About the sample: integrated reports reviewed

There are a number of very well done assessments of integrated reporting, but the best ones look at reporting from the perspective of a single country.  I wanted to understand the global picture.

Reports reviewed included companies from Europe (10), North America (3), Africa (2) and Australia (2), South America (1) and Asia (1). GRI’s data has continually shown that sustainability reporting is the most widespread and most mature in Europe, so it makes sense that this is a region with significant penetration of integrated reporting.

Four of the ten European reports reviewed are from Dutch multinationals.  (Technically Unilever is Anglo-Dutch.) This is not because I am based in Amsterdam, and am familiar with many of these companies.  Dutch companies have been extremely enthusiastic participants in the IIRC pilot program, with higher participation rates than in many other European markets.

In South Africa, integrated reporting is a listing requirement for those companies listed on the Johannesburg Stock Exchange, so there are an unusual number of integrated reporters based in the country.  I chose to look at Gold Field’s report because they are one of only a handful of South African companies participating in the IIRC pilot program.  I chose to look at Standard Chartered, even though it is the only non-IIRC pilot company in the sample, because it is a well-regarded report that had just been released.  Many South African companies report based on a fiscal year ending June 30, and so some of the best and most interesting South African reports will not come out until later in the year.

Because I was interested in reports that are broadly relevant, I sought out the reports of companies that operate globally, or in many different markets.  I also focused on the reports of publicly held companies.

In terms of sector diversity, the sample includes 5 financial services companies, 3 companies in the extractives industry and 3 chemical companies.  There are also 2 software companies and 2 consumer product companies.

The table below includes an overview of all 19 reports reviewed, with links to each report.

Company
Country
Report
Format
Reporting highlights/
lowlights
Aegon Netherlands 77 page integrated annual review
  • Most prominent use of materiality matrix.
  • Annual review is very process oriented; performance information is at the back.
  • 2013 data is often presented without prior year comparisons (except in statements at the back).
  • Shared value is a consistent theme. throughout.  Most notable in section titled ‘Sharing profits.’
Akzo Nobel Netherlands 218 page integrated report
  • Best reporting on value creation using multiple types of capital.
  • Extremely clear strategy and risk reporting.
  • Financial and non-financial statements with audit and assurance reports.
BASF Germany
  • Thoughtful report with robust non-financial data.
  • Report is concise but information is connected.
  • Focus on shared value creation, particularly in segment reporting.
  • Possible area for improvement:  non-financial statements.
Gold Fields South Africa 160 page integrated annual review with supplemen-tary financial report
  • Tremendous focus on value-creation.
  • Business model is an input output model for env and financial capital, also includes people.
  • Company restructured in 2013 and the strategy and rationale are very clearly explained.
  • Failures, including two fatalities and several environmental incidents are explained in full.
  • Governance section is about overall management systems, with the board being only one of many important systems.
HSBC UK Nearly 600 page annual report
  • Focus on customer satisfaction in remuneration creates linkages to non-financial performance metrics.
  • Value creation model looks like a diagram of a balance sheet.
  • Chief executive discusses only financial performance.
  • Most of the report devoted to detailed financial statements.
KPMG International Switzerland International annual review; appears to be a lengthy corporate brochure.
  • Level of integration is minimal.  People and environmental figures are reported along with minimal financial information, but very little is disclosed.
  • No discussion of materiality, almost none about value creation.
  • Report PDF is available but hard to find.
Marks and Spencer UK Integrated annual report is 116 pages
  • Good implementation of key elements of IIRC’s integrated reporting framework.
  • Goal is to become world’s most sustainable retailer, but KPIs, mostly related to proprietary ‘Plan A’, are not comparable to peer companies.
  • Helpful index.
Microsoft US 91 pagesAdditional financial and citizenship reporting
  • Strategic shifts discussed in CEO letter.
  • Business description includes a paragraph about employees and a paragraph about customers.
  • Primarily a conventional financial report.
National Australia Bank Australia 36 page annual review + 187 page annual report
  • Very concise.
  • Good explanation of approach to reporting.
  • Chairman’s letter links financial performance to the social and env operating environment.
  • Strategy is stakeholder driven, focuses on changing needs to customers.
  • Reports on at least seven indicators measuring customer satisfaction.
  • Good integrated overview of financial and non-financial performance figures.
  • Summary assurance statement in annual review, but no auditor’s report.
Petrobras Brazil 71 page ‘Review of the Administra-tion’
  • Content is good, but this is essentially a combined report.
  • Company still does robust separate financial and sustainability reports.
  • Administration review provides an integrated overview of performance.
  • Social and env issues get five pages in the integrated review.
  • Non-financial metrics are very material.
  • Good transparent reporting on fatalities and oil spills.
Philips Netherlands Everything is reported in a single volume, no supplemen-tary reporting.
  • Good non-financial statements and materiality discussion.
  • Non-financial KPIs are material.
  • % of executive compensation tied to non-financial performance is disclosed.
  • Audit committee responsibility for non-financial KPIs detailed.
  • Integrated strategy is based on need for innovation, meeting customer needs.
  • Forward-looking information is only financial.
  • Business model diagram could be stronger.
Potash Canada 172 page annual integrated report
  • The world’s largest fertilizer company with great expertise in chemicals, Potash positions itself as a champion for the human right to food.
  • Financial and non-financial performance highlights.  Interestingly, shareholder returns are reported as non-financial performance.
  • Customer survey scores used as a key non-financial KPI.
  • Business outlook is very integrated, although it is only for the coming year.
Prudential US Chairman’s letter + 10-K
  • While Chairman’s letter exhibits integrated thinking, reporting using a 10-K format does not allow for a full picture of value creation.
  • Report is basically a legal document.
Repsol Spain 261 page financial and management report
  • Detailed business model.
  • 20 page ‘value creation’ section is really a CSR/sustainability section.
  • Very good tax reporting, including breakdown of taxes by country.
SAP Germany 434 pages
  • Very long. Some repetition, difficult to navigate.
  • Follows both IIRC framework and G4.
  • No statement from executive or chair.
  • Includes an opportunity report.
  • Has non-financial statements, but non-financial metrics are not specific to core business.
  • Interesting interactive diagram tries to show relationships between financial and non-financial performance.  No numbers, just arrows showing links.  Promising area for development, shows integrated thinking.
Standard Chartered South Africa 300+ page annual report
  • Great example of integrated strategy.
  • Very good non-financial KPIs, including use of customer survey data.
  • Materiality is very clear.
  • Does not use value creation language and business model is really an org chart.
  • No non-financial statements.
Stockland Australia 57 pages
  • Very concise.
  • Business model diagram explains value-adding activities quite well.
  • Chair letter mentions sustainability achievements but does not tie to strategy.
  • Very material non-financial KPIs
  • Community impact is included, but is toward the back.
Takeda Japan 129 page annual report with large CSR section
  • Focus on measuring and managing R&D productivity.
  • Material issues for report are identified through a global consultation process that is reported using a world map.
  • Value creation defined as for the company.
  • Good discussion of human rights issues in clinical trials, but this is in CSR section, not R&D section.
Unilever Netherlands 147 page annual report and accounts.  Separate statutory filing (20-F) and sustainability report.
  • Report is primarily comprised of governance information and consolidated financial statements.
  • Business model in report is the same used in investor presentations.
  • Extensive remuneration reporting includes no explicit links to corporate goal of creating sustainable living.
  • Remuneration is linked to financial performance indicators.
  • Report has very good non-financial indicators that are specific to key Unilever business segments.
  • Good risk reporting.  Includes reliance on partners, certification bodies as a risk relating to achievement of sustainability objectives.
  • Audit committee terms of reference do not include oversight of non-financial data.
  • Helpful index.

 

 

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