Integrated Reporting Insights – The connectivity principle
This video in our series on integrated reporting looks at the guiding principle of ‘Connectivity of Information’. This is the bit where <IR> asks you to join the dots between the various things that are...
this video in our series on integrated reporting looks at the guiding principle of ‘connectivity of information’.
this is the bit where <ir> asks you to join the dots between the various things that are happening because looking at things in silos isn’t particularly useful. it’s systems thinking really, where there are interdependencies whether they’re immediately obvious or not. if you can clearly see the trade-offs, you can understand how they affect each other. and that might have you making different decisions.
so how do you go about identifying these connections? and then how do you articulate them in your report?
this video provides a couple of tips . . .
Integrated Reporting Insights - How important is hard data?
This video in our series on integrated reporting takes a look at the roles of qualitative vs quantitative information. We often come across clients who know they need to embrace Integrated Reporting but feel...
this video in our series on integrated reporting takes a look at the roles of qualitative vs quantitative information.
we often come across clients who know they need to embrace integrated reporting but feel they’re not ready to go there because of a lack of hard data. our response to that is two-fold:
- starting on the journey towards integrated reporting is more important than producing the ideal report. this is not a game you can master overnight. just get started with a report that has the right spirit and improve over time.
- hard data is only part of the story. your genuine stories and exposing the soul of your beliefs in action are just as important. the <ir> framework spells this out: “the ability of the organization to create value can best be reported on through a combination of quantitative and qualitative information".
so, if your organisation has a conscious intent, and is deliberately dealing with activities that affect your people, your product and the planet in a cohesive way, you can definitely start on the integrated reporting journey. it will be the quality and genuineness of your thinking and actions that will set the scene in your early reports.
in the accompanying video, i show you how effective this can be.
Integrated Reporting Insights - the Value Creation Model
In this, the first of our video series on aspects of integrated reporting, we take an in-depth look at the Value Creation model. Value Creation (or depletion, as the case may be) is probably the most fundamental core...
in this, the first of our video series on aspects of integrated reporting, we take an in-depth look at the value creation model.
value creation (or depletion, as the case may be) is probably the most fundamental core principle of integrated reporting – the ability of an organisation to create value for itself and other stakeholders and society over time.
and the value creation model is the flow diagram in virtually every integrated report that illustrates how a company’s operations adds value to the various financial and non-financial capitals that it utilises.
as companies globally are adding more and more information into their value creation models, insight creative’s mike tisdall is observing them drowning in so much complexity that they’re ceasing to communicate effectively.
this video is for viewers who already have a reasonable understanding of the principles of the value creation model and are ready to dig deeper into the nuances. it takes a brief overview of the anatomy of the vcm, as outlined by the <ir> framework, and then focuses on some of the components that routinely cause confusion or get overlooked.
we take a close look at the important difference between outputs and outcomes; the role of risks, external operating environment, the company’s strategy, and how much detail the business model itself should attempt to incorporate.
and we pose the questions: how much is too much? and what’s more important – content or reader engagement?
Integrated Reporting: Connectivity of Information
It’s one of the core principles of an Integrated Report (<IR>). But many clients seem to think it’s one of the hardest. We’ll get to that in a minute – but spoiler alert: it isn’t really. First,...
it’s one of the core principles of an integrated report (<ir>). but many clients seem to think it’s one of the hardest. we’ll get to that in a minute – but spoiler alert: it isn’t really.
first, let’s consider why the <ir> framework considers it an important principle. basically, it’s because it’s really not that useful to look at material issues in isolation. there are interdependencies there whether you’ve noticed them consciously or not. and if you can surface these connections and the trade-offs between issues, it becomes easier to understand just how they affect each other. which in turn influences decision-making.
and here’s that easy way to get started that i alluded to above: in my experience, even if an organisation hasn’t been through a formal integrated thinking process, threads naturally occur and it’s just a matter of using fresh eyes to look at the tapestry to find the sometimes not-so-obvious synergies. because – credit to your leadership - there’s usually a strategy at play and you can join the dots if you look closely enough.
and while this isn’t as good as being crisply intentional in strategy activation, at least it gives you a place to start if you’re embarking on an integrated reporting journey in an organisation that hasn’t yet got a level of maturity in its integrated thinking.
most annual reports contain some form of case studies these days. they’re used to illustrate a strategy in action and provide proof points for directional statements. analyse your case studies. you may be surprised at how many of them tick more than one of your strategy boxes, and impact more than one of your stakeholder groups or desired outcomes.
once you’ve identified them, surface them and actively join the dots. explain how the examples deliver on your strategies or help you towards a stated kpi goal. different case studies can deliver to different goals of course, but you will probably find that some actually deliver to more than one.
here are a couple of examples from watercare and vector which illustrate how we’ve actively helped the reader connect case studies to more than one of the business’s goals and strategies.
note how each of these case studies reports back to watercare’s stated strategic goals (highlighted by the red boxes):
so, look closely at your in-market activities. you may be surprised that they meet more than just commercial objectives. and take another look at your stories about your people, the environment and the community – you may well find that each meets more than one of your stated strategies.
having got to this point, you can now start to be more intentional in your non-financial planning, goal setting and kpi measurements. before you know it, integrated thinking will be happening in your organisation.integrated reporting, connectivity, joining the dots, non-financial reporting
What will improve integrated reporting?
For those companies seeing the benefit of structuring their annual report along ‘integrated reporting’ lines, the latest move by the International Integrated Reporting Council (IIRC) is interesting. The...
for those companies seeing the benefit of structuring their annual report along ‘integrated reporting’ lines, the latest move by the international integrated reporting council (iirc) is interesting.
the <ir> framework was published eight years ago. and it has stood the test of time so well that it hasn’t been updated in that time, despite constant reviews. but that’s about to change.
there’s no doubt that reporting systems have evolved since then, along with perceptions of what businesses should be doing and saying. there is some strong consensus now around the importance of capitals beyond the purely financial. as a result, most companies can see the wisdom of the thinking behind integrated reporting. within this context, <ir> has solidified its role in changing the way companies think, plan and communicate their value creation.
the revisons being mooted in no way conflict with the intent and philsophy inherent from the beginning. and by ‘mooted’ i really mean three key themes around which market feedback is being sought. as lisa french, the iirc’s chief technical officer, has said:
“the iirc has learned a great deal from the application of the <ir> framework by around 2,000 businesses in over 70 countries. while the feedback is that the <ir> framework is a robust tool that has stood the test of time, our <ir> business network participants and others in the corporate reporting system have been clear about where they believe minor modifications and clarifications will enhance the effectiveness of the <ir> framework.”
if you’ve ever grappled with a value-creation business model, or struggled with the difference between outputs and outcomes, for example, then your views will be valuable.
have a read of the questions and submit your answers here.iirc, integrated report,
6 insights on Integrated Reporting from Ravensdown
Guest post on Ravensdown’s Integrated Reporting journey by Gareth Richards, Group Communications Manager To listen is to learn Every human being can recognise is when they’re being listened to. ...
guest post on ravensdown’s integrated reporting journey by gareth richards, group communications manager
to listen is to learn
every human being can recognise is when they’re being listened to.
for me, having been involved on a three-year journey with ravensdown, i think that’s the place to start. and perhaps can be summed up with a question: how much does the process of listening form your strategy?
not just listening to people like our neighbours who are concerned with dust, noise and their property values. but listening to the signals that alert any business to opportunity and risk. listening to the sceptics and antagonists who may have a grain of truth in what they are saying. listening to the story your own people tell when they are asked what your company does and why they are here.
so let’s talk about our integrated reporting journey and the ravensdown’s story . . .
the changing role of ravensdown
founded in 1977 as a buying co-operative, the company was set up by farmers to scour the globe looking for mineral fertilisers and nutrients to import and manufacture. for 40 years, this enabled farmers to grow food for animals and humans that became the envy of the world.
but in 2017, it was clear that the co-operative was much more complex than a simple import-and-process model. it had adapted to its environment. its advisors were seen as critical parts of the farm teams - fertiliser is farming’s second largest expense. and our highly qualified consultants advising on environmental mitigation became the fastest growing part of the business. new technology was bringing new precision and traceability so the right amount of the right nutrient went in the right place.
instead of being seen only as a fertiliser manufacturer, we needed to be seen as the farm nutrient and environmental experts. that was who we really were. but like all integrated reporting journeys, ravensdown’s started with “why we are here”.
and through the normal, maze-like process with lots of blind corners that most companies go through, we found our way out of the maze and with a sharply focused purpose:
enabling smarter farming for a better new zealand
the integrated reporting journey
for the past three years, i’ve worked with the cfo, internal auditor, leadership team and board, and our design agency, insight creative, as we’ve moved closer to integrated reporting. i thought i’d share six insights about the experience with you today.
as a comms guy, stories are my meat and drink. i started doing this job before corporate social responsibility became a thing, but i knew things had really changed when the head of our audit and risk committee told me that the stories in our integrated report had to be punchy and relatable. it felt like all the advice i’d been giving corporate finance people for 20 years was being played back to me!
so… six insights. good news. we’ve already covered one of them!
1. the power of listening
2. starting with why
starting with why (simon sinek) means thinking broadly about the intersection and combination of capitals that you impact and that impact you. we look for connection. a joining of the dots.
for example: profit becomes an outcome not a purpose. value becomes the lens with which to view the entire business. risks become more specific and manageable. the forward view comes into focus.
it takes time! and it’s hard. we must have changed our business model diagram 25 different times and that in the first year alone!
in terms of reporting, instead of listing every concern a stakeholder has, we share how we’re going about learning what matters.
instead of listing every action we’ve taken, we highlight which aspects of our strategy relate to those things that matter.
once you’re understanding what’s important to your stakeholders and business, are clear on your purpose and ideas on how to progress towards that, now you come to the question of how are you going to demonstrate progress? what are you going to be reporting on?
3. choose the right targets
we all know the phrase “what gets measured gets managed.” that’s a lot more catchy than my version: “what gets publicly disclosed as a target that is comparable over time, receives sustained focus”.
this has proved a challenge across the three years we’ve been trying - board and leadership team need to understand the implications and possible unforeseen consequences of declaring a target to the world. it would be easy to do badly.
closely related to number 3 is…
4. get the right data
most of our targets and data sets were by functional silos where specialist managers report upward. but the data that’s easiest to find is not often the right data. we had a lot of financial data but nowhere near enough non-financial data. the holy grail is the integrated thinking that’s needed as you consider integrated reporting and the report itself.
an integrated measure is harder to conceptualise and but worth persevering with…
in our case, an example is the strength of a superphosphate granule. this is impacted by operational or procurement choices, by training and handling protocols, by capital investment in processing machinery and storage sheds. we report on this as a material indicator (its value relates to reputation and environmental impacts – a dusty granule is bad for neighbours and for farmers spreading near waterways).
we started with the rear view mirror approach to quality and then we could move on to the forward view of targets around improvements.
5. look to leverage
- in the first two years, our online report went from a pdf on our website to our own microsite, that’s also a link at the bottom of all staff’s email signatures: a good way to encourage staff to read and understand!
- managers go through the print document with their teams and every employee gets a copy with a personal letter from the ceo.
- the website is optimised for phones and contains videos and other animations you can’t get from the paper document.
- this year much of the compliance related information will be on the website, so the document doesn’t blow out to a hundred pages. in fact, the digital domain frees up the printed format, so it can break conventions of a typical looking annual report. this year we will also be sharing the site a lot more via linkedin, twitter and facebook and we will be making the site more sophisticated in terms of structure.
i’ve saved the most important for the end. and that is all about how you make a start…
6. just make a start!
there are 19 parts of an integrated reporting framework so it’s easy to get overwhelmed.
but the key thing is to make a start and build momentum. it’s like getting on a roundabout. doesn’t matter where you get on or where you are on the ride, but that you’re actually on board and have changed your perspective.
we knew that we weren’t aiming for a fully-fledged, quality assured integrated report from year one. it was more the spirit of integrated reporting we were going after. we called them stakeholder reviews for the two years. this year we will call it an integrated report. but like any good journey, we’re still learning and gaining clarity.
one thing we are clear on. our reporting is a process of establishing trust. through transparency, disclosure and frankness.
we can’t be scared of a bad result. better that performance gaps are identified than accusations of cherry picking or green washing.
the benefits of <ir> to ravensdown that we've already seen
- increased understanding of value creation
- created opportunities
- reduced silo thinking in the business
- great morale – especially ahead of criticism e.g. from activists…
- longer term and aspirational thinking
- improving what is measured – better reporting
gareth richards, ravensdown
integrated reporting, getting started on integrated reporting,