IIRC finalises its Framework for integrated reporting

  • IIRC (International Integrated Reporting Committee) (green) Image

09 Dec, 2013

The International Integrated Reporting Council (IIRC) has released its ‘International Integrated Reporting Framework’ ( Framework). The Framework seeks to explain the fundamental concepts, principles and content requirements underlying an 'integrated report', which is considered the next step in the evolution of corporate reporting.



The International Integrated Reporting Council (IIRC) was formed in August 2010 with the objective of creating a globally accepted framework for a process that results in communication by an organisation above value creation over time.  The initial formation of the IIRC involved HRH The Prince of Wales bringing together The Prince’s Accounting for Sustainability Project (A4S), the Global Reporting Initiative (GRI), and a cross section of representatives from civil society, corporate entities, accounting firms and organisations, regulators, non-government organisations and standard-setters.

Since its initial formation, the IIRC has rapidly pursued its objectives, including:

  • Publishing a Discussion Paper Towards Integrated Reporting in September 2011
  • Formation of a IIRC Pilot Programme in October 2011 for organisations to pilot <IR>
  • Releasing a prototype <IR> Framework in November 2012
  • Publishing a Consultation Draft of the <IR> Framework in April 2013, together with number of background papers on key <IR> concepts that led into the development of the Consultation Draft.

The release of the finalised <IR> Framework follows additional consultation and consideration by the IIRC and its working groups of feedback obtained through these due process steps.


Overview of <IR>

Integrated reporting (stylised by the IIRC as '<IR>') is seen by the IIRC as the basis for a fundamental change in the way in which organisations are managed and report to stakeholders. A stated aim of <IR> is to support integrated thinking and decision-making. Integrated thinking is described in the <IR> Framework as "the active consideration by an organization of the relationships between its various operating and functional units and the capitals that the organization uses or affects".

The <IR> Framework expresses the IIRC's vision in the following way:

The IIRC's long term vision is a world in which integrated thinking is embedded within mainstream business practice in the public and private sectors, facilitated by Integrated Reporting (<IR>) as the corporate reporting norm. The cycle of integrated thinking and reporting, resulting in efficient and productive capital allocation, will act as a force for financial stability and sustainability.

There are three fundamental concepts underpinning <IR>:

  1. Value creation for the organisation and for others.  An organisation’s activities, its interactions and relationships, its outputs and the outcomes for the various capitals it uses and affects influence its ability to continue to draw on these capitals in a continuous cycle. 
  2. The capitals.  The capitals are the resources and the relationships used and affected by the organisation, which are identified in the <IR> Framework as financial, manufactured, intellectual, human, social and relationship, and natural capital.  However, these categories of capital are not required to be adopted in preparing an entity’s integrated report , and an integrated report may not cover all capitals – the focus is on capitals that are relevant to the entity
  3. The value creation process.  At the core of the value creation process is an entity’s business model, which draws on various capitals and inputs, and by using the entity’s business activities, creates outputs (products, services, by-products, waste) and outcomes (internal and external consequences for the capitals).

The <IR> Framework sets out the purpose of an integrated report as follows:

The primary purpose of an integrated report is to explain to providers of financial capital how an organization creates value over time. An integrated report benefits all stakeholders interested in an organization’s ability to create value over time, including employees, customers, suppliers, business partners, local communities, legislators, regulators, and policy-makers.

The ‘building blocks’ of an integrated report are:

  • Guiding principles – these underpin the preparation of an integrated report, informing the content of the report and how information is presented
  • Content elements – the key categories of information required to be included in an integrated report under the Framework, presented as a series of questions rather than a prescriptive list of disclosures.

The table below summarises each of these building blocks, together with the other key requirements for an integrated report:


High-level summary of the requirements for an integrated report


  • An integrated report should be a designated, identifiable communication
  • A communication claiming to be an integrated report and referencing the Framework should apply all the key requirements (identified using bold italic type), unless the unavailability of reliable data, specific legal prohibitions or competitive harm results in an inability to disclose information that is material (in the case of unavailability of reliable data or specific legal prohibitions, other information is provided)
  • The integrated report should include a statement from those charged with governance that meets particular requirements (e.g., acknowledgement of responsibility, opinion on whether the integrated report is presented in accordance with the Framework) – and if one is not included, disclosures about their role and steps taken to include a statement in future reports (a statement should be included no later than an entity’s third integrated report referencing the Framework)


  • Strategic focus and future orientation – insight into the organisation's strategy
  • Connectivity of information – showing a holistic picture of the combination, inter-relatedness and dependencies between the factors that affect the organisation's ability to create value over time
  • Stakeholder relationships – insight into the nature and quality of the organisation's relationships with its key stakeholders
  • Materiality – disclosing information about matters that substantively affect the organisation's ability to create value over the short, medium and long term
  • Conciseness – sufficient context to understand the organisation's strategy, governance and prospects without being burdened by less relevant information
  • Reliability and completeness – including all material matters, both positive and negative, in a balanced way and without material error
  • Consistency and comparability – ensuring consistency over time and enabling comparisons with other organisations to the extent material to the organisation's own ability to create value.


  • Organisational overview and external environment – What does the organisation do and what are the circumstances under which it operates?
  • Governance – How does an organisation’s governance structure support its ability to create value in the short, medium and long term?
  • Business model – What is the organisation’s business model?
  • Risks and opportunities – What are the specific risk and opportunities that affect the organisation’s ability to create value over the short, medium and long term, and how is the organisation dealing with them?
  • Strategy and resource allocation – Where does the organisation want to go and how does it intend to get there?
  • Performance – To what extent has the organisation achieved its strategic objectives for the period and what are its outcomes in terms of effects on the capitals?
  • Outlook – What challenges and uncertainties is the organisation likely to encounter in pursuing its strategy, and what are the potential implications for its business model and future performance?
  • Basis of preparation and presentation – How does the organisation determine what matters to include in the integrated report and how are such matters quantified or evaluated?


Changes made in finalising the Framework

The <IR> Framework incorporates the IIRC’s responses to feedback received in the consultation process, and input from participants in the IIRC’s Pilot Programme.  Some of the changes made in finalising the Framework include:

  • Better explaining the relationship between an integrated report and other reports and communications, such as financial reports and sustainability reports – the Framework notes an integrated report is “intended to be more than a summary of information in other communications… rather, it makes explicit the connectivity of information to communicate how value is created over time”
  • Changing the primary objective of an integrated report from a focus on the audience (providers of financial capital) to a purpose (explaining how an organisation creates value over time), so as to reflect the broader constituent interest in <IR>
  • Further elucidating the concept of ‘value’ and ‘value creation’, explaining that value arises from increases, decreases or transformations of capitals, and has two linked aspects: value for the organisation (which enables financial returns to providers of financial capital) and for others (stakeholders and society at large).  The Framework also explains that value and value creation need not be quantified in an integrated report
  • Clarifying terminology used, including the relationship between ‘integrated thinking’ and <IR>
  • Including an additional Content Element in the <IR> Framework on ‘Basis of preparation and presentation’, requiring an entity to describe its basis of preparation and presentation of the integrated report, including the significant frameworks and methods used to quantity or evaluate material matters.  Greater emphasis has also been given to using existing measurement guidance, including accounting standards, to ensure consistency in measurements across various reports and communications
  • Addressing concerns around the involvement of those charged with governance in an integrated report – whilst the requirement for a statement acknowledging responsibility for the integrated report has been retained, a two-report grace period has been included to allow organisations  to take responsibility for an integrated report, at least on a comply or explain basis.
The question of whether those charged with governance should provide a statement acknowledging their responsibility for the integrated report was the single most contentious issue arising from the IIRC’s consultation process with only just over 50% of respondents in support. Investor representatives in general felt such a statement is necessary to add credibility to the integrated report and prevent it being seen as a marketing document. The principal argument against such a statement came from respondents in countries like Japan where there is currently no requirement for such a statement in relation to financial statements and there is no evidence that this has caused investors to look less favourably on Japanese stocks. By holding integrating reporting to a higher standard, the IIRC risks discouraging take up in such markets. Time will tell whether this proves to be the case.

The <IR> Framework is accompanied by a Basis for Conclusions and another document identifying at a more detailed level how various issues raised by respondents to the April 2013 Consultation Draft were treated, as well as mapping significant changes in structure and movements of text from the Consultation Draft to the <IR> Framework.


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