Table Of ContentIntegrated Reporting
Management
Analysis and Applications
for Creating Value
Integrated Reporting
Management
Analysis and Applications
for Creating Value
Sean Stein Smith
A PRODUCTIVITY PRESS BOOK
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Library of Congress Cataloging-in-Publication Data
Names: Stein Smith, Sean, author.
Title: Integrated reporting management : analysis and applications for
creating value / Sean Stein Smith.
Description: 1 Edition. | New York : Taylor & Francis, [2018] | Includes
bibliographical references and index.
Identifiers: LCCN 2018027263 (print) | LCCN 2018043807 (ebook) | ISBN
9781351015479 (e-Book) | ISBN 9781138498853 (hardback : alk. paper)
Subjects: LCSH: Communication in organizations. | Organizational behavior.
Classification: LCC HD30.3 (ebook) | LCC HD30.3 .S754 2018 (print) | DDC
651.7/8--dc23
LC record available at https://lccn.loc.gov/2018027263
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This book is dedicated to my family, who have always
lent me their support and encouragement along my
academic, professional, and personal journey.
Contents
Preface ................................................................................................................xi
Introduction .....................................................................................................xiii
Author ................................................................................................................xv
1 The Case for a New Type of Reporting ...................................................1
Issues with Traditional Financial Reporting ................................................1
Stakeholder Expectations .............................................................................4
Tying in Integrated Reporting .....................................................................5
Long-Term Value Case .................................................................................7
Pressure from Shareholders ..........................................................................8
The Need for an Action-Oriented Plan ......................................................10
Stakeholder Theory ....................................................................................11
Stakeholder Theory in a Globalized World ................................................13
Stakeholder Theory in a Digital Age ..........................................................15
Connecting Stakeholder Theory to Integrated Reporting...........................16
2 Why Integrated Reporting ...................................................................19
How Integrated Reporting Developed .......................................................19
The Business Case for an Integrated Report ...............................................22
What Information Is in an Integrated Report? ...........................................24
The Multiple Capital Model ......................................................................26
Natural Capital .....................................................................................29
Value Add of Natural Capital ...........................................................30
Social and Relational Capital ................................................................32
Use Case ...........................................................................................33
Manufactured Capital ..........................................................................34
Use Case ...........................................................................................36
Intellectual Capital ................................................................................37
Use Case ...........................................................................................38
Human Capital ....................................................................................40
Use Case ..........................................................................................42
vii
viii ◾ Contents
Differentiating Integrated Reporting .........................................................43
What Are the Benefits of an Integrated Report? .........................................45
Internal Benefits ........................................................................................46
3 The Current State of Integrated Reporting:
Applications and Insights .....................................................................49
The International Integrated Reporting Council: Information and
Resources ...................................................................................................49
Connecting Integrated Reporting to Other Forces.....................................51
Adidas Case Study .....................................................................................53
Human Capital and Corporate Governance ..............................................54
Integrated Reporting and Corporate Governance ......................................55
Better Data and Analytics ..........................................................................56
Supply Chain Implications ........................................................................57
Integrated Reporting and the Status Quo ..................................................59
Financial Impact of ESG and Other Nonfinancial Information ................60
4 Leaders and Support for Integrated Reporting ....................................63
Integrated Reporting and Transparency .....................................................65
Benefit Corporations .................................................................................66
Flexible Purpose Corporations ...................................................................68
Leading Organizations...............................................................................70
Apple, Inc. .............................................................................................71
Eni: Italian Oil Organization ................................................................73
Novo Nordisk: Pharmaceutical Organization .......................................75
Eisai .....................................................................................................77
American Electric Power (AEP) ............................................................78
Southwest ..............................................................................................80
Coca-Cola .............................................................................................82
Clorox ..................................................................................................84
JLL ........................................................................................................86
General Electric .....................................................................................88
Technology Organizations ....................................................................91
Commonalities ......................................................................................91
Building from Complementary Work: Other Examples of
Nonfinancial Reporting .............................................................................94
Drilling Down on Integrated Reporting ...............................................96
Integrated Reporting: An Analysis of the Multiple
Capital Model ...................................................................................96
Technology and the MCM ...............................................................97
Examples of the Different Types of Capital.......................................98
Connection between MCM and Long-Term Value Creation ..........104
Blue Ocean and Integrated Reporting ............................................106
Contents ◾ ix
5 Integrated Reporting: Implementation Challenges and
Opportunities .....................................................................................109
Implementation of Integrated Reporting: Internal ...................................109
Technology Requirements ........................................................................111
Technology Regulation ............................................................................113
Operational Requirements .......................................................................115
Management Accounting Expectations ....................................................116
6 Implementation of Integrated Reporting: External ...........................119
Stakeholder Expectations .........................................................................121
Integrated Reporting and Differentiated Reporting .................................123
Integrated Reporting and Long-Term Value Creation ..............................128
7 Accounting Implications for Integrated Reporting ............................131
Assurance and Attestation Changes .........................................................131
Use Case..............................................................................................133
Changing Expectations ............................................................................134
8 Integrated Reporting and Revenue Opportunities .............................137
Connecting Integrated Reporting to Talent Development .......................140
Integrated Reporting and External Opportunities ...................................141
9 The Value Proposition of Integrated Reporting .................................143
Creating Value in the Marketplace ..........................................................144
Circular Economy ....................................................................................145
Human Capital and Long-Term Value Creation ......................................146
Better Data for Better Decision-Making ..................................................147
10 Connecting Integrated Reporting to Technology Trends ..................149
Integrated Reporting: Technology Driven Communication ....................150
Artificial Intelligence ...........................................................................151
Why it Matters ........................................................................................152
Blockchain Technology ............................................................................153
Private Blockchains ..................................................................................154
Supply Chain Blockchain ........................................................................155
Blockchain Applications and Integrated Reporting ..................................157
Integrated Reporting in a Frictionless Environment ................................157
Smart Contracts and Integrated Reporting .........................................158
Data Analytics .........................................................................................159
Data-Based Decision-Making ..................................................................160
11 The Future of Integrated Reporting ...................................................163
Future Directions of Integrated Reporting ...............................................163
Integrated Reporting and Other Emerging Areas ....................................165
