Chapter 3 defines the process of integration, and deeply explains the concept of integrated report. We provide a wide range of literature review sources, for the purpose of establishing the characteristics of integrated reporting. Integrated reports cannot be fully understood until we clarify the meaning of the first word: integrated. This section of the book concentrates on defining the term of integration. Kirkpatrick and Lee (1999) links the notion of integration to sustainable development and economic, social, and environmental impacts on the decision-making process. Krajnc and Glavic (2005) mentions that corporations need to integrate the information related to sustainable development so that it becomes useful for decisions.
TopUnderstanding The Integration Process
There have been many approaches to study the integration process, from sustainability index combination (Krajnc & Glavic, 2005), to impact assessment integration: economic, social, environmental (Wilkinson et al., 2004), and to corporate social reporting (Frias-Aceituno, 2012). Previous work of Ramjerdi et al. (2008) studied integrated indicators, finding four levels of integration, namely: very strong, strong, weak, very weak. Eggenberger and Partidio (2000) distinguish between five forms of integration, namely: substantive, methodological, procedural, institutional, political. Substantive integration is both local and global in the same time, and assumes environmental, social, climate aspects. The methodological integration involves the cumulating of social, economic, and environmental information. Procedural integration represents the implication of stakeholders in the decision making process. The institutional integration involves government, agencies and institutions involvement, while political type of integration relates to the integration of regulations (Eggenberger & Partidio, 2000). All the integration types can be applied in our research, except substantive integration, as this one refers to behavioral aspects more than reporting practices.
From the IIRC perspective, integration means the interdependence/correlation between financial and non-financial information, as it results from the first draft- framework issued in 2013 (Figure 1).
Figure 1. IR content elements and principles according to the draft framework of IIRC
One year later, IIRC had a final framework, that added some general guidance on preparation and presentation of the report, rephrased some IR elements or principles, or changed their order in the framework.
However, the IIRC mentions that the above elements and principles are not mandatory and companies can still apply IR on a correct manner without necessarily including all these items. According to the IIRC vision of the integration process, we should consider the various forms of capitals from an IR, namely: financial capital, manufactured capital, intellectual capital, social and relationship capital, human capital, and natural capital.
TopIntegrated Reporting: Definitions And Characteristics
In order to provide a deep understanding of the concept of integrated reporting (Figure 2) we have gathered various definitions, opinions and facts upon the concept of integrated reporting. Integrated reporting has its roots in the notion of triple bottom line (Elkington, 1998). The concept of integrated reporting is mentioned for the first time by White (2005) who performs an analysis upon various corporations’ reports. By 2010, the scholars and academics were becoming more interested in the topic of integrated reporting, enlarging the international literature. Therefore, the notion of integrated reporting has evolved from the triple bottom line (Elkington, 1998), being inoculated by scholars and academics in their studies on corporate reporting (White, 2005, Eccles et al., 2010b; Abeysekera, 2012; Adams et al., 2011; Armbrester et al., 2011; Eccles & Krzus, 2010; Eccles & Krzus, 2011; Hanks & Gardiner, 2012; Krzus, 2011; Roberts, 2011).