Download the International <IR> Framework (2021) here.

The IIRC published various accompanying documents setting out the feedback received during the consultation process, the analysis of the feedback and the subsequent treatment of the feedback. To view these documents, click here.

Further information about the IIRC can be found on its website.

See the Integrated Reporting Committee (IRC) of South Africa’s latest Information Paper Aligning Internal and External Integrated Reporting by clicking here.

You can download the updated IRC Starter’s Guide here

The Paper aims to inform those preparing integrated reports, as well as executives and members of the governing body who are responsible for guiding and approving integrated reports. The Paper will also be useful to the users of reports to enhance their understanding and expectations of information on Outlook.

Download it now – Reporting on Outlook in the Integrated Report

The Integrated Reporting Committee (IRC) of South Africa has released its latest technical paper, Achieving Balance in the Integrated Report: An Information Paper.

The Paper discusses the role of the governing body, the meaning of balanced reporting, challenges and weaknesses, and lists some key considerations in achieving a balanced integrated report.

The Integrated Reporting Committee (IRC) of South Africa has developed this Information Paper to assist organizations achieve better practice in disclosing performance against strategic objectives in the integrated report.

The Paper highlights the importance of providing a balanced disclosure of performance by applying the guiding principles of the International <IR> Framework (Framework), the challenges organizations may face, and key considerations with illustrative examples from the reports of South African organizations.

The Framework was issued by the International Integrated Reporting Council (IIRC) in 2013. It has been endorsed by the IRC of South Africa as guidance on good practice on how to prepare an integrated report. This Paper aims to assist those preparing reports, but will be of use to executives and governing body members who are responsible for guiding and approving integrated reports. Users of reports will also benefit through an understanding of what should be disclosed.

Download it now – Disclosure of performance against strategic objectives

The International <IR> Framework (Framework) was issued by the International Integrated Reporting Council (IIRC) in December 2013. It has been endorsed by the Integrated Reporting Committee (IRC) of South Africa as guidance on good practice on how to prepare an integrated report.

The Framework introduced a requirement to report on outcomes, which are defined as:

The internal and external consequences (positive and negative) for the capitals as a result of an organization’s business activities and outputs.

While the wording in the Framework is simple, an analysis of South African integrated reports after the first few years of applying the Framework reveals challenges in reporting on outcomes.

This Information Paper aims to assist report preparers, and the executives and board members responsible for guiding and approving integrated reports, in improving their understanding of what the term outcomes means while offering some considerations for communicating outcomes in an integrated report.

Download the information paper here.

The document below discusses some frequently asked questions relating to how the SDG’s can be addressed in the Integrated Report.

FAQ: Reporting on the Sustainable Development Goals (SDGs) in the Integrated Report

This question has been asked by preparers of integrated reports in South Africa. It is relevant because of South Africa’s Company law and the King IV Report on Corporate Governance for South Africa, 2016 (King IV^TM).

It is the view of the IRC, after consideration of the above, that the organization’s integrated report need not state a specific target audience because the integrated report is an explanation of the organization’s value creation process over time. As such, the integrated report will appeal to all stakeholders interested in the organization’s ability to create value and is positioned as the ‘first read’ after which stakeholders may choose to access more detailed information (explained in the Octopus Model approach to the corporate reporting suite on page 2, second bullet point).

Basis of conclusion

In terms of South Africa’s Company law the governing body should act in the best interests of the organization. What this means is that the governing body should take into account the legitimate interests of stakeholders in making decisions that are in the best interests of the organization. In effect, the governing body is accountable to the organization and through the organization there is accountability to all its stakeholders.

King IV (like its predecessors) adopts the stakeholder-inclusive approach as fundamental to governance and reinforces this throughout its 17 principles. It advocates that in the execution of governance roles and responsibilities the governing body should adopt a stakeholder-inclusive approach that balances the needs, interests and expectations of material stakeholders in the best interests of the organization over time¹. On reporting, King IV’s principle 5 states: The governing body should ensure that reports issued by the organisation enable stakeholders to make informed assessments of the organisation’s performance, and its short-, medium- and long-term prospects. In achieving principle 5, it is recommended, inter alia, that an annual integrated report be prepared.

When preparing and presenting integrated reports most organizations in South Africa use the guidance of the International <IR> Framework (Framework) released by the International Integrated Reporting Council in 2013².

In the <IR> Framework, paragraphs 1.7 and 1.8 cover the purpose of an integrated report and are relevant to audience: The primary purpose of an integrated report is to explain to providers of financial capital how an organisation creates value over time. It therefore contains relevant information, both financial and other. An integrated report benefits all stakeholders interested in an organisation’s ability to create value over time, including employees, customers, suppliers, business partners, local communities, regulators and policy-makers.

Also of relevance is paragraph 1.14, which states: An integrated report may be prepared in response to existing compliance requirements… If that report is also prepared in accordance with this Framework it can be considered an integrated report.

The IRC considers that local requirements in South Africa apply when considering whether or not a target audience for the integrated report should be stated. As mentioned in the second paragraph above the integrated report is the story of the organization’s value creation process and need not specify a target audience as it will be of interest to all stakeholders interested in the organization’s ability to create value.

Other points of interest

• King IV’s fundamental concepts include those of the Framework – namely, the capitals, Integrated Thinking and Value Creation – and King IV acknowledges this stating: … when drafting King IV, reliance was placed on the International Framework as issued by the International Integrated Reporting Council. The Integrated Reporting Committee of South Africa has endorsed the International Framework as good practice on how to prepare an integrated report and its further guidance on integrated reporting should be followed³.
• When applying the Octopus Model approach (see FAQ: The Octopus Model on this website) to an organization’s corporate reporting suite, the integrated report is positioned as a high-level, concise report on the organization’s value creation over time (as the head of the octopus) and as such is the ‘first read’ of any stakeholder in understanding the organization, its performance and prospects. Detailed, subject-specific information can be accessed in the organization’s other external reports, Financial Statements, Sustainability Report, Governance Report etc. (with each report seen as an arm of the octopus).
• The nature and form of the integrated report is a concise account of the organization’s value creation process over time containing all of the organization’s material matters. It is unlikely, however, to meet every information need of every stakeholder and it should rather be seen as an ‘’entry point” to more detailed and linked information (that is, the Octopus Model).
• In applying the principles of King IV and the requirements of the <IR> Framework the organization’s governing body ensures that the integrated report is relevant, understandable and accessible.

¹ In carrying this out, King IV acknowledges the balancing of interests over time by way of prioritising and, in some instances, trading off interests.

² Endorsed by the IRC of SA in April 2014 as good practice in preparing an integrated report.

³ Part 2: Fundamental Concepts, “Highlights of the King IV Code”

August 2018

New preparers of integrated reports may wonder at how the six capitals referred to in the International <IR> Framework (Framework) should be presented in the integrated report.

What are the six capitals and why are they used in integrated reporting?

An integrated report should provide users with insight on the important resources and relationships used or affected by the organization – these are collectively referred to as ‘’the capitals” in the Framework. The capitals can be seen as “stocks” of value on which the organization depends for its success as inputs to its business model and which are increased, decreased or transformed through its outputs (products and services) and business activities. The capitals concept highlights that an organization depends on all forms of capital, not just financial capital, and that it has effects on these capitals. A sustainable organization will maintain and where possible enhance stocks of capital rather than deplete or degrade them.

The capitals are categorized in the Framework as financial, intellectual, human, natural, manufactured, and social and relationship (see pages 11 and 12 of the Framework for definitions).

What is the expectation in terms of reporting on the capitals?

An integrated report aims to provide a holistic picture of the combination, inter-relatedness and dependencies between the factors that affect the organization’s ability to create value over time. This includes providing the important inter-dependencies and trade-offs between the capitals, and how changes in their availability, quality and affordability can affect the organization’s ability to create value over time.

Is it necessary to adopt the definition of each capital as per the Framework?

Organizations are not required to adopt the exact definitions set out in the Framework and are free to use their own definitions (however, it would help users of the report if these are explained therein). The primary reasons for including the capitals in the Framework are: “to serve as part of the theoretical underpinning for the concept of value creation, and as a guideline for ensuring that organizations consider all the forms of capital they use or affect (International Integrated Reporting Council, International <IR>  Framework, 2013). The six capitals, as defined, serve as a very useful completeness check on inputs (uses) and outcomes (effects) ensuring that none are overlooked.

Is it necessary to structure the integrated report along the lines of the six capitals?

An organization is free to choose a structure for its integrated report that best serves it in telling its value creation story. So it’s not obliged to structure the report along the lines of the capitals. Some organizations do, however, choose to structure their reports around the capitals.

Should quantitative indicators or a financial value be assigned to the effects on the capitals?

The Framework doesn’t stipulate this. Quantitative indicators such as key performance indicators or monetized metrics can be relevant in explaining an organization’s use of and effects on the capitals, but so too is qualitative disclosure. Indeed, some capitals may be clearly reported on with narrative because value is subjective and different stakeholders may judge the effects on capitals differently. It’s up to the organization to determine the information that best explains its value creation story over time.

Some useful references on the capitals

• International Integrated Reporting Council (2013) Capitals background paper for <IR>
• Natural Capital Coalition (2016) Natural Capital Protocol
• Sasol Ltd (2013) Six capitals video

This is a question often asked by organisations starting out on their integrated reporting journey.

The organisation’s board (or top governing body) should apply its collective mind in determining the reporting structure which is in the best interest of the organisation taking account of particular reporting requirements and relevant regulations¹.

When explaining how the integrated report – and the information contained therein – fits into the reporting structure the analogy of the octopus is often used² . . .

The integrated report is the head of the octopus: it tells the value creation story of the organisation in a high-level, complete, concise way and includes all material matters. The head of the octopus is connected to a multitude of arms, each of which is a detailed report/ information source: for instance, the financial statements, sustainability report, governance report, social and ethics committee report, risk report, remuneration report, or other printed or online information. These may be compliance reports required by legislation or regulation, provide detail on the high-level information in the integrated report, or offer information to meet the needs of specific stakeholder groups.

The integrated report is not intended to be merely a summary of information contained in other reports/ information sources; rather, it connects the relevant information to communicate how value is created over the short, medium and long term. The integrated report will refer users to other reports/ information sources to access additional information if so required. The integrated report itself is not intended to satisfy all an organisation’s compliance reporting.

The International ‹IR› Framework (Framework), which has been endorsed by the IRC of SA as guidance on good practice on how to prepare an integrated report, requires an integrated report to be “a designated, identifiable communication”. In practice, some organisations have chosen to have a standalone integrated report while others have included the integrated report as a “distinguishable, prominent and accessible part” (as stated in the Framework) of another report which also includes the financial statements and compliance reports.

¹ The Practice Note King III Chapter 9: The integrated report explains that the approach taken in King III was that the form of the integrated report is less important than the substance of evidencing the integrated thinking of the collective mind of the board. The Practice Note states that there may be a single integrated report or a suite of reports containing integrated information. It notes that the International ‹IR› Framework allows for flexibility in the form of the report (section 1E) and that the board should apply its collective judgement in the best interest of the company when considering the requirements of the Framework or King III.

² Integrate: Doing Business in the 21st Century, Juta, 2013, Mervyn King and Leigh Roberts