Whitepaper integrated reporting in the Cloud

W H I TE PA PE R

Integrated Reporting:
A Means for Corporations to Become
Socially Responsible and Accountable.
By Liv Apneseth Watson, Director of Research & Development, AccountAbility and Executive Advisor, WebFilings

The recent BP oil spill that leaked more than 14 million barrels “To make our economy sustainable we have
of oil into the Gulf of Mexico made it readily apparent that our
existing system for corporate reporting has failed shareholders to relearn everything we have learnt from
and stakeholders alike in evaluating a company’s risk. Traditional
the past. That means making more from less
reporting of company performance, which primarily consists
of balance sheets, income statements, and the accompanying and ensuring that governance, strategy and
directors’ report, is simply not measuring up. Some go so far
sustainability are inseparable. Integrated
as to say that the overconsumption of finite natural resources,
the very real risk of catastrophic corporate accidents, and Reporting builds on the practice of Financial
the implications of climate change are possibly the greatest
challenges facing the world.
Reporting, and Environmental, Social and

In a “post-BP crisis” world, companies find themselves in the
Governance — or ESG — Reporting (also
midst of rapid global transformation with increased demand to known as Corporate Social Responsibility —
perform not only financially, but to also become good corporate
global citizens — remaining accountable to their stakeholders. CSR), and equips companies to strategically
The concept of companies looking beyond profitability alone, manage their operations, brand and
engaging and focusing on their role in society, and reporting
on this activity to stakeholders is generally termed Corporate reputation to stakeholders and be better
Social Responsibility (CSR) reporting. Weaving the CSR report
prepared to manage any risk that may
together with the traditional financial performance report into
one document is referred to as “integrated reporting”. That is, compromise the long-term sustainability of
integrated reporting refers to the combined representation of
a company’s performance in terms of both their financial and
the business.” *

non-financial results. Today, many smart companies are now
providing integrated reports as a means to attract new business — Prof. Mervyn King, Chairman of the Global
opportunities, safeguard their reputation, maximize competitive Reporting Initiative, (GRI)
advantages and mitigate operational risks.
Source: International Integrated Reporting Committee (IIRC)

According to Klaus Schwab, the Executive Chair of the World as well as provide operational guidance on sustainability
Economic Forum, “corporate global citizenship” means that assurance and stakeholder engagement. The AA1000
companies must not only be engaged with stakeholders but standards are designed for the amalgamated thinking
must be stakeholders themselves alongside governments and required by the low carbon and green economy, and they
civil society. His reasoning is that companies depend on global support integrated reporting and assurance.
development, which in turn relies on stability and increased
• The Global Reporting Initiative (GRI) — Provides
prosperity; it is in their direct best interest to help improve
a framework for companies and organizations on
the state of the world. This thinking among global leaders
sustainability disclosure. Its vision is to realize a day
today is increasingly driving companies to produce Corporate
that disclosure on economic, environmental, and social
Social Responsibility reports — mostly on an annual voluntary
performance becomes as commonplace and comparable
basis. Over the last few years, a select number of companies
as financial reporting and equally as important to
has started to integrate CSR reporting into their annual
organizational success. The GRI Consortium is a network-
reports. Integrated Reporting is part of the shift in business
based organization that has pioneered the development
responsibility driving companies to become corporate global
of the world’s most widely used sustainability reporting
citizens. Integrated reporting therefore provides greater context
framework and is committed to this framework’s
for performance data, clarifies how sustainability fits into a
continuous improvement and application. More than
company’s DNA, and helps embed sustainability into company
1,000 organizations globally declare that they use the GRI
decision making processes.
Guidelines for their sustainability reporting, including
There is increasing demand from international investors, 3M, Cisco Systems, Citigroup, Dell, Eli Lilly, Intel, General
accounting bodies, governments and other stakeholders for Electric, Procter & Gamble, and United Technologies.
integrated reporting. The best illustration of this trend is the
• The Prince’s Accounting for Sustainability Project (A4S)
growing number of organizations that make CSR reporting their
— His Royal Highness the Prince of Wales himself leads
actual business. Some of those organizations include:
this important project. Accounting for Sustainability is a
• Principles for Responsible Investment (PRI) — Represent project to bring organizations and other key stakeholders
signatories to the United Nations’ Principles for Responsible together for the purpose of developing practical tools
Investment Initiative (PRI). Launched in 2005, the PRI today that enable environmental and social performance to be
accounts for more than 560 global investment institutions better connected with strategy and financial performance
with more than $18 trillion in assets under management. and, thereby, embedded into day-to-day operations and
PRI signatories pledge to integrate consideration of CSR decision making.
issues into investment decisions and ownership practices.
They recognize that social and environmental issues can be
material to the financial outlook of a company and therefore
to shareholder value.
“The case for globally consistent financial
• Ceres — An Advocacy Non-Government Organization
(NGO), Ceres is on the green bandwagon and works with reporting standards is well understood and
investors worldwide to improve corporate and public policies
on climate change and other environmental, social, and
accepted. It is appropriate to apply the
corporate governance issues. As part of this mission, Ceres same global approach to other aspects
launched and coordinates the Investor Network on Climate
Risk (INCR), an alliance of more than 90 institutional investors of corporate reporting. This (International
and financial firms that collectively manages nearly $10 trillion Integrated Reporting Committee — IIRC)
in assets to influence companies to issue CSR reports.
initiative represents an important step on
• AccountAbility — This organization has developed the
AA1000 series of principles-based standards that are that journey”. *

designed to help organizations become more accountable,
responsible and sustainable. They address issues affecting — Sir David Tweedie, Chairman of the International
governance, business models and organizational strategy Accounting Standards Board

• International Integrated Reporting Committee “I believe we will look back on the creation
(IIRC) — On August 2, 2010, The Prince’s Accounting for
Sustainability Project and the Global Reporting Initiative of this Committee (International Integrated
announced the formation of the International Integrated
Reporting Committee — IIRC) as a turning
Reporting Committee. The Committee’s bold vision is to
bring forward a comparable framework for CSR reporting. point in the development of corporate
They plan to present this global initiative to the G-20
Meeting in Paris in 2011.
reporting.” *

The IIRC has been created to respond to the need for a — Jane Diplock, Chairman of the New Zealand
concise, clear, comprehensive and comparable global Securities Commission and Executive Committee
Integrated reporting framework that is structured around
of the International Organization of Securities
an organization’s strategic objectives, its governance and
business model, and a framework that integrates both Commissions (IOSCO)
material financial and non-financial information.

the same way that financial reporting is a requirement for all
The objectives for an integrated reporting companies. At the 2010 UN Sustainable Stock Exchanges event
framework are to: in China, delegates focused on how stock exchanges and key

• Support the information needs of long-term investors stakeholders can improve CSR disclosure and performance

by showing the broader and longer-term consequences of listed companies, either through voluntary exchange-led

of decision making initiatives or regulation. The conclusion of the meeting was that
there is a strong business case for stock exchanges to strengthen
• Reflect the interconnections between environmental, CSR disclosure requirements. Starting on June 1, 2010, all 450
social, governance and financial factors in decisions that companies listed on the Johannesburg Stock Exchange are
affect long-term performance and condition, making required to publish an “integrated report” or explain why they
clear the link between sustainability and economic value are not doing so. Market evidence already exists that indicates
the value that investors, analysts and other stakeholders place
• Provide the necessary framework for environmental and
on important non-financial information (e.g., environmental,
social factors to be taken into account systematically in
social and governance or “ESG” data) which gives a more
reporting and decision making
comprehensive view of an organization’s performance. Recently,
• Rebalance performance metrics away from an undue more than 250 of the world’s largest institutional investors,
emphasis on short-term financial performance representing more than $15 trillion in combined assets under
management, demonstrated their commitment through the PRI
• Bring reporting closer to the information used to invest in companies that follow good sustainability and ESG
by management to run the business on a practices. As we can see, these are several of the many reasons
day-to-day basis for companies to “go green” and produce integrated reports
with the ultimate goal of becoming socially responsible and
Source: International Integrated Reporting Committee (IIRC) accountable to all stakeholders.

Integrated Reporting Meets Collaboration

All these organizations collectively have a huge influence on One of the questions facing companies who decide to take on
corporate behavior and policy makers. From Southwest Airlines integrated reporting is “who is and how are we going to do the
to Walmart, companies of all types and sizes are voluntarily additional work required to produce these reports?” Existing
communicating integrated information to stakeholders about external reporting teams for most major companies are already
their business’ impact on the environment. Stock exchanges stretched thin simply meeting their existing compliance reporting
are starting to incorporate mandatory CSR disclosure standards requirements. The CSR reporting process brings with it many new

stakeholders, contributors and reviewers. And, if simply getting Liv is also an accomplished writer and commentator, having
the reports done isn’t enough, report accuracy and process been a co-author and contributing author on several books
transparency has never held a higher premium than it does in a among them, XBRL for Dummies, and the Governance, Risk
“post-Enron” world. Ensuring that integrated reports are accurate and Compliance Handbook. Her articles and commentary have
is critical. been published in leading business journals, including the
Harvard Business Review and Strategic Finance. Prior to joining
Fortunately, there is now a solution available that can make
AccountAbility, Liv was an Executive Advisor to WebFilings, a
the addition of Integrated reporting “smooth sailing” for
privately-held US company that offers web-based software for
those charged with the task and streamline the existing
SEC financial reporting.
compliance reporting process for the reporting team as
well. Using WebFilings’ unique cloud-based software, entire
reporting teams can collaborate in real-time creating, editing About AccountAbility
and reviewing documents. The software’s intuitive and familiar
AccountAbility is a leading global organization providing
interface combines and integrates word processing and
innovative solutions to the most critical challenges in corporate
spreadsheet editing capabilities in a single application with
responsibility and sustainable development. Since 1995
process controls specifically designed for complex, finance-
AccountAbility has been helping corporations, non-profits
centric reports. It’s the perfect solution to help companies
and governments embed ethical, environmental, social, and
embrace integrated reporting.
governance accountability into their organizational DNA.
With WebFilings’ “one active document” architecture, multiple AccountAbility’s unique value proposition brings together
editors in multiple locations can collaborate on a single leading-edge research, widely-recognized standards and
document, eliminating all version control issues — and ensuring strategic advisory services to deliver practical solutions for their
that all team members are always working on the current clients. For more information about AccountAbility, please
document every time. Another key feature is the sophisticated visit www.accountability.org.
“linking” tools that enable source values and text to be changed
once and automatically trigger updates to all impacted data About WebFilings
and text throughout the document — helping to ensure the
accuracy of report data. Add to this the software’s integrated WebFilings is a privately-held Los Altos, California and Ames,
EDGAR HTML conversion and intuitive XBRL search, compare Iowa-based company that offers the first and only end-to-end
and tagging toolset, and you’ve got a one-stop shop for your solution for external financial reporting. The company develops
Integrated reporting needs. and markets a fully-integrated, cloud-based solution dedicated
to meeting SEC reporting requirements. With WebFilings,
The trend is clear. The momentum is evident. Progressive reporting teams collaborate in real-time on their financial reports
companies need to take a serious look at adding integrated from accounting close through SEC acceptance — including
reporting to their corporate reporting process. integrated EDGAR HTML conversion and XBRL mapping and
tagging. As a result, WebFilings reduces the time, risk, and costs
About the Author associated with the entire external reporting process. For more
information, please visit www.webfilings.com.
Liv Watson, Director and Global Head of Research and
Development at AccountAbility, is a highly-regarded expert * “The Prince’s Accounting for Sustainability Project.” The Prince of Wales — The
Prince’s Accounting for Sustainability Project. August 1, 2010. Web. February 21, 2011
in corporate governance, financial reporting, and XBRL. She is
one of the original developers of the XBRL standard, as well as a
founder of the XBRL International consortium. Liv has also served
in several leadership positions related to the XBRL standard,
including as a member of the International Accounting Standards
Committee Foundation (IASCF) Advisory Committee and the
XBRL International Steering Committee.

e: info@webfilings.com w: webfilings.com p: 888-275-3125 © 2011 WebFilings LLC | wp0311a

Whitepaper integrated reporting in the Cloud

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