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The momentum and support for integrated reporting should increase rapidly when organisations and report preparers view it as an effort to consolidate various disjointed reports rather than as an additional report in the form of an “integrated report”. The primary beneficiaries of the proposal, investors, are also likely to want to read less and receive concise, relevant and useful disclosures. To achieve conciseness, relevance and usefulness, the integrated reporting framework will need to address explicitly the determination of materiality, particularly in relation to investors and wider stakeholders. Otherwise, the good intention of integrated reporting could be overcome by organisations disclosing too much and, therefore, creating clutter.
The usefulness of integrated reporting ultimately rests on how well environmental, social and governance (or sustainability) factors have been embedded into organisations so that organisations take a longer-term sustainable perspective. The PAIB Committee believes that an integrated reporting framework should include the various necessary internal steps that organisations need to pursue to achieve high-quality integrated reporting. The PAIB Committee’s Sustainability Framework encourages integrated thinking at various levels, and that needs to occur so that integrated governance, strategy, management, processes and systems can support effective integrated reporting.
The PAIB Committee also suggests that how-to guidance for preparers will be important to help them to develop or redesign their internal processes to ensure readiness. This needs to be done before integrated reporting becomes mandatory.
To provide clarity, the final framework and any supplementary guidance should distinguish between the integrated reporting process and an integrated report.