Contextual reporting connects the Integrated Report to company data
It used to be that the only information available on a company was the information made available by the company. Typically, this information was delivered in the form of an annual report. Although annual reports got larger and weightier, today they are no longer the only source of information about a company, according to Fronesys partner Jyoti Banerjee.
Instead, we get our information from a variety of sources. Data terminals provide information on market prices, news about a company and its competitors, comparison metrics between companies from the same industry or region, and messages from a company about its own strategies and actions. More online research will uncover information about environmental performance and social impacts, some of which might not be tracked by the company itself. The list goes on and on.
While the existing information about a business is multiplying, the challenge for annual report writers is to make the information they provide both accessible and relevant. In fact, one of the principles captured in the International <IR> Framework is to be concise. Is it possible for companies to be more transparent about their operations and meet growing disclosure requirements while providing smaller reports than before?
The problem of the two-way traverse
The integrated report is the home of information about company strategy and the business model, whilst ensuring that all the information that is included is material to the organization’s value creation story. But it also needs to have connectivity to further information which gives greater insight on specific issues. When you consider the extra-company sources of information also made available then we can see a picture with an emergent problem. And the problem is this: the information and data sets that supplement that which is found in an integrated report lacks context about a company’s strategy, or business model, or risks, or opportunities – the sort of information contained in the integrated report.
When we read an integrated report, we should be able to find the underlying data that gives us insight on a company’s strategy and its business model. Conversely, when we delve into large sets of corporate data, we should be able to understand how material that information is to the risks and opportunities facing the company. This two-way traverse between an integrated report and other pieces of corporate data is what I have named ‘contextual reporting’, a concept adopted by Bob Eccles and Mike Krzus in their new book, The Integrated Reporting Movement.
To get contextual reporting to work, we need to see some key ideas to develop. First, we need technology in place to enable greater connectivity between the information in digital reporting with other corporate information. Secondly, we need better methods to be able to gain analytical insights from the vast troves of structured and unstructured data that is increasingly available to the information consumer. Finally, we need standards in place to govern the publication of electronic reporting information. If we can see this happen, it will be more likely that the integrated report will become a rich contextual map that can guide internal and external users through the mazy terrain of corporate information.
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