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Momentum

WHILE THE UNIVERSAL ADOPTION of integrated reporting is by no means inevitable, its current trajectory remains positive. Though less mature than sustainability reporting, integrated reporting is, at its core, a social movement.1 When put into practice by companies and used by the audience of report consumers, it can transform the way resource allocation decisions are made inside companies and markets across the globe. Its social goal is to use corporate reporting as a means to influence companies and investors such that they incorporate the consequences of the positive and negative externalities of corporate decisions (most typically referred to as "sustainability"2 regarding social and environmental issues) and the increasing importance of intangible assets. A key element of this is fostering longer-term thinking and taking more explicit account of all the "capitals" a company uses and transforms in creating value.

Defined as a loosely organized but sustained campaign in support of a social goal—often implementation of or resistance to a change in society's structure or values—social movements are by definition collective efforts.3 Although they may differ in size, this type of group action results from the more or less spontaneous coalescence of individuals and organizations whose relationships are not defined by rules and procedures but by their common outlook on society.4

Adoption, Accelerators, and Awareness

FIGURE 3.1 Adoption, Accelerators, and Awareness

The success of any social movement requires the participation, support, and collaboration of a wide range of actors. In the case of the integrated reporting movement, whose success ultimately depends on the global adoption of this practice by all listed companies, these actors include companies, analysts and investors, nongovernmental organizations (NGOs), regulators and standard setters, and accounting and technology firms. It is only through the global—or at least widespread—adoption of integrated reporting by most of the world's largest companies that the system-level benefits of integrated reporting will be achieved. In the meantime, individual companies stand to benefit for the reasons discussed in the next chapter, as can investors who learn how to incorporate the information in an integrated report into their investment decisions.

This chapter will catalogue evidence of the movement's momentum in terms of three interrelated dimensions: adoption, accelerators, and awareness (Figure 3.1).

As the company is the unit of analysis for integrated reporting, we use its adoption by companies outside of South Africa5 as a litmus test of the movement's progress. If the number of companies using the practice is high and growing rapidly, momentum is increasing. Accelerators include regulation, multistakeholder initiatives and organizations, and endorsements that support integrated reporting.6 Finally, awareness reflects the extent to which integrated reporting has received broad visibility in the business world and public sphere. Accelerators help speed the adoption of integrated reporting. Together, they raise the level of awareness. Although awareness can add energy to accelerators, it has little to no direct effect on adoption.

ADOPTION

While it is difficult to assess the number of companies that have embraced integrated reporting or the rate at which this is happening, we can use the number of "self-declared" integrated reports, the rise of sustainability reporting, and data from annual reports that indicate that the "spirit" of integrated reporting is present as rough indicators of the level of adoption. At present, two limitations are to blame: (1) the lack of clear criteria for just what qualifies as an integrated report and (2) difficulty in determining how many annual or other types of reports fit these criteria.

 
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