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Integrated Reporting Framework PDF

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koketso rahab
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INTEGRATED REPORTING INTERNATIONAL FRAMEWORK JANUARY 2021 PREFACE nog ‘As of August 2022, the IFRS Foundation assumed responsibilty fr the Integrated Reporting Framework. The IFRS Foundation’s Intemational Accounting Standards Board (ASB) and ‘the International Sustainability Standards Board ((SSB) will work together to agree on how tobuild on and integrate the integrated Reporting Framework into their standard setting projects and requirements. The IFRS Foundation and Chairs of tie IASB and ISSB actively encourage the continued adoption of the Integrated Reporting Framework by preparers. Historical information about the IIRC ‘The International Integrated Reporting Councll (IRC) was a global coalition of regulators, Investors, companies, standard setters, the accounting profession, academia and NGOs. Together, this coalition shared the view that communication about value creation, preservation or erosion is the next step in the evolution of corporate reporting. The IIRC developed the International Framework to meet this need and provide a foundation forthe future. ‘The Intemational Framework Uanuary Sdn te teneeweniresesonan 2021) supersedes the Intemational Framewark (December 2013) Tis latest version applies to reporting periods commencing 1 January 2022, Earlier application is welcome. Other resources Formoreonmtepates eprting and how the Intgated Reporting Framenorkcan te apple, st Teli’ Fequety Asked 20d ‘samples Database and + The practical guidance, anon negated. ‘epoca: A eo ting sted Integrate thinking ado integrated decision making and acon that corsderthe reton, resention or rosin ofvalue overthe short ‘medium andengtern.tooktt support Integrated thong practice hasbeen developed ane ordered on tree eve = pipes assessment and operator the princes. For ‘moron integrate thinking, vt + iterated Thinking Pines: Business The Principles ave structured to meet the nee of company boards and management and are rooted In the Integrates Reporting Framoverk. PREFACE nog About integrated reporting The IIRC's long-term vision is a world in which integrated thinking is embedded within mainstream business practice in the public and private sectors, facilitated by integrated reporting as the corporate reporting norm. The cycle of integrated reporting and thinking, resulting in efficient and productive capital allocation, will act as a force for financial stability and sustainable development. Integrated reporting aims Improve the quality of information avaiable to providers of financial capital to enable a more efficient and productive allocation of capital Promote a more cohesive and efficent. approach te corporate reporting tat craws on Aiferent reporting strands and communicates the ull ange of factors that mately affect the ability ofan organization to creat value overtime Enhance accountability and stewardship forthe broad base of capitals (inancial, ‘manufacture, intelectual, human, social and relationship, and natural) and promote understanding oftheir intetdependencies ‘Support integrated thinking, decision-making and actions tha focus on the creation of value ‘overthe srt, medium and longterm. Integrated reportingis consistent with numerous {evelopment in corporate reporting taking place Within atonal jurisdictions across the wold Itisintended that the Framewark, which provides principles ‘based guidance for companies ‘and other organizations wishing prepare an integrated repor, will accelerate these individual Inivatives and provide impetus to greater innovation in corporate reporting bal to unlock the benefits ofintegrated reporting, including the Increased efficiency ofthe reporting process itsel itis anticipated that, overtime integrated reporting wil become the corporate reporting norm, No anger wll an organization preduce numerous, disconnected and static ‘communications. Ti willbe delivered by the process of integrated thinking andthe application of principles suchas connect of informatio, PREFACE nog Integrated reporting par ofan evoiving corporate reporting system. This system is enabled by comprehensive frameworks and standards, addressing measurement and disclosure in relation to al capitals, appropriate reguation and effective assurance Integrated reporting is consistent with developments in financial and other poring, but an integrated report also iter rom atherreports and communications ina number of ways. particular, tocuses on the ability ofan organization to creat value inthe short, medium ang long term, ang in so dong it: + Has.a combined emphasis on conciseness, strategic focus an future orientation, the connectiity af information and the capitals and teirinterdependencies ‘+ Emphasizes the importance of integrated ‘thinking within the organization, Integrated thinking the active consideration by an organization of the relationships between its various operating and funcional units and the capitals thal the organization uses or affects. Integrated thinking leads to integrated decision. ‘making and actions that consider te creation, preservation or erosion of value over the shor ‘megiur and ong erm, Integrated thinking takes into account the connectivity and interdependencies between the range of factors that affect an organization’ abilty te reate value overtime, ncuding + The capitals thatthe organization uses or atflects, and the citcalintedependences, inclucing trade-offs, between them + The capacity ofthe organization to respond to key stakeholders legitimate needs and interests + How te organization airs business ‘model and strategy to respond tots extemal fenvonment and the risas and opportunites ittaces + The organization's activites, performance (financial and other) ané outcomesin terms. ofthe capitals - past, present and future The more thatintegrated thinking is embedded into an organization's activities, the more naturally will, ‘the connectivity of information flow into management reporting, analysis and decision-making, Italso leads to better integration of the information systems that support internal and external reporting and communication, including preparation of the integrated report. CONTENTS neo EXECUTIVE SUMMARY 5 PART 2 - THE INTEGRATED REPORT 24 PART 4 - INTRODUCTION 9 3. Guiding Principles 2 4. Utne tho Framenore 10 Macey 2 E coneseress 2 © Purpase ard user af aninteate report. 1 D heeeetewemen t FRetabltyand completeness 3 6 Consstencyandcomparbity 36 E_Farmotreprtard rlatnstip snchotier frat 2 Content ements 2 r ees the i Fanewee 8 ‘A Organizational overvew ard external ervronment 39 Respond aranwteatedrepar 1 ae a Fundamental conopte . © sess mode! a D_Riksand pporuntes a A Invedeton 15 _Sategy andresouc locaton. a B_Vaue creation forte organization an for aes. 6 FPedemance 45 © Thecaptals 8 6 ovtook 4% > Pocess th wicnvae seated, Hsasisofresraton ane presentation a preserved oreradea a 5. General Reporting Guldance ” GLOSSARY 53 APPENDIX ~ SUMMARY OF REQUIREMENTS. 55 Seaimgaeapaingo EXECUTIVE SUMMARY nog Integrated reporting promotes a more cohesive and efficient approach to corporate reporting and aims to improve the quality of information available to providers of financial capital to enable a more efficient and productive allocation of capital. The IRC’s long-term vision is a world in which integrated thinking is embedded within mainstream business practice in the public and private sectors, facilitated by integrated reporting as the corporate reporting norm. ‘An Integrated Report to create value aver time, including employees, customers, supplies, business partners, local communities, legislators, reguators and policy-makers. The Framework takes a principes-based approach. The intentisto stike an appropriate balance between flexibly and prescription that recognizes the wide variation in incvidval circumstances of ferent organizations wile enabling sufficient degree of comparabity across organizations to meet relevant information needs. It does not prescribe specific key Performance indcators, measurement methods, othe disclesure of ndvdual matters, but does Incuge a small number af requirements that are to be applies before an integrated report can be said tebe in accordance withthe Framework An integrated report benefits all stakeholders interested in an organization's abilty An integrated report maybe prepared in response to existing compliance requirements, and may be ethera standalone report orbe included as a istinguishabe, prominent and accessible part of antherreport or communication. should include ‘statement by those charged with governance accepting responsibilty forthe repor. EXECUTIVE SUMMARY nog Fundamental Concepts An integrated repor aims to provide insight about the resources and relationships used and affected byan organization ~ these are collectively referred ‘twas "tne capitals” nthe Framewark. also seeks to explain how the organization interacts ‘With the external envenment andthe capitals. to create, preserve o erode value verthe short, ‘medium and longterm. ‘The capitals are stocks of valve that are Increased, decreased or transformed through the actives and outputs of te organization, ‘They ae categorized inthe Framework as fnancal, manufactured, intellectual, human, social and relationship, and natural capital, athough organizations preparing an integrated report are not required to adopt tis categorzation orto structure ther report along the lines of ‘the capital. The ablity of an organization to create value for itself enables financial retums tothe providers of financial capital. Thisisinterelated with the value the organization creates forstakenolders and society at age through a wide range of activities, interactions and rlatonships. When these are ‘material to the organization’ ability to create value for itself they are included inte integrated report. The Framework ‘The purpose ofthe Framework sto establish Guiding Principles and Content Elements that gover the overall content ‘ofan integrated report, and to explain the fundamental concepts that underpin them, The Framework: ‘+ lentes information tobe included Inan integrated report forusein assessing the organizations ability to create value; it doesnot set benchmarks fr such things asthe ‘quality ofan organization's strategy ‘orthe level ofits performance Seaimgaeapaingo EXECUTIVE SUMMARY neo Guiding Principles ‘Seven Guiding Principles underpin nope ee a ee the preparation and presentation ‘Seay mecrpaavorsabaly _opanzaorsabitytceaevaue reese, “ sentat Seerarentenet nedrediagem edn ealegem ofan integrated report, informing sjutoisunutaetacconnocstat® “ (Crete nicer ndbecne the content ofthe report and HOW rangement informa eri eresarier roa cee sare than Ao at coupons. a tngtdnpr ‘aroun ond sprees borer De oto a iscontatec be otmunens oy oot + Canslsteneyand comparably Te inforraten nan ‘+ Stakoolder relatlonships An iterated report. Integrate report shold be preset (aon a basis ‘sald prose sight sats 2nd) away that oxganeat ans the “elodinghaw ard to whatexent the organeaton ‘nets mateal to tne ogaiai's own abit 0 ndersands, esto acauntand responds to er createvaieoertine. leptmateneeas aa eres Seaimgaeapaingo 7 EXECUTIVE SUMMARY nog Content Elements An integrated report includes eight Content Elements that are fundamentally linked to each other and are not mutually exclusive: \Wratcoes the oraizaton do ard whatare ie crcumstaneesuder nich toperates? (Gaver How coesihe oganzaion’sgoronance car supports billy reat valve he stot ‘necumanlonaiern? Bites, Wrist organs ‘snes race? Re appara Wt are especie rsks and opporuntesthatafect te ogaiato abity {ocetevaueoerthe sort mei an ngter, andtaw ste organzatondeargwith then? hese deste cnanaton wart go and ow ces tend ta grthen? + Pte 0 what exer asthe rgarzaon acieedts vate ojectve forthe perad ard what aes atcomes intersects on ‘hecaptals? + Qutook What cnatenges anc arcea te ire ‘nanzaon tela eneaunterinpursrgits sae, and what ae te pte! mpcabrs fois business ‘model an far peromance? + Biss ipreention How ces tnexganzaion {etermne wratmatterste inden the tegats reportanhawaresuc matters uated cevluted? Seaimgaeapaingo PART 1 INTRODUCTION PART 1 INTRODUCTION nog 1. Using the Framework 1A Integrated report defined 1 Anintegrated reports 2 concise ‘communication about how an organization's strategy, governance, performance and prospects inthe context af its external environment, lead tothe creation, preservation or erosion of value over the short, mecium ang long term, 4.2 _Anintegratedreportshould be prepared in accordance withthe Framework 1B 13 14 Objective of the Framework ‘The purpose o the Frameworks to establish Guiding Principles and Content Elements that govern the overall conte ‘ofan integrated report, and to explain the fundamental concepts that underpin them. The <> Frameworks writen primary Inthe context of private sectoy, for-profit companies of any size buttcan also be applied, adapted as necessary, by public sector and na-or-poft ganizations 15 16 The Framework identifies information {oe incuded in an integrated report foruse in assessing an organizat benchmarks forsuch things as the ual of an organization’ strateny orthe level ofits perfomance, Inthe Framework, reference tothe creation of value: + Includes instances when value is preserved and when itis eroded (see paragraph 2.14) + Relates to value cretion overtime (Ge. overthe short, medium and Tong term), PART 1 INTRODUCTION neo 1C Purpose and users of an integrated 1D Aprinciples-based approach {10 The Framewors does not report 1.9 Theo Famewarkisprncpes-base ron nomen notes uy 18 ‘The primary purpose ofan integrated reportisto explainto providers of ‘nancial capital how an organization creates, preserves or erodes value ‘overtime. therefore contains relevant Informatio, both financial and ater An integrated report benefits al stakeholders interested in an organization's ably to create value overtime, including employees, customers, supplies, business partners, local communities, legislators, regulators and policy-makers. The intent of te piciples-based approach isto strxe an appropriate balance between flexbilly and prescription that recognizes the wide variation in indvival ireumstances of ctferent organizations while enabinga sufcient degree of comparably across ergarizations to ‘meet relevant information needs, indicators, measurement methods oF the cisclosure of navidual matters Those responsible forthe preparation ‘and presentation ofthe integrated report ‘therefore need to exercise judgement, ven the specific cieumstances of the oxganzation, to determine: 1 + How they are dscosed, including the apalication of generally accepted measurement and disclosure methods as appropriate. When information in an integrated reports similar to, or based on therinformation publised by the organization, itis prepared onthe same basis as, ori easly econclable with, ‘that otherinformation. + Which matters are me PART1 INTRODUCTION neo ‘Quantitative and qualitative information integrated report i that other information LAL Quantitative indicators, including key performance indicators and monetized ‘mets, and the contextin which they are provided can be very helpful in exolaining how an organization creates, preserves or erodes value and how ituses and affects various capitals, Wile quantitative indicators are included in an integrated report whenever itis practicabe and elevantto do so + The ably ofthe organization to create value can best be reported on ‘ough a combination of quantitative ‘and qualitative information. (See also paragraph 3.8 regarding te connectivity of quantitative ane qualtative information) + Itisnotthe pupose ofan integrated reportto quantity of monetize the value ofthe organization ata point inne, the value creates, preserves or erodes ‘vera petod,orts uses ofr eects on allthe capitals. (See aso paragrah 5.5 forcommon characteris of suitable quantitative indicators) 1E Form of report and relationship with other information 4.12 An integrated report should be a designated, Identifiable communication. 41.13. Aninegratedreportisintended to be ‘more tran a summary of information nother communications (eg fancial statements, a sustainably report, analyst cals, orn a website) rather, ltmakes explicit the connectivity of information to communicate how values creates, preserved or eroded overtime, 4.14 An integrated report may be prepared Inresponse to existing compliance requitements. For example, an organza ‘may be required by local law to prepare ‘management commentary ot other report that provides context frits financial statements I that reports als preparein accordance with the Frameworitcan be considered an Integrated report I the repertisrequred to inctude specified information beyond at equied by the Framework, the report can stl be considered an 1s 116 {does not obscure the conse information require by the Framework, An integrated repor.may be either standalone report or be included as a stinguishabe, prominent and accessible par of another prt or communication. For example, itmay be included atthe frontofareportthat also includes the ‘organization's financial statements. ‘An integrated reporcan provide an entry point to more detailed information outside the designated communication, to which ftmay be linked. The form of inkwill depend on the form of the integrated report (e.g fora paper-based report inks may involve attaching cother information as an appendix; for ‘a web-based por, tmay involve ypertinking to that other information. PART 1 INTRODUCTION neo AF Applcatonetthe Famenerk 18 niece ef evnntabiyet ——_cultase 1 Anycamentatn lige racial 1 reine Faneno tat ‘an integrated report and referencing Brobibitions, an Integrated report should: isnot in bold italic type provides seirtdrpr rf vette ratifie oman =n uae Se tee thats Beni fruronea tomers inoav tale pone «Bolen tebe srr el Te ‘ein Soret eer ohm Imernson arpa + mtn cf nt t, pris a non nasty tenes So ttn oath Ste mat maton belnemattnt egetd te + Dre of mato trmaton tome erage ‘would cause significant competitive hharm. (See paragraph PART 1 INTRODUCTION nog 1G _ Responsibility for an integrated report 4.20 An integrated report should Include a statement from those charged. with governance that includes: + Anacknowledgement oftheir responsiblity to ensure the integrity ofthe integrated report + Their opinion or conclusion about ‘whether, or the extent to which, the Integrated reportis presented in ‘accordance with the Framework. ‘Where legal or regulatory requirements preclude a statement of responsibilty from those charged with govemance, this shouldbe clearly stated. 1.21 Theextentto which the integrated report Ispresented in accordance wit the Frameworks evaluated against the requirements identified in bold tall type and summarized inthe Appendix 122 Where an organization iin the process of adopting tie Framework, tis appropriate to identity which requirements have not been appliec and the reasons why. in appring paragragh 1.20, the ‘iganization wi take into account its ‘oun governance structure, which function ofits junction, cultural and legal context size and ownership characteristics Fr example, some juriscetion require a singetier board hile others require the separation of supervisory and executve/management functions within atwotierboard. Inthe case oftwotir boards, the statement of responsbiltyis ordinarily provided by the body respansibl for overseeing the strategic alrection af the organization. tisimportantto consider te intent of paragraph 1.20, which isto promote the Integrity of te integrated report through the commitment af the body responsible for overseeing the strategic rection ofthe coiganizaton. 41.23. Incases where legal or regulatory requirements preclude a statement of responsibly from those charged with governance, an explanation of measures taken to ensure the integrity ofthe integrated report can provide important insigtto users, Accorcingy, disclosures _aboutthe process followed to prepare and presente integrated report are encouraged. Such disclosures can include: + Related systems, procedures and contol, including key responsibities and activites + The role ofthase charged with ‘governance, inclusing relevant commitees. 41.24 Process cisclosurs are encouraged as a supplementtoa statement of responsibilty ‘tom those charged with governance as this information indicates measures taken to censure the integrity ofthe integrated report PART 1 INTRODUCTION nog 2. Fundamental Concepts 24. The Fundamental Concepts underpin and reinforce the requirements and ‘uidance inthe Framework. Introduction 23 An incegrated report explains how an cotganzation creates, preserves or erodes value overtime Value isnot created, preserved or eroded by or within an organization alone is + Influenced bythe esteral environment * Created tough relatonships with stakeholders ‘+ Dependent on various resources. ‘An integrated repor therefore aims to provide insight about + The extemal environment that atects an organization + The resources and the relationships used and affected by the orgarization, hich ae refered to collectively in the Framework as the capitals and are categorized in Section 2C as nancial manufactured intoletual, human, social and relationship, ang natural + How the organization intoracts withthe external environment and the capitals to create, preserve or erode value over the short, medium and longterm. PART 1 INTRODUCTION neo 2B Value creation, preservation or 26 The abit ofan organization to create value This includes takingaccount ofthe extent erosion forthe organization and foritsetis linked tothe value itereates for to which effects onthe capitals have been for others other. As ilustrated in Figure 1, this exteralzed (ie. he costs or ater eects happens trough a wide ange of actives, ‘on capitals that are not owned by the 2.4 Value created, preserved or eroded by an interactions and relationships in addition organization) ‘organization overtime maniesttselin tothose, sch assalesto customers, Increases, decreases or transformations thatare directly sociated with changes ofthe capitals caused by the organizations in financial capital. These include, for Figure 4. Value created, preserved or erodes for business activites and outputs example, the effects ofthe organizations the orgarization and for otrers ‘Thatvalue has two interelated aspects — business athities and outputs on Value created, preserved or eroded fr customer satisfaction, suppliers + The organization ise, which afects willingness to wade with the organization financial eturnsto the provides of and the teams and conditions upon which financial capital they do so, te intatves that business pes + others (ie. stakeholders and socety partners agre to undertake with the Btn atlas) ‘organization, the organization's comune reputation, conditions imposed onthe 25 Providers of financial capital ar intrested Inthe value an organization creates foritselt They at also interested in the vale an organization creates for others when it affects the ability ofthe 27 organization to create value forts, ortelates ta stated objective of the organization e.g an explicit social purpose) that affects their assessments ‘organizations social cence to operate, and the imposition of suppy chain conditions or egal requirements. When these interactions, actives, and relationships are material to ‘the organizations ability to create ‘valu fois, they are includes Inthe integrated report PART 1 INTRODUCTION nog 2.8 Extemalties maybe postive ornegate 2.9 (ce. they may resultin a netincrease or decrease tothe value embodied in the capitals). Extemaities may ukimately increase or decrease value created for the organization; therefore, provides of financial capital need information about ‘material extemalties to assess their effects and allocate resources accordingly. Because valves created ove diferent time horizons an foraitferen stakeholders through citferent capital, ti unlikely be created through the maximization of one capital while disregarding the others. For example, the maximization offinancial capita (e.g, profit atthe expense of human capital (eg through inappropsate human resource policies and practices) is unikely to maximize value forthe orgaization nthe longterm. PART 1 INTRODUCTION nog 2 The capitals: ‘The stock and low of capitals 210 Allorgaizations depend on vaous forms of capa forthe success. nthe Framework, the capitals comprise francial, manufactured, intelectual, human, social and relationship, and rata, although as discussed in paragraphs 2.17-2.19, organizations preparing an integrated repartare nat required to adoptths categorization. ‘through the acvities and autpus ofthe ‘organization. Fr example, an organization's financial capitals increased when Itmakes a prof, andthe qualty of its human capital's improved when employees become better rained. (BAR The oveallstock of capitals not fixed over time. Theres constant fow between and within the capitas as they are increased, decreased or transformed. Forexamle, \when an organization improves its human capital through employee training, the related training costs reduce is financial capital. The effects that nancial capital has been transformed into human capital ‘Although this examples simple and resented ony om the organization's perspective, tdomonstrates the continuous interaction and transformation between the capitals, abet with varying rates and outcomes. 2.413 Many activites cause increases, decreases orransformations that are far ‘more complex than the above example and involve a broader mix of capitals ‘orof components within a capital e.g. the use of water to grow arops that are fedto farm animals, allo which are components of natural capita) 2.44 Although organizations aimto create erosion of value storedin some captals, resultngin a net decrease to tie overall stock of capital. valueis eroded), Inmany cases, whetherthenetefect ‘san increase of decrease (ornether, |e. when values preserved) wll depend onthe perspective chosen: asin the above example, employees and employers might value training ciferenty. CCategorles and descriptions ofthe captals. 245. Forthe purpose ofthe Framewotk, the capitals are categorized and described ‘onthe folowing page. 1 verpespestesinclie eictesette ers eancalcapial dt payment wie to ie pyr ane neaea zea expla ray ccurtempyeesuse nen acura Sls cebu teeameunty zanaatens Gee abe agap 8 regvorgcompentymrepercerees ne deo) Seaimgaeapaingo PART 1 INTRODUCTION + iia apt They und tats ~ hale anorganizatn arse tbe produc of oes othe post of services ~ optaned ough nani sch a eb, equity arnt gnerate tr persons ormestnens + Manufactured capital - Wanufactured Piysical objects (as distinct rom natural pysial objects) that are available to an organiza ~ Buildings = Equipment = lnrastructure (suchas roads, ports, bridges, and waste and water treatment plants). Manufactured capitalis often created by other organizations, butincudes assets ‘manufactured by the reporting organization for sale orwhen they are retained forts own use, Intellectual capital - Organizational knowledge-based intangibes, including: Intellectual property, suchas patents, copyrights software, rights and licences “Organizational capita” such as tacit knowledge, systems, procedures and protoco's. Hua eaptal- People's competencies, capabiles and experience, and thei ‘motivations t innovate, including thei: ~ Alignment with and support foran ‘organization's governance frarework, sk ‘management approach anc ethical valves = Ability to understand, develop and Implement an organizations strategy = Loyalties and motivation forimproving processes, goods and services, including ‘thelr ably to lead, manage and colaborate Social and relationship capital - The institutions an the relationships within and between communities, groups of stakeholders and athernetworks, and ‘the ability to share information to enhance nog Individual and collective wel-being, Social an relationship captalingludes? ~ Shared norms, and common values and behaviours = Key stakeholder relationships, and the ‘rust and wilingness to engage that an organzation has developed and strives to build and protec with extemal stakeholders ~ Inangibes associated withthe brand ‘and reputation that an organization nas developed = An organization’s social cence to operate. a 4 processes that provide goods orservices that support the past, current or future prosperty ofan organization. tincldes: ~ ig water, land, minerals an forests ~ Biodiversity and eco-system health. Seaimgaeapaingo PART 1 INTRODUCTION nog 2.18. Nota capitals are equal relevant or applicable to all organizations. While most ‘organizations interact with al capitals tosome extent, these interactions might be relatively minor orso indirect that they are nat suticient important to include inte integrated report Role of the capitals in the Framework 2AT The Framework doesnot require an Integrated report to adoptthe categories Identified above orto be structured along thelines of the capitals. Rater, the primary reasons forincluding the capitals inthe Framework are ta serve: + As partofthe theoretical underpinning forthe concept of value creation, preservation o erosion (see Section 28) “+ Asa guideline fo ensuring organizations consider alte forms ofcaptal they use oratfect. 2.48 Organizations may categorze the capitals itferenty. For example relationships with external stakeholders and the intangibles associated with brand and reputation (Goth dented as par of socal anc relationship capital in paragraph 2.15), might be considered by some organizations tobe separate capitals, part of other capitals or cutting across a number of individual capitals. Silay, some ‘organzacions define intelectual capital as comprising what they identify as human, “structural” and “eationa” capitals 2.19 Regardless of how an organization categorzes he capitals forts own Durposes, te categories identified in paragraph 2.15 ae to be used as a ‘uideine to ensure the organization does notoveriook a capital that ituses or affects. PART 1 INTRODUCTION nog 2D Process through which value is created, preserved or eroded 2.20 As noted in paragraph 2.14, although organizations aim to eat value, the In sueh cases, value is eroded or preserved. The process through which value is created, preserved or eroded iscepicte in Figure 2. is explained brie in he following paragraphs, which aso identity how the components of Figure 2 (emphasized in bol text) align withthe Content Elements in Chapter 4 2.21 The external environment, including economic conditions, technological change, societal issues and environmental challenges, sets the contest wthin which the organization operates. The purpose, mission and vision encompass the whole organization, identiyingits intention in clear, concise terms. (See Content Element 4A Organizational overview and external envionment) 2.22 Those charged with governance are see ci cr (See Content Element 48 Governance) and wast), The organizations business activities ane outputs lead to outcomes Interms of eects onthe capitals. The capacity ofthe business model to adapt tochanges (eg. inthe availabilty, quality and atordabity of inputs) can affect the organizations longer term vii. (See Content Element 4C Business model) 2.24 Business actitles include the planing, design and manufacture of products or the deployment of specialized skis and knowledge inthe provision of services. Encouraging culture of innovation is often a key business activity in terms of generating new products and services that {anicipate customer demane, nroducing cficiences and better use of technology, substituting inputs to minimize adverse social or envionment effect, and finding alternative uses for outputs. 2.28 Outcomes ae the internal and external consequences (positive and negative) for the capitals as a result ofan organizations business activites and outputs 2.26 Continuous monitoring and analysis of the extemal environmentin the context of ‘the organizations pupose, mission and ‘sion dents sks and opportunities relevantto the organization its strategy and ts business model See Content Element 4D Risks and opportunities) Seaimgaeapaingo PART 1 INTRODUCTION Figure 2. Process through which value ls created, preserve or eroded es PART 1 INTRODUCTION neo 2.21 The organization Itsetsoutstrategic objectives and strategies to achieve tem, hich ae implemented through resource allocation plans. See Content Element 44E Strategy and resource allocation) 2.28 The organization needs infomation about ‘ata hh ce 82 provide information for decision-making (Se Content Element 4F Performance) 229 Theva wate, petnatonsronsan proces ene tatiana each component ad its interactions with other components, anda focus onthe organization's outlook, ead to revision and refinementto improve allthe components. (See Content Element 46 Outlook) Seaimgaeapaingo a PART 2 THE INTEGRATED REPORT individually and collective forthe purpose of preparing and presenting ‘anintegrated report; according, judgements needed in applying them, particulaly when there is an apparent tension between them eg between conciseness and completeness). PART2 THEINTEGRATED REPORT neo ‘A Strateglfocus and future orientation 3A. Strategic focus and future 21) ese caeatince) B Connect of infemation orientation CIE OEATESE CT. 3.3. An integrated report should provide presentation ofanintegrated report, © Stakeholder relationships Insight into the organizations strategy, Informing the content ofthe report ‘and how it relates to the organization's and how information's presented. D Materaity ability to create value inthe short, E Conciseness ‘medlum and long term and tots use of and effects on the capitals. F —_Reliabittyand completeness 3.4 Applying this Guiding Principle is Consistency and comparability notlimited to the Content Elements 4 Strategy and resource allocation and 4 Outlook. It guides the selection 3.2 These Guiding Principles are applied and presentation of oer content ‘and may include, or example + ‘igngntng signicant sks, opportunites and dependencies owing ftom te organization's market position and business mode! PART2 THEINTEGRATED REPORT nog + The views of those charged with 3B governance about 36 ~ Therelatonship between past and future performance, and the factors that can change tat relationshio = How the organization balances shor: ‘medium and longterm interests ~ How the organization haslearnedirom 3.7 pastexperencesin determining future strategie rections 3.5 Adopting strategic focus and future orientation ce also paragraphs 3.52.3.53) includes deary articulating how the continues availaity, quality and afordobilty of significant capitals contribute tothe organzation's ability to achieve its strategic objectives Inthe future and oeate value Connectivity of information An integrated report should show a holistic picture ofthe combination, interrelatedness and dependencies between the factors that affect the organization's ability tocreate value overtime. ‘The more tha integrated thinking is ‘embedded into an organization’ activites, ‘the more naturally wll the connectivity of information flow nto management reporting, analysis and decision-making, and subsequently ito the integrated report. The key forms of connect of information include the connectivity between: + The Content Elements. The integrated report connects the Content Elements into a total picture that refects the dynamic ané systemic interactions o the organizations activites s a whole For example: ~ Ananalysis of existing resource allocation, and ow the organization wll combine resources or make further investment to achieve its targeted performance ~ Information abouthow the organization's strategy stalored when, frinstance, new sks and ‘opportunities are identified or past performance isnot as expected PART2 THEINTEGRATED REPORT neo = snp ewaotins song) + Planers + ingot bud sae ec ener ee SRS, ‘earl oe mane ee ee Semone Ettensrmei onto SU tesmncper upset snares ep Se ae te eee pees eho ov See approached. = Cost reduction or new business ‘those charged with governance. «repos pratant tr rea cacey + rman negate, sofa tgo ste ee amr ech inlet Spcinaincesincces ——_ mmbbauate tl eee eee aaaeea eae Rone ntpomcon contrat cee ee Ingen tr ate ee eerie eee cae at Deiseanasobemenlnecing + ata and qt cement wean sant eae Seer eens soem Syeaseeteastayis —eanyamanots an integrates reportto propery represent ‘the organization's ability to creat value ‘as each provides conte forte ater. Includingkey performance indicators as partofa narative explanation canbe an fective way to connect quantitative and qualitative information, + The capitals. Thsincludes the Interdependencies and trade-offs between te capitals, and how ‘changes in ther avalabilty, quality and affordability affect the ability ofthe ‘organzaton to create valu. Seaimgaeapaingo a PART2 THEINTEGRATED REPORT neo 3.9 The connectivity of information and 3C Stakeholder relationships 3.12 Stakeholders provide useful insights the overall usefulness ofan integrated about matters that are importantto reportis enhanced when iti logicaly 3.10 An integrated report should provide them, including economic, environmental structured, well presented, written in clear, {insight into the nature and quality of the ‘and social issues that also affect understandable and jargon-tre language, organization's relationships with its key the abiity ofthe organization to and includes effective navigation devices, stakeholders, Including how and to what ‘reate value, These insights can such as clearly delineated (but inked) eee Sarat a meron assist the organization to: sections and cross referencing, In this to account and respon secon dams eeectg tis se = terns ‘technology can be used to improve the 3.11 This Guiding Principle reflects the ° ability to search, access, combine, connect, importance of relationships with key '* Identify trends that might net yet have paragraph 2.2, value is not created by are rising in significance itdoes not mean that an integrated report should attempt to satsy the information needs of al stakeholders. Develop and evaluat strategy Manage risks Implement activites, inctucing stategic and accountable responses tomaterialmaters. PART2 THEINTEGRATED REPORT nog 3.13 Engagement with stakeholders occurs regular inthe ordinary course of business (€4.day-o-dayliaison with customers anc supplies orbroader ongoing engagement as partofstrategc planing and risk assessment. tight iso be undertaken fora particular purpose (e.g. engagement wit a local community when planninga factory extension. The mor integrated thinking is embeddedin te business, the ‘more lielyitis tata flr consideration of key stakeholders legitimate neees and interests is incorporated as an ‘ordinary part of onducting business 3.14 An integrated report enhances transparency and accountabilty, which are essential in bulging trstand resilience, by disclosing how key stakeholders’ legitimate needs and imcrests are understood, taken into account and responded to through decisions, ations and perarmance, as welas ongoing communication. 3.15 2.16 Accountabliys closely associated withthe concept of stewardship and the responsibility ofan organization to care for, oruse responsibly, the capitals thatits activities and outputs ae When the capitals are owned by the organization, a stewardship responsiblity is imposed on management and those charged with governance va their legal responsiblities tothe organization, When the capitals are owned by ‘others of nat owned a al stewardship responsiblities may be imposed by aw or regulation eg through a contract with the owners, orthrough labour laws ‘or environmental protection reguaton). When ther sno lgal stewardship responsibly, the organization may have an ethical esponsibiity to accept, or choose to accept stewardship responsiblities and be guided in doing 0 by stakeholder expectation. 3D Materiaity 3.17 An integrated report should disclose Information about matters that substantively affect the organization's ability to create value over the short, medium and long term. ‘The materiality determination process. 3.18 The materaity determination process for the purpose of preparing and presenting an integrated report involves: + Identifying relevant matters based on ‘ther ably to affect value creation as discussed in Section 28 (See paragraphs 321-329 + Evaluating the importance of evant mattersin terms of teirkrown or potential eect on value creation (Gee paragraphs 3.24-3.27) + Priortng the matters based on thelr relative importance (see paragraph 3.28) + Determining he information to dislose about material matters (see paragraph 3.29 PART2 THEINTEGRATED REPORT nog 3.19 This process applies to both postive and negative matters including sks and opportunities and favourable and unfavourable performance or prospec. Italso apptes to both fnancal an ot information Such matters may have rect impications forthe organization itself or may afect the capitals conned by or available to others. 3.20 Tobe most effective, the materialty determination process is integrated ino the organization’ management processes and includes regular engagement with providers of financial capital and others toensure the integrated report meets its primary purpose as noted in paragraph dentitying relevant matters 3.21 Relevantmatters are those that have, or may have, an elect onthe cotganizaton’s ability to create value This is determined by considering heir. effect on te organizations strategy, governance, performance or prospects. 3.22 Ordinarily, matters elatedto value creation, preservation or erosion that ate discussed at eotings of those charged with governance are considered relevant An understanding ofthe perspectives of key stakeholders is cial to identying relevant matters. 3.23 Matters that mightbe relatively easy address inthe shor term but which may, iflet uncheckea, become more damaging or dificult te address inthe medium cor longterm need tobe incuded inthe population of relevant matters. Matters ate not excluded on the bass thatthe ‘tganizaton does nat wish to adress them ‘or does not know how to deal wth them Evaluating importance 3.24. Notallelevant matters wil be considered material, Tobe included in an integrated report, a matter also needs to be sufficient importantin tems ofits xoown orpotental effect on value creation This valves evaluating the magnitude of the matter’ effect and iis uncertain whether the matter wil ‘occur it ikethood of accurence. 3.25. Magnitude is evaluated by considering whether the matter’ effect on strategy, governance, performance or prospects such that thas the potential to substantively influence value creation, preservation or erosion overtime. This requires judgement and will depend ‘onthe nature ofthe matter in question. Matters may be considered material either incviualy orn the aggregate 3.26. Evaluating the magnitude of amatter's fect does nat imply thatthe eect needs to be quantified. Depending on thenature ofthe matter a qualitative evaluation might be more aporoorat, PART2 THEINTEGRATED REPORT nog 3.27 Inevaluating the magnitude of effect, the organization considers: + Quantitative and qualtatve factors + Financial, operational, strategie reputational and regulatory perspectives + Area ofthe effect, be itinteral crexternal + Time trame, Prioritizing important matters 3.28 Once the population of portant matters isidentieg, tey are printized based fon their magnitude, Thishelps to focus ‘on the mostimportant matters when etermining how tey ae reported Determining information to disclose 3.29 Juogementis applied in determiningtne information to disclose about material matters. This requires consideration ftom diferent perspectives, both internal and extemal, andis assisted by regular engagement with providers offinancial capital and others to ensure the integrated report meets its primary purpose as nated in paragraph (See also paragraphs 5.2-5.4) Reporting boundary 3.30 Keyto the mately detrmination process i the concept of the reporting, ‘boundary. Determining the boundary for an integrated report has two aspects: “+ The financial reporting entity ((e. the Boundary used for financial reporting purposes) “+ Riss, opportunites and outcomes attibutable to or associated wth other enttios/stakeholders beyond the financial reporting entity thathave a significanceffect onthe ability othe financial reporting entity to create vale. 3.31 The nancial reporting enttyis central tothe reporting boundary because + Itisthe financial eporting entity in which providers of financial capital investand ‘therefore need information about Using te firancial reporting entity enaoles the nfermation inthe nancial statements to serve as an anchor or point of eference to which he other information in an integrates report can be relate, 3.32 Figure 3 depicts the entites/ stakeholders tatare considered in determining te reporting boundary PART2 THE INTEGRATED REPORT fA i> io iv Figure 3. Entiis/stakeholdersconsieed in determining the reporting boundary fencer ata) pretrey ecnuneee PART2 THEINTEGRATED REPORT nog Financial reporting entity 3.33, The financial reporting entity identifies Which subsiciares; joint ventures’ and associates’ transactions and related events are included in the organization's financial eport The financial reporting enttyis determined according to applicable financial eporting standards Which revolve argune the concepts of control or significant inence. Risks, opportunities and outcomes 3.34 The second aspect af determining the reporting boundary isto ident those risks, opportunities and outcomes attibutabie to orassociated with entes/stakeholders beyond the fnancial reporting entity that have a significant effect on the ability ofthe financial porting entity to create value. These other etites/stakeholders might be “related partes” forte purpose of fancial reporting, but wll ordinarily exten further, 3.35 The purpose of ooking beyone the natal reporting Boundary toidentity risks, ‘opportunities and outcomes that materaly afect te organization’ abiy to create vale. The entie/stakeoders within this portion ofthe reporting boundary arerotreated to the financial reporting entity by itu of control or significant influence, butrather by the nature and Droxmity ofthe risks, opportunites and ‘uteomes.Foresampleifaspects ofthe labour practices inthe organization's Industry are materalto tre ability ofthe cxganizaton to create valu, then disclosure Inthe integrated roport might include information about thse aspects as they relate to suppliers’ labour practices. 3 3.36 337 2.38 Conciseness ‘An integrated report shouldbe concise. An integrated epor includes sufficient context to understand the organization's svategy, goverance, performance ‘and prospects without being burdened with less relevant information, The organization seeks a balance inits integrated report between conciseness and the other Guiding Principes, in particular completeness and comparability. In achieving conciseness, an integrated report: + Apples tre materiality ¢eterminaton process described in Section 30 + Followsa logical structure and includes intemal cross-references as appropriate tolimitrepetiion PART2 THEINTEGRATED REPORT nog ‘+ May inka more detailed information, information that does not change frequently (e.g aistingof subsidies), orextemal sources (eg, assumptions about future economic conditions on @ government website) + Expresses concepts ceaty and nas few words as possible + Favours plain language overthe use of Jargon a highy tecnica terminology + Avoids highly generi disclosures, often referred to as “bolerpat’ that are not specificto the organization. 3F Reliability and completeness 3.39 An integrated report should include ‘all material matters, both positive ‘and negative in a balanced way ‘and without material eror. Reliability 3.40 The liability ofinformationis affected byits balance and freedom from ‘material ertor. Reality (which s often refered to as fitful representation) Is enhanced by mechanisms such as robustintemal control and reporting systems, stakeholder engagement, iteral audit or similar functions, and Independent, exeral assurance. 3.1 3.42 2.43, Those charged with governance have ultimate responsibilty fr how the ‘organization’ strategy, governance, perfomance and prospects lead to value ‘ration overtime, Tey ar responsible forensurng thatthe is effective leadership and decision making regaraing the preparation and presentation of ‘an integrated report, including the entiation and oversight ofthe ‘employees actively involved in the process. Maintaining an ault tall when preparing an integrated report helps senior management and those charged with governance review the report and exercise judgement in cecicing whether information is sufficient reliable tobe included. It ight be appropiate in some cases (eg, with respect t futue-orented information) foran integrated reportto describe the mechanisms employed to ensure reliability. Paragraph 1.18 identifies relevant disclosures when material information is omitted because of ‘the unavailability of reliabe data, PART2 THEINTEGRATED REPORT nog Balance 3.44 Abalanced integrated report has no bas in the selection or presentation of information, Information in the reportisnotslante, Weighted, emphasized, de-emphasized, combined, offset o otherwise manipulated to change the provabitythatit wil be received either favourably or unfavourably. 3.45, Important methods to ensure balance inclu: + Selection of presentation formats that ate not ikely to unduly or inappropriately influence assessments made on the basis ofthe ntgratec report + Giving equal consideration to both increases and decreases inthe capitals, both strengths and weaknesses ofthe ‘organization, both positive and negative performance, et, ‘+ Reporting against previously reported targets, forecast, projections and expectations Froodom from material error 3.46 Freedom from material error does not imply that te information is perfectiy accurate inal espects It does imply that + Provesses and controls have been ‘applied to reduce to an accestany low levethe risk that porte information contains a material misstatement “+ When information includes estimates, thisis clearly communicated, and the satu and limitations of the estimation process are expaine. Completeness 3.47 Acomplte integrated reportincludes allmateral information, both postive and negative. To help ensure that allmateral information has been identitied, considerations given to wh ‘organizations inthe same industy are reporting on because cetain matters within an industry are ikely to be material toallorganizationsin that industry. 3.48. Determining completeness includes considering the extent of information disclosed and isleve of spectiity orpreciseness. This might involve considering potential concems regarding cost/benefit, compete advantage and fture-oriented informatio ‘each of whichis discussed below, Cost/benefit 3.49. Information included in an integrated reports, by nature, central to managing thebusiness. Accordingly, ita matter 'simportanto managing te business, cost should natbe a factrin fling to ‘obtain rial information appropitely assess and manage the matter. 3.50. An orgarization may evaluate cost and benefits when determining the extent, lve of spectty, and preciseness information necessary fran integrated report to meetits primary purpose, butmay not retain eniely from making ary cisclosure about 2 material mater onthe basis of cost. PART2 THEINTEGRATED REPORT nog Competitive advantage 3.51. Ininclucing information bout material matters dealing with competitive advantage (eg critical strategies), an organization considers now to describe the essence ofthe matte without identiying specic information that might cause a significant loss of competitive advantage, Accorcngy, the ergaization considers what acvantage competitor could actually gain rom Information n an integrated report, and balances ths agains the needfor the Integrated report to achiew its piary purpose as noted in paragraph 1.7 Future-orlented information 3.52 Legalor regulatory equirements may apoly to certain futue-oiented information in some jurisdictions, covering fr example: + The types of esclosures that may be made ‘+ Whether autionary statements may be equited or permitted to highlight uncertainty regarding achevablity ‘An obligation to publicly update such information. 3.83 Future-orientedinformationis by nature ‘more uncertain than historical information. Uncertainty snot, however, a reason ints to exclude such information (See also paragraph 5.2 regaraing disclosures about uncertainty) 3G Consistency and comparability 3.54 The information in an Intograted ‘report should be presented: + Ona basis thats consistent over time + Ina way that enables comparison with ‘other organizations to the extent it {Is material to the organization's own ability to create value overtime. Consistency 3.85. Reporting policies are followed consistently ftom one period tthe next unless a ‘change 's needed to improve the quality of nformavion reported. This incudes reporting the same key performance indicators they continue tobe me across reporting periods. Wena significant change has been made, the ‘organization explains the reason forthe change, describing (and quantfyngit practicable and material ts effet al PART2 THEINTEGRATED REPORT nog Comparability 3.56 The specific infrationin an integrated report wil, necessary, vary rom one ‘organization to another because each organization creates value n'ts own unique way. Nonetheless, addressing the questions relating tote Content Elements which apply to all organzations, helps ensure a sutable evel of comparably between organizations. 3.57 Other powerful tools for enfancing comparably (n both an integrated reportitself and any detalled information thatit ins o) can include: + Usingbenchmark data, suchas industry or regional benchmarks ‘+ Presenting information nthe frm of ratios (eg, research expenditure as a percentage of sles, orcarbon intensity measures suchas emissions per unit of output) “+ Reporting uanttative indicators ‘commonly used by other organizations with similar activites, particularly when standardized definition ae stpulateé byan independent organization eg. an industry body). Such indicators are not, howevey, included in an integrated report unless thoy are relevant tothe individual ‘Gteumstances of, and are used internally by, the orgaization, PART2 THEINTEGRATED REPORT neo 4. Content Elements A organizational overview and 42. ThecontentEementsaretundanertay nepatesroprtineuese axel emonment Me ech ater an arent rly Se eee tac Te reef Cet eens ‘form of questions to be answered. B Govemance as listed here is not the only way they could © business mate besequnced: ccordngy he Conte neocon ste at Ehren art Mende seve Thegirealeporingeitancein ——-_Reksandapporuties Sadar stuctreforantegaed port chogters wititomatonsbut tem apeatngtn E _Suategyandresource alacaton dec onguenct ores led, danaore sections. Rather, nfrmation in an integrated reports presented in a way that outlook makes the connections between the Content Elements apparent. See Section 3B) F Performance Basis of preparation and presentation " ren ° 4.3 The content of an organizations integrated report will epend on the naval ‘iteumstances ofthe organization, The Content Elements are therefore stated inthe form of questions rather than as checks of specie dscosures, Accor, judgement needs to be exercised in applying he Gucing Principles to determine \whatinformaton is eported, 2 wel as how t's eported, as ciscussed beiow. PART2 THEINTEGRATED REPORT nog 4A Organizational overview and external environment 44 Anintegrated report should answer the ‘question: What does the organization do and what are the eireumstances under which it operates? 4.5 Anintegrated por identifies the ‘ovganization’s purpose, mision ana vision, and provides essential context byldentiying matters such as: + The organization's = Gute, ethics and values = Ownership and operating structure ~ Principal activities and markets ~ Competitive landscape ané market positioning (considering factors such asthe threatofnew competition and substitute products or services, the bargaining power of customers and suppliers, and the intensity of compete rvay) = Poston within the value chain, + Key quantative information the umber of employees, revenue and ar ruber of countresin which the ‘organization operates), hgrligting, in partiular, significant changes from priorpetiods + Significant factors affecting the ‘extemal environment ane the ‘organization's response. Extomal environment 46 Significant factors atfectng the external environmentincluse aspects ofthe legal, commercial, social, environmental and poltical context thataffectthe ‘organization’ abilty to create vale in ‘the shoe, medium orlong term. They an affect te organization drecty or indirectly (cg, byinfuencing the avalabiity, quality and affordability ofa capital that the organization uses or affects) These factors cecurin the context col the particular organization, in the context fits industry oregon, and in the wider socia or planetary context. They may include, fr example + Thelegitimate needs and interests ofey stakeholders + Macro and miore econamio condtons, ‘suchas economic stably, globalization, and industry tends + Market forces, such asthe relative stengths and weaknesses of competitors and customer demand + The speed and efecto technological change + Societal issues, such as population and demographic changes, human rights, heath, poverty, collective values and educational systems PART2 THE INTEGRATED REPORT fo Emonmertlchalengss,ch es 48 Governance Parr actors hose charged late change, else of ecsyens, vith goveranc hae akan once andres shortages plata Annterated report shold dndmontarttecategedecon limits are approached ‘answer the question: How does the of the organization and its approach to exciton’ governance structure tskmarogmet Thelegsatv and elton Stppatt alt tcreate ae lo cenvironmentin which the organczacon operates The poical environment in counties where the organization operates and other counties tat may affect the ably ofthe organization to implement ite strategy 49 the short, medium and long term? ‘An integrated epor provides insight about how such matters as te folowing atelinked tots ability o create value: + The organization’ leadership stucture, including the skis and diversity (c.g range of backgrounds, gender, ‘competence and experience of those ‘charged with governance and whether regulatory requirements infvence the design ofthe governance structure * Specific processes used to make ‘tatege decisions and to establish and monitor the culture of the organization, including attitude torskand mechanisms for addressing ntgtity and ‘ethical ssues How the organization's culture, ethics and values arerefiectedin its use of and effects onthe capitals, including ts relationships with key stakeholders Whee he organization implementing governance practices that exceed legal requirements The responsibilty those charge with governance tae for promoting and enabling innovation How remuneration and incentives are linked to value creation inthe shat, medium and longterm, incuding now they ae linked tothe organization's use ofand effects onthe capitals. PART2 THEINTEGRATED REPORT nog 4¢ Business mode! 4.10 An integrated report should answer the question: What the ‘organization's business model? 4.411 An organization's business modelisits system of transforming inputs, through its business acts, into outputs and outcomes that aims off the organization's strategic purposes and create value overthe shot, medium and longterm, 4.12 An integrated report describes the business mode, including key * Inputs (see paragraphs 4,144.15) + Business activities (see paragraphs 416-417 + Outputs (see paragraph 4.18) + Outcomes (see paragraphs 4.19-4.20), 433 Features that can enhance the effectiveness and readabilty ofthe eseriotion ofthe business modelincluce: ‘+ Explcitidenticaion ofthe key elements ofthe business mode! A simple diagram highighting key elements, supported by a clear ‘explanation ofthe relevance of those elements tothe organizaion Narrative flow that logical given the particular creumstances ‘ofthe organization Identification of critical stakeholder and other (eg ram material dependencies and important factors affecting the ‘external ervronme ‘Connection toinfrmation covered by ‘other Content Elements, such as svategy, risks and opportunities, and performance (nluding key performance indicators ‘and financial considerations, such as ‘ost containment and revenues}. Inputs 4.4 An integrated por shows how key inputs relate tothe capita on which the organization depends, or that provide a source fctfrentiation for the organization tothe extent tey are material to understanding the robustness and resiience ofthe business model 4.15 An integrated report does nat attempt provide an exhaustive ist ofall inputs, Rather, the focus son those that have a material bearing on te ality to create value inthe short, medium and lng term, whether of nat the capitals trom hich they re derived ae owned by ‘the organization. Itmay aso include a discussion oftre nature ano magritude of the significant rade-offsthatinfiuence the selection of inputs. (See paragraph 5.8) PART2 THEINTEGRATED REPORT nog Business activities 4.16. An integrated report describes key business activites. Tis can include: + How the organization dferentatsitsetf inthe market place (e.g though product ferentiation, market segmentation, Framework doesnot require ‘an nteratedreportto provide an ‘exhaustive account of allthe complex interdepencencies between the capitals such that an organization's netimpact ‘onthe global stock of captals could be talled Itisimportant however, that an integrated epor discose the interdeponcencies that are considered in determining its reporting boundary, andthe important trade-offs that influence value ration over ime, including rade-ots: + Between capitals orbetween components of capital (e.g creating employment tough an activity that negatively affects te environment) + Overtime (eg. choosing one couse of action when another course would resutt in superior capita increment butt unt alater period) + Between capitals owned bythe organization ana those owned by others or nt ata PART2 THEINTEGRATED REPORT nog ‘Time frames for short, medium and long term 5.9 The uturetime dimension to be considered in preparing and presenting an integrated reportwil typically be longer than forsome other forms of reporting, The length of each time frame forshort, medium and long terms decided ty the organization Witt reference to its ousiness and investment cytes ts strategies, and its oy stakeholders’ legtimate needs and Interests. Accordingly, theresa set answer forestabishing the length foreach term, 5.10. Time frames iter by. + Industry orsector (eg strategic objectives inthe automobile industry typically cover two model- cycie terms, spanning between eight and ten yeas, whereas within the technology industry, timeframes might be significant shorter) The natue of outcomes (eg. some issues affecting natural or social and relationship capitals canbe very long termi nature 5.11. The engthf each reporting timeframe and the reason forsuch length might affect the nature of information disclosed in an integrated report. For example, because longer-term matters ae more likely tobe more affected by uncertainty, information about them may be more likely tobe quatative in nature, whereas information about shorter-term matters ‘may be better suited to quantification, ‘oreven monetization However, itis notnecessaryta disclose the effects ‘of amatter or each time fame. ‘Aggrogation and disaggregation 5.12 Each organization determines the level of aggregation eg. by county, subsiciary, 4ision, or site) at which to present Information tnatis appropriate to its ‘etcumstances.Tisinctudes balancing the effort required to disagaregate (or aggregate information against any added ‘meaningfulpess of information reported ona dsaggregates (or aggregated) bass, 5.13. Insome circumstances, aggregation of information canresuitina significant oss ‘of meaning and can also alto highlight particulary strong or poor performance in specific areas. On the oter hand, unnecessary disaggregation can result incutter that adversely aflects the ease of understanding te information. 5.14 The organization dsagerogates (or aggregates) information to an appropriate lve considering in parla, haw senior management and those charged with governance manage and oversee ‘he organization and its operation. This commonly esults in presenting Information based onthe business or eographical segments used fr financial reporting purposes. (See also paragraphs 4.22-4.23 regarding organizations with multiple business models) GLOSSARY nog For the purpose of the Framework, unless stated otherwise, the following terms have the meanings attributed below: Business model norgaizatins syst of tansfoming inputs though tsbusnes actives int outputs ang outomes tat amstoutithe organizations strategic purposes and create value ‘overthe short, medium and longterm. Capitals. Stocks of value on which all ‘organizations depend for their success as inputs to theirbusiness mode, and which are increased, decreased or transformed trough the orgaizatio's business activites and outputs. The capitals are categoiedin the - Framework as nancial, manufactured, intellectua,human, social and relationship, and natural CContont Elements. The categories of information requiced tobe included in an integrated report the Content Elements, which ae fundamentally liked to each other and are not mutually exclusive, are stated inthe form of questions to be answeredin away that makes the relationships between them apparent. Guiding Principles. The principles that underpin the preparation and presentation ofan integrated report informing the content ofthe report and how Informations presented Inputs. The capitals (esources and relationships) thatthe organization draws ‘upon forits business activites. Integrated report. Aconcise communication abouthow an organization's strategy, governance, performance and prospects, inthe context of itsexernal environment, lad to the creation, preservation or eosin of vale inthe shot, ‘meek and ong erm, Intogratod reporting. A process founded on integrated thinking that results in a periodic integrated report by an organization about value creation, preservation or easion overtime and related communications regarding aspects of ‘value creation, preservation or erosion Integrated thinking. The active consideration ty an organization ofthe relationships between ts various operating and functional units ‘and the capita thatthe organzation uses or affects, Integrated thinking leads to integrates Framework Form of report and relationship with other information 41.12 An integrated report should be a ‘designated, identifiable communication. ‘Application ofthe Framework 4.47 Any communication claiming tobe an ntograted report and referencing the Framework should apply al the requirements identified ‘in bold tal type uness: + The unavailability of reliable Information or specific legal prohibitions results in an inability to disclose material information + Disclosure of material information would cause significant competitive harm. 41.18 Inthe case ofthe unavallabilt of reliable information or specific legal ‘prohibitions, anintograted report should + Indicate the nature ofthe information that has been omitted “+ Explain the reason whyithas been omitted “+ Inthe case of the unavalabity of data, Identify the steps being taken to obtain the information andthe expected time {frame for doings. Responsibility for an integrated report 4.20 An integrated report should include ‘statement from those charged with governance that includes: + An acknowledgement of thelr ‘esponsibility to ensure the integrity of ‘the integrated report “+ Their opinion or conclusion about ‘whether, or the extent to which, the Integrated reports presented in ‘accordance with the Framework Where legal or regulatory requirements preclude a statement of responsibilty {rom those charged with governance, this, shouldbe clearly stated GUIDING PRINCIPLES. Strategic focus and future orientation 3.3. Anintegrated report should provide insight Into the organizations strategy, and how that relates to its ability to create value Inthe short, medium and long term and tots use of and effects on the capitals. ‘Connectivity of information 3.6 An integrated report should show a holistic plture ofthe combination, itorelatedness ‘and dependencies between the factors that affect the organization's ability to create value overtime, Stakeholder relationships 3.10. An integrated report should provide Insight Into the nature and quality ofthe organization's relationships with its key stakeholders, including how and to what extent the organization understands, takes into account and responds to their legitimate needs and interests. APPENDIX - SUMMARY OF REQUIREMENTS nog Matorialty 3.17 An integrated report should disclose Information about matters that ‘substantively affect the organization's ability to create value over the ‘short, medlum and fog term. Conciseness 3.36. An integrated report shouldbe concise. Rellaity and completeness 3.39. An integrated report should include allmaterial matters, both positive and negative, na balanced way ‘and without material error. Consistency and comparabilty 3.54. The information In an Integrated report should be presented: + Ona basis thats consistent overtime + Inaway that enables comparison with ‘other organizations tothe extent it {is material to the organization's own ability to create value overtime, ‘CONTENT ELEMENTS: Organizational overview and external environment 4.4 An integrated report should answer the ‘question: What does the organization ddo and what are the clreumstances Under which it operates? 4.8 Anintograted report should “answer the question: How does the ‘organization's governance structure support its ability to create value in the short, medium and long term? Business model 4.10 An integrated report should ‘answer the question: What i the organization's business model? Risks and opportunities 4.24 An integrated report should answer the question; What are the specific risks and opportunities that affect the organization's ability to create value over the short, medium and long term, and how |s the organization dealing with them? Strategy and resource allocation 4.28 An integrated report should answer the ‘question: Where does the organization want ta go and how does It intend to get there? Performance 431, An integrated report should answer the question: To what extent has the organization achieved Its strategie objectives for the period ‘and what are its outcomes in terms of effects onthe capitals? Outlook 4.35. An integrated report should answer the question: What challenges and uncertainties Is the organization likely to ‘encounter in pursuing its strategy, and what ae the potential implications for Its ‘business model and future performance? Bass of preparation and presentation 4.41. An integrated report should answer the ‘question: How does the organization determine what matters to Include in the integrated report and how are such ‘matters quantified or evaluated?

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