“IR: Integrated Reporting. From the history of Corporate Reporting to the benefits and contents of the Integrated Report. The analysis of the Sustainability Report of two Italian SMEs.”
The Integrated Reporting is an innovative corporate reporting tool, designed by the IIRC, the International Integrated Reporting Council, following the European Directive 2014/95/EU. This paper will present the advantages a similar reporting can generate, within the company and for its stakeholders. The focus will also be on the corporate capital needed to write this report, focusing on human capital. Finally, we will analyse the current reports of two Italian SMEs and the difference with respect to the integrated report.
The topic of corporate reporting will be discussed, particularly focusing on the introduction of “Integrated Reporting”. In the following chapters we will present the Integrated Report, which contains both economic and non-economic information. It has been introduced as a result of the European Directive 2014/95/EU, which required larger companies to include non-financial information in the Notes to their financial statements.
It is therefore a report that includes both financial information, such as those we find on the Financial Statement, and non-financial information, related to the environment, sustainability, human capital, etc. You will notice how, with this report, human capital has become a fundamental part in evaluating the ability of a company to create value in the future. For years, theory and practice have been engaged in proposing reports that better meet the stakeholders’ information needs, but at the same time, which are synthetic and effective, containing the most significant information.
The integrated report seems to respond to all these needs, and many large companies have already adopted it, finding great benefits both internally and externally. In the last chapters we will discuss how SMEs approach this new report.
The newly introduced topic will be dealt with in 5 chapters:
– Chapter 1 will describe the history of the evolution of business reports, starting from mainly economic reports, with the sole purpose of highlighting the company’s result, to social and environmental reports;
– Chapter 2 will describe the Integrated Reporting: content, guiding principles, benefits, how it should be constructed;
– Chapter 3, an in-depth analysis will be carried out on the capitals that make up a company, which represent a key element to properly prepare an integrated report;
– Chapter 4, two Italian SMEs will be analysed with their sustainability reports, after which they will be compared to the integrated report framework;
– Chapter 5 will include the conclusion of the analyses made in the previous chapters and will introduce some hypotheses on the possible future evolution of reporting within Italian SMEs.