SIX GROUPS OF ACTORS, each with their own motives, comprise the integrated reporting movement: (1) companies, (2) the audience or users of integrated reports and integrated reporting, (3) supporting organizations, (4) supporting initiatives, (5) regulators, and (6) service providers. Each group's motives are a function of whether they are mission-driven, profit-driven, or some combination of the two. Companies are largely profit-driven, although some have a strong mission element as well. Audience includes a diverse set of report users: investors and other providers of financial capital (e.g., debt and project finance), sell-side analysts, rating agencies, employees, customers, suppliers, and nongovernmental organizations (NGOs). With the exception of NGOs, which are by definition mission-driven, these are largely profit-driven and interested in financial information. The mission-driven members are interested in nonfinancial information. One of the challenges a company practicing integrated reporting faces is to educate these different members on the value of taking a more holistic view of the company's performance. Regulators and supporting organizations and initiatives are mission-driven. Regulators can also be considered members of the audience. Finally, service providers are profit-driven.

These actors' relationships with each other make positive action possible. When two actors are both profit-driven, their relationship is one of shared economic self-interest based on resource exchange. From a company perspective, this is true of their relationship with profit-driven audience members and service providers. In profit-driven/mission-driven relationships, the relationship is based on gaining or resisting influence, such as those between companies and supporting organizations and initiatives and companies and regulators. Relationships between different mission-driven organizations are also based on influence, such as those between supporting organizations and initiatives and regulators.

The integrated reporting movement's momentum is a function of the extent to which these actors succeed in providing resources and exercising influence in ways that accelerate adoption and increase awareness. Accelerating adoption can be accomplished both directly by companies and indirectly by shaping the context through laws and codes of conduct in the institutionalization phase of meaning. Examples of the former from a resource perspective are providers of capital creating incentives for a company to produce an integrated report and service providers that furnish advice and technology to help them do so. From an influence perspective, examples would include supporting organizations that seek to encourage companies to adopt integrated reporting as a "best practice" or to "show leadership" or get "brand value" from doing so. Examples of entities that indirectly accelerate adoption include supporting organizations and initiatives that influence regulators, such as securities commissions, and those with some regulatory authority, such as stock exchanges, to require or create incentives for companies to adopt integrated reporting. Finally, there are many ways in which supporting organizations and initiatives attempt to influence each other and regulators in order to codify and institutionalize the meaning of integrated reporting as a way to accelerate its adoption.


Absent regulation mandating that companies publish integrated reports, the decision of whether or not to produce one lies with each company. Company motivation to produce an integrated report generally stems from the belief that its tangible (e.g., better financial performance) and intangible (e.g., enhanced reputation) benefits will exceed the tangible (e.g., resources) and intangible (e.g., litigation risk) costs of doing so. In making this assessment, executives must be aware of the concept and important related concepts like integrated thinking and materiality. Although this varies by country, most executives we have encountered today have a modest understanding of integrated reporting at best due to the relative youth of the movement. If these executives are sufficiently senior and occupy the right roles—such as chief executive officer (CEO), chief financial officer (CFO), or board member— they can, however, take the next step and make it an item for consideration, debating its costs and benefits.

The litmus test for both advocates and skeptics is whether integrated reporting leads to better corporate performance through integrated thinking, all of which should be ultimately reflected in a company's stock price. Today, it would be very difficult to analyze this contention due to the limited number of companies practicing integrated reporting for any length of time. However, it is possible to gain insights from company experiences to date, as reflected in their perceptions of the costs and benefits of integrated reporting, even though no algorithm exists to net these out into a "bottom line." Moreover, even experienced companies find it difficult to quantify the costs and benefits of integrated reporting.

Thus far, surveys have shown integrated reporting's benefits as perceived by companies to be modest and largely intangible. An Ernst & Young (E&Y) survey1 conducted with GreenBiz2 asked company representatives to provide their reasons for why it makes sense to voluntarily adopt integrated reporting (Table 4.1). A total of 282 companies in 17 sectors, all with revenues of $1 billion or more, 85% of which were in the United States, responded to the survey. The top three benefits by a wide margin were all intangible: increased external sustainability awareness, improved transparency and data accuracy, and enhanced brand and reputation. These are cited by over 50% of the respondents. By comparison, tangible benefits such as improved reporting efficiency and cost reductions are ranked relatively low, cited by one-third and one-quarter of respondents, respectively.

Table 4.1 also provides insights into the meaning companies ascribe to integrated reporting. The fact that nearly 40% cited "creating competitive advantage" and "driving collaboration between different parts of the business" suggests that some companies see a relationship between integrated reporting and integrated thinking. However, only one-third or less thought that integrated reporting will improve their communications with investors and enable them to better understand the company, leading to a higher valuation. Except for increased sustainability awareness—and, as noted in Chapter 2, the International <IR> Framework (<IR> Framework) is not couched in

TABLE 4.1 Reasons for Voluntary Adoption of Integrated Reporting

Percent Making


This Statement

Increase sustainability awareness with investors and customers


Improve transparency and data accuracy


Enhance brand and reputation


Create competitive advantage


Drive increased collaboration between different parts of the business


Improve communication with media and general public


Improve reporting efficiency


Improve analysis and valuation


Preempt questions from investors and others stakeholders


Drive cost savings/reductions


Enhance employee recruiting


Improve innovation


Data Source: Ernst & Young and GreenBiz Group, "2013 six growing trends in sustainability reporting," p. 30.

"sustainability" terms—more companies cite the internal benefits of integrated reporting than the external benefits. These modest percentages suggest that most companies have yet to be convinced about the full range of integrated reporting's benefits. Until they are, adoption will be slow and momentum will be minimal.3 Similarly, a 2012 survey of 43 organizations in the International Integrated Reporting Council's (IIRC) Pilot Programme Business Network conducted by Black Sun Pic4 confirmed the importance of internal benefits, all of which are primarily intangible but most of which are consistent with integrated thinking:

1. "One of the most mentioned benefits of Integrated Reporting is the opportunity it provides to connect teams from across an organisation, breaking down silos and leading to more integrated thinking.

2. Changes to systems driven by Integrated Reporting requirements are providing greater visibility across business activities and helping to improve understanding of how organisations create value in the broadest sense.

3. A shift to Integrated Reporting is increasing the interest and engagement of senior management in issues around the long-term sustainability of the business, which is helping them to gain a more holistic understanding of their organisations.

4. Better understanding of organisational activities is enabling companies to establish a holistic business model and helping to streamline communications.

5. Organisations are starting to identify ways to measure the value to stakeholders of managing and reporting on sustainability issues."5

Unlike the benefits of creating an integrated report, the costs are very tangible, thereby making the decision to adopt integrated reporting a difficult one. Financial and human resource costs include organizing and executing on a process to produce an integrated report6 (which includes determining the material issues to be included and necessarily higher levels of stakeholder engagement), investments in technology and control systems to produce sufficiently reliable nonfinancial information on a timely basis7 (which can also be thought of as a benefit), the costs of producing an additional report (if it is one), making changes in the company's website to support the integrated report, and educating users about how to get the most benefit out of it. Difficult-to-quantify costs include increasing expectations by the audience and subsequent reputational risk, and legal risk from increased disclosure.

While little empirical evidence exists to confirm the existence or magnitude of these costs and benefits, one could argue that this is beside the point. What is important is that inside the company, management and the board make an informed decision about whether to produce an integrated report or not. Equally important is the fact that some barriers commonly cited to practicing integrated reporting are not seen as significant by most companies. For example, in the E&Y/GreenBiz survey, respondents ranked challenges to preparing an integrated report (Table 4.2). While legal risk is often cited as a reason against integrated reporting, only 18% of respondents considered it the most difficult challenge. Further evidence that legal risk is more of an excuse than a legitimate reason to refrain from producing an integrated report is that there is very little evidence of lawsuits or regulatory enforcement actions against companies for voluntary disclosures. Rather, the problem is one of inaccurate or fraudulent disclosures—or the failure to disclose material items.8 All other challenges on the list are cited by 15% or fewer of respondents. With the exception of lack of guidance from standard setters and regulators, cited by only 12% (showing that this is not a significant barrier), all other challenges are internal.9

TABLE 4.2 Challenges to Integrated Reporting

Percent of Respondents

Ranking the Challenge 1 Challenges as Most Difficult

Balancing the demands for transparency against legal risk and other considerations of releasing such information


Aligning sustainability reporting processes with financial processes


Lack of C-suite and board buy-in


Lack of CFO buy-in


Budget and staff to prepare the report


Time constraints


Adequate guidance from standard setters and regulatory bodies (e.g., U.S. SEC)


Data Source: Ernst & Young and GreenBiz Group, "2013 six growing trends in sustainability reporting," p. 31.

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