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New Integrated Reporting Framework introduces meaningful new features

22 Jan 2021 by Mike Tisdall

Yesterday, the International Integrated Reporting Council (IIRC) published the first revisions to the <IR> Framework since it was first published in 2013. This has been the culmination of two years work and...

Investor Communication
new integrated reporting framework introduces meaningful new features mike tisdall

yesterday, the international integrated reporting council (iirc) published the first revisions to the <ir> framework since it was first published in 2013. this has been the culmination of two years work and extensive consultation with 1470 individuals, including yours truly, in 55 jurisdictions.
the most fascinating outcome has been how fit for purpose the original framework was. given the passage of time, the light touch that resulted is remarkable. and good news because we don’t have to learn yet another change in our way of reporting.
the changes that have been made are really more about making things clearer and more actionable than anything else. all aimed to make the quality of reporting better. a couple of the tweaks really move the ‘integrated thinking’ and ‘reporting’ aspects forward a notch.
there were 22 issues that the consultation uncovered and that have been addressed. and only seven of these are ‘significant’.
the most pertinent of these for most of us are the changes to the value creation model (vcm). and this relates to distinguishing clearly between outputs and outcomes. most global reports have conflated these, probably because of confusion. have a look at the new version of the diagram:

in particular, let’s hone in on the business model component:

the first points that the changes make a lot clearer:

  • outputs and outcomes are very different concepts. and both are important because it’s the outcomes that actually impact on value
  • while outputs can directly affect outcomes, so can your business activities. they revised diagram conveys this

the second point to note:

  • the diagram now reminds reporters that outcomes should be considered not just in the short term, but also in the medium and long term

the third point to note:

  • it now reinforces the need for balanced disclosures. this speaks to the quality, credibility and integrity of reporting information. this means acknowledging and candidly communicating some areas in which value is eroded or simply preserved rather than just created. and declaring negative outcomes along with the positive.

this can often be about trade-offs between the capitals, e.g. by increasing profits or providing improved customer benefits, you may perhaps create adverse outcomes for the environment or society.

integrated reporting has always encouraged us to disclose the lows as well as the highs. now the investment market globally is demanding it for their quality assessments. the revised framework now really spells that out clearly. the end-game benefit to reporters is that quality and transparency of information leads to better capital allocation and lowers the cost of capital.
beyond the vcm, there are two more areas where the global market requested greater clarity.  

  1. qualitative and quantitative information. the framework now reminds reporters that disclosures are most effective when they have a blend of narrative and metric indicators – the indicators providing the support or evidence and a basis for comparison while the narrative provides the all-important explanation and context.
  2. simplifying the statement of responsibility. a bit of a technical change, but the purpose is to lower the reporting burden while not sacrificing the quality of the report. it recognises that integrated reporting is a multi-year journey and that perfection is not achieved in year one. so it lowers the responsibility on directors in particular in terms of what their sign off promises.

the future of integrated reporting is clear
there is no doubt that integrated reporting has now reached global tipping point. the principles are now visible in almost every report we see, even if they’re not purporting to be integrated reports. in particular, the notions of reporting on the things that really impact the business and its stakeholders (materiality), of value creation, of short, medium and long term planning, of the importance of non-financial information, and of connecting that non-financial information to the fortunes and health of the business – they’re obvious in every report now. and that’s a direct legacy of integrated reporting. and given the global feedback on the <ir> framework and the very few changes resulting, it’s a way of thinking that we can say, with confidence now, has stood the test of time.

click here to see the full new <ir> framework.

integrated reporting, framework, value creation model

The Sanford Integrated Report Journey

26 Nov 2020 by Mike Tisdall

It seems that wherever we turn in corporate New Zealand, the Sanford integrated reports are held in the highest esteem and the benchmark that other companies measure their integrated reporting progress by.  We...

Investor Communication
the sanford integrated report journey mike tisdall

it seems that wherever we turn in corporate new zealand, the sanford integrated reports are held in the highest esteem and the benchmark that other companies measure their integrated reporting progress by. 

we have produced all seven of the sanford reports, starting in 2014. (and prior to that, their annual and sustainability reports since 2008.)

the 2014 report was a breakthrough. it really set a high threshold for what integrated reporting could and should be and put corporate new zealand on notice for what future reporting expectations would be.

it’s a great time to look back at the journey. sanford’s ceo for the past seven years, volker kuntzch, elected to seek a change of direction. this retrospective is as much a tribute to his visionary and care-centred leadership as it is a tale of the evolution of sustainability reporting in new zealand.

the early reports

when volker briefed us to produce the 2014 report as an integrated one, we had little experience in the genre. we knew some rudimentary principles and looked at two or three australian examples, but to be frank, were completely underwhelmed and felt they taught us nothing.

it was time to take a deeper dive to really understand the crux of this new way of thinking. the penny-dropping moment was when the ceo of the iirc (international integrated reporting council) visited new zealand. he encouraged us to stop looking through the lens of the impact that sanford had on things, and start thinking about how those things might impact on sanford’s business in the long term if not planned for and protected. once we looked beyond the one-way corporate citizenship thing, we were able to see the virtuous circle and what a game changer this was for business and the world.

sanford proved to be the perfect client to apply this to. the most immediate and lasting impression of hearing volker’s philosophy was the authenticity that was being nurtured within sanford – his genuine care for people and the environment in particular. you could feel the soul of the company under his leadership, and that sense has continued, only today there’s a lot more embedded structure around it. and that philosophy will, in turn, protect the sanford business for decades to come.

from the beginning, we knew that soulful storytelling was the key to sharing this authenticity. so rather than merely report data about what they were doing, we chose to dig deeper and frame a more emotive, connecting story.

our first report was titled ‘how we see the sea’. and it set the tone for the new way they deserved to be perceived.

we continued storytelling journey in 2015, seeking once again to convey the grounded authenticity we found in sanford, and embed that understanding. with reports that are content heavy, as these reports are – close on 120 pages – we strive to layer the communication, so that the core tone and messaging are conveyed at a glance, while those that want evidence have plenty to provide that assurance.

2016 – 2020

as we all gained more experience in integrated reporting, our learnings enabled our reports to become more sophisticated and the messaging more specific while never veering far from that intrepid seafaring core. 

the value creation model journey

a great measure of increasing understanding of integrated reporting is the sophistication and depth of one of the central and defining elements: the value creation model. 

back in 2014, our understanding of what they were meant to convey was fairly superficial and the resulting first attempt, while clear, was very simplistic. 

in 2015, we made it more engaging through illustration, and it is this version that seems to have set the benchmark if imitation is indeed the sincerest form of flattery. we now see versions of this illustration in many new zealand integrated reports.

as for sanford, they’ve evolved too. as they’ve become more meaningful with the gradual inclusion of more data, the space for illustration has become somewhat constrained. but we’ve endeavoured to retain the visual engagement while ringing the changes to keep it fresh.




openness and trust

ironically, one of the aims of integrated reporting is conciseness. but when one of your communication objectives is transparency and clear differentiation within an industry that suffers from a corporate trust issue, then full, open disclosure and over-communication is a valuable positioning tool. as sanford has seen success in this defining positioning strategy and trust rapidly build, they have been able to reduce the page count noticeably in the last two years. but openness and transparency have never been compromised.

awards speak to an enduring quality

sanford have been recognised every year of their integrated report journey. over a dozen international awards, from the new york-based arc awards to the international graphis awards to the more regional ara awards, thrice winning best integrated report, twice winning best sustainability report, and twice being a report of the year finalist. and this year, the inaugural nz integrated reporting award winner.

as the years have gone by, our immersive knowledge of both the spirit and mechanisms of the integrated reporting framework have grown exponentially. but the dive into the deep end for sanford was the trigger that sparked our admiration for the extraordinary business power of integrating reporting and our desire to go deeper and deeper to better advise new zealand businesses no matter where they are on the journey.

integrated reporting, annual reports, sustainability reports, sanford, insight creative, value creation models

Integrated Reporting Principles - Alignment in storytelling

30 Jul 2020 by Mike Tisdall

There are a number of reasons why ‘alignment’ is a good word to keep in mind when planning your corporate reporting – and integrated reporting in particular. This eight minute video spells them out, and goes on...

Investor Communication
integrated reporting principles - alignment in storytelling mike tisdall

there are a number of reasons why ‘alignment’ is a good word to keep in mind when planning your corporate reporting – and integrated reporting in particular. this eight minute video spells them out, and goes on to tell you where to look to find some alignment to inform your report narrative.

with practical, real-world examples of how these principles have been applied to reports for companies such as nz post, vector and watercare, the hope is that these few minutes will help you approach your next report with a road map, a bit more clarity, and a toolkit for telling a cohesive story to your various stakeholder groups.

we wrap up with a bit of planning theory: how to map out your document structure logically, and to closely reflect your company's vision, mission, values and strategic plan.

, integrated reporting, alignment of storytelling

Integrated Reporting Insights – The connectivity principle

23 Jun 2020 by Mike Tisdall

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...

Investor Communication
integrated reporting insights – the connectivity principle mike tisdall

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, connectivity of information

Integrated Reporting Insights - How important is hard data?

16 Jun 2020 by Mike Tisdall

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...

Investor Communication
integrated reporting insights - how important is hard data? mike tisdall

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: 

  1. 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.
  2. 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,

Integrated Reporting Insights - the Value Creation Model

09 Jun 2020 by Mike Tisdall

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...

Investor Communication
integrated reporting insights - the value creation model mike tisdall

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, value creation model
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