Integrated Reporting
Term of the Day - 2 February 2024
Today’s Term is “Integrated Reporting”.
Integrated Reporting (IR) is a reporting framework that provides a comprehensive view of an organisation's value creation by integrating financial and non-financial information. It revolves around the concept of "capitals," representing different forms of resources that organisations use and affect. Here's a breakdown of the capitals in the context of IR:
Financial Capital: This includes the funds and monetary resources a company uses to operate and grow. It encompasses income, investments, and financial instruments.
Manufactured Capital: Refers to the physical and infrastructure assets a company possesses, such as buildings, machinery, and technology. It represents the tangible outcomes of human efforts.
Human Capital: Involves the skills, knowledge, and capabilities of the workforce. Human capital is crucial for innovation, productivity, and the overall success of the organisation.
Intellectual Capital: Encompasses intangible assets like patents, trademarks, and proprietary processes. It represents the organisation's intellectual property and its capacity for innovation.
Social and Relationship Capital: Relates to the organisation's interactions with external stakeholders, including relationships with customers, communities, and social networks. It highlights the value derived from positive social engagement.
Natural Capital: Encompasses the resources and ecosystems from which the organisation derives value. This includes environmental considerations, such as biodiversity, climate stability, and natural resource availability.
Integrated Reporting encourages organisations to disclose how they interact with, and impact, each of these capitals, providing a more holistic understanding of their overall performance and sustainability.
