New report from the International Integrated Reporting Council (IIRC): ‘Integrated Thinking & Strategy: State of play report’
23 Jan, 2020
The International Integrated Reporting Council’s (IIRC's) Integrated Thinking & Strategy Group has published a new report setting out how best to adopt integrated thinking and enhance strategy to achieve long-term value creation.
The group is made up of over 50 organisations globally that have convened to develop a model and share expert insights.
The model that they have developed is defined as follows: ‘Integrated thinking is a multi-capital management approach that enables organizations to deliver their purpose to the benefit of their key stakeholders overtime. It is about creating and preserving value and enabling better decision-making based on interconnected, multi-capital information.’
The group’s underlying thinking comes from the fundamental concepts and other aspects of the International <IR> Framework and therefore aims to make an explicit link between reporting and enhanced decision-making within the organisation. The report therefore considers, for example:
- How taking a broader and more integrated view of the resources (‘capitals’) that organisations rely on to create value can be used in decision-making.
- Better understanding of factors in value creation and how these are realised over time – especially in the longer term.
- Better alignment of the company with its role in relation to society and the environment (which the report calls ‘system value’).
- An enhanced ability to understand and make decisions on optimising value creation, taking into account longer-term performance, the needs of stakeholders, and the impacts on the capitals that are used in the value creation process.
In his foreword to the report, IIRC Chair Emeritus Professor Judge Mervyn King writes:
A collaborative management culture, a multicapital mindset and outcome-based corporate governance – these are the building blocks of integrated thinking, the output of which is an integrated report. Above all, integrated thinking is a unifying concept and a strategic tool that helps management to bring order to the manifestly complex environment in which businesses must operate in the 21st century.
The report’s authors invite feedback on the initial ideas set out in the report and promise a further paper at the end of 2020. Our report A Directors Guide to Integrated Reporting is available here.
