Integrated Thinking
The framework isn't the interesting bit, the thinking is.
When Integrated Reporting first emerged, much of the conversation focused on the framework. What are the components? How closely should we follow them? What does an Integrated Report need to contain?
Those were reasonable questions. The <IR> Framework introduced a different way of thinking about reporting and challenged organisations to look beyond financial performance alone. But its more enduring contribution is integrated thinking: understanding how the different parts of an organisation connect, how decisions create consequences elsewhere, and how those relationships influence value over time.
You don't need to produce an Integrated Report to think that way.
Nothing happens in isolation
Organisations are systems in which strategy, investment, capability, people, customers and performance influence each other. Risk and opportunity connect with strategy. Sustainability connects with resilience. Governance influences decisions, and those decisions affect the resources and relationships the organisation depends on.
These aren't separate conversations simply because annual reports have traditionally put them in separate sections. Integrated thinking asks organisations to understand the relationships between them, and good reporting makes those relationships visible.
This is the principle of Connectivity, one of Integrated Reporting's most important contributions. In practice, it means helping readers see how strategy connects with priorities, how decisions and actions influence performance, and how the resulting outcomes shape future opportunities, risks and direction.
Value creation is bigger than financial performance
Another important contribution is the idea that organisations should explain how they create value, not simply what financial value they produced during the year.
Financial performance remains fundamental, but it is usually the result of a much broader system involving people, relationships, assets, knowledge, natural resources, reputation, capability and other factors the organisation depends on. The <IR> Framework describes these through the capitals, but the label matters less than the thinking behind it.
What resources and relationships does the organisation depend on? How does it use and transform them? What outcomes does it create? Which dependencies could constrain future success? Where is value being created, preserved or eroded?
Those questions take reporting much closer to how organisations actually work.
Choices create consequences
Seeing the organisation as a connected system also makes trade-offs harder to ignore. Organisations constantly make choices about where to invest, what to prioritise, what to protect and what to defer, and those choices can create very different consequences across the business.
A decision that creates value in one area may consume resources or create pressure somewhere else. Short-term performance may come at the expense of longer-term capability, while investment today may depress current returns but strengthen future resilience. Understanding value creation properly means recognising those consequences and, where they are material, helping stakeholders understand how they are being managed.
Time changes the picture
The same decision can look very different over different time horizons. What appears costly in the short term may build capability or resilience over the medium or long term, while an action that improves this year's result may weaken relationships, resources or options the organisation will depend on later.
Thinking across the short, medium and long term therefore changes the quality of both decision-making and reporting. It helps organisations consider the future consequences of today's choices and helps stakeholders judge whether current performance is strengthening or weakening the organisation's prospects.
Future focus isn't something to bolt onto the end of the report. It is part of understanding how value is created over time.
Better reporting starts with better conversations
A Value Creation Model may ultimately become a diagram. Materiality may produce a list of issues. Connectivity may become visible in the structure and content of the report. But much of their value comes from the conversations required to get there.
Developing them brings different perspectives together and asks people to explain how strategy connects with resources, relationships, risks, performance and future outcomes. That can expose different assumptions, reveal dependencies and make choices and trade-offs more explicit.
The report is the visible result, but the thinking involved in producing it can be just as valuable.
Frameworks evolve. Better thinking endures.
The <IR> Framework remains a useful discipline for thinking about value creation, Connectivity, materiality, trade-offs and different time horizons. But using its terminology isn't the objective, and producing something called an Integrated Report isn't the test.
What matters is whether the organisation understands how its strategy, decisions, resources, relationships and performance connect to create value over time, and whether its reporting helps stakeholders understand that too.
The Framework gave us a language for that. The thinking is what matters.
Planning with Integrated Thinking
Integrated thinking doesn't change the purpose of an annual report. It changes the way you arrive at it.
Instead of beginning with the report and asking what each section needs to contain, begin with the organisation. Understand its strategy for success, how it creates value, the resources and relationships it depends on, the risks and opportunities it faces, and what this year's performance says about its future.
That shift changes annual report planning from an exercise in assembling information into an exercise in understanding the business.
Start with the business, not the contents page
Annual reports have familiar components, and many are required. That can make the contents page an easy place to begin.
But starting with sections can encourage sectional thinking. Strategy is briefed to one team, sustainability to another, risk somewhere else, and performance follows the organisational structure. Eventually the pieces are assembled into a report.
Integrated thinking starts further upstream. Before deciding where information belongs, ask how the organisation actually works: what drives success, what it depends on, where value is created, what could constrain it, and how the different parts of that system influence each other.
The report structure can come later.
Explain, don't just disclose
Reporting requirements inevitably shape annual reports, but they shouldn't determine the whole communication.
A disclosure mindset asks: What information do we need to provide?
An integrated-thinking mindset also asks: What does the reader need to understand?
That second question changes the job. It requires context and interpretation, and often requires connections to be made between information reported in different places. A risk matters partly because of what it could mean for strategy. A performance result matters because of what it says about progress. A sustainability issue matters because of how it may affect resilience or future value.
The information may already be there. Integrated thinking helps explain why it matters.
Look for the connections
Strategy, governance, risk, sustainability, performance and financial results are often reported as separate subjects. The organisation itself isn't so tidy.
Integrated thinking looks for the Connectivity between them. Can readers see how strategic priorities influence decisions and resource allocation? Does performance reporting show progress against those priorities? Are material risks and opportunities connected to strategy and outlook? Do sustainability issues appear where they affect the business, rather than existing in a parallel narrative?
The aim isn't to mention everything everywhere. It is to give readers enough line of sight to understand how the pieces fit together.
That may affect report structure, but more often it affects the way sections talk to each other.
Focus on what matters
Integrated thinking also provides a useful antidote to reporting by accumulation.
Organisations generate more information than an annual report can usefully communicate. Materiality helps identify the issues that matter most to the organisation and its stakeholders, while strategy and performance provide other important perspectives on significance.
Together, they help the reporting team make choices about what deserves explanation, what evidence is needed and what can sit at greater depth in Reference.
Conciseness starts here. It is easier to produce a focused report when the thinking is selective before the writing begins.
Explain how value is created
One of the most useful planning questions is also one of the simplest:
How does this organisation actually create value?
Answering it properly means looking beyond products, services and financial outcomes to the system behind them. What inputs, resources and relationships does the organisation depend on? What does it do with them? What outcomes result? Where are the dependencies, constraints and trade-offs? How might that system need to change over time?
A Value Creation Model can help express the answer, but the diagram isn't the starting point. The understanding is.
Once that thinking is clear, it can inform much more than the VCM. It can strengthen strategy explanation, performance reporting, risk, sustainability and outlook because each can be understood as part of the same value-creation system.
Think across time
Integrated thinking also stretches the reporting horizon.
Current-year performance matters, but its significance often depends on what it means over the short, medium and long term. Investment may weaken current returns while building future capability. Strong current performance may be less reassuring if it depends on resources or relationships that are being eroded.
Planning with different time horizons in mind helps the report connect today's decisions and performance with tomorrow's possibilities and constraints.
It turns future focus from an Outlook section into a perspective running through the report.
Use the Framework as a lens, not a template
The <IR> Framework remains a useful way to test the thinking. Its principles encourage strategic focus and future orientation, Connectivity, stakeholder awareness, materiality, conciseness, reliability and consistency. Its content elements identify the areas readers need to understand to make sense of the organisation.
But you don't need to turn those principles and elements into a report structure.
Use them as questions. What are we not connecting? What is missing from the value-creation story? Are we explaining the future as well as the past? Have we focused on what matters? Can readers see the consequences of important choices?
That is where the Framework earns its keep.
The report should feel connected because the thinking was
Integrated thinking isn't a formatting technique applied once the content arrives. It changes the questions asked before the report takes shape.
Start with the business. Understand how value is created. Focus on what matters. Look for connections and trade-offs. Think across time. Then decide how the report should express that understanding.
When those decisions are made upstream, the finished report is much less likely to feel like a collection of sections assembled at the end of the process.
It feels like one organisation.
A Value Creation Model is much more than a diagram
A Value Creation Model is one of the most visible expressions of integrated thinking. But its greatest value may come before anyone sees the finished model.
Developing a good VCM requires an organisation to step back and understand how it actually creates value: what it depends on, what it does particularly well, how its strategy acts on the business, what outcomes result, and how all of those things connect.
The diagram matters. The thinking required to create it matters more.
Start with understanding, not drawing
It is tempting to begin a VCM by looking at other organisations' models or at the components suggested by the <IR> Framework. Inputs on the left, outputs and outcomes on the right, some version of the Business Model in the middle, arrows connecting everything together.
That may help with structure later. It isn't where the work should begin.
The starting point is the organisation itself. How does this particular business create value? What resources and relationships does it depend on? What capabilities or characteristics enable it to succeed? What does it actually do with those inputs? Who benefits from the outcomes, and where might value also be diminished?
Until those questions are understood, drawing the model is premature.
The conversation can be as valuable as the answer
This is where developing a VCM becomes an exercise in integrated thinking rather than graphic design.
People from different parts of an organisation often understand the business through different lenses. Finance sees one set of dependencies. Operations another. Strategy, sustainability, people, customer and risk teams bring others. Senior management and the Board may see connections that aren't obvious from within individual functions.
Bringing those perspectives together can expose assumptions, reveal dependencies and clarify how strategy, resources, relationships, activities and outcomes actually connect.
Sometimes the most valuable result is not a new diagram. It is a more considered, shared understanding of how the organisation works and creates value.
Strategy should be visible in the model
A VCM shouldn't describe a static business while strategy sits somewhere else in the report.
Strategy is about how the organisation intends to succeed and create value into the future. It may change where resources are invested, which capabilities are strengthened, which relationships become more important, what the organisation does differently or the outcomes it is seeking to create.
A good VCM helps make that relationship visible. It shows the value-creation system strategy is acting on, and can help explain how that system needs to evolve.
This is one reason developing the model can be useful beyond reporting. It can prompt strategic conversations about what really drives success, where the organisation is vulnerable and what needs to change.
Value creation isn't a one-way street
The familiar progression from inputs through activities to outputs and outcomes is useful, but real organisations are rarely that linear.
Outcomes feed back into the system. Investment can build capability. Strong customer outcomes can deepen trust and relationships. Financial performance can create capacity for future investment. Equally, poor outcomes can erode reputation, deplete resources or weaken the licence to operate.
External forces also change the system. Markets, regulation, technology, climate, stakeholder expectations and other factors can alter what the organisation depends on, what it needs to do and what successful value creation looks like.
Seeing those relationships is integrated thinking in practice.
The diagram has a job to do
None of this makes the finished VCM unimportant.
Its job is to distil a complex system into something readers can understand. It should help them see what the organisation depends on, what makes it distinctive, how it creates value and how the different parts of that story connect.
But a diagram can only simplify thinking that has already happened. If the underlying understanding is generic, incomplete or unresolved, visual polish won't rescue it.
The strongest Value Creation Models therefore begin long before the design process. They begin with people asking better questions about how the organisation works, challenging their assumptions and reaching a shared view of how value is created over time.
Developing that understanding is the real task. The diagram makes it visible.
Do we have copy for this?
Putting the thinking to work
Integrated Thinking becomes valuable when it changes the way you approach the report. The Practical Guides that follow help you apply the thinking to planning, materiality, connectivity and value creation, while the Tools provide practical ways to test the quality of the thinking and the connections you've made.
Practical Guides
-
"What business are we really in?"
It's a deceptively simple question, but one that many reporting teams discover is harder to answer than they expected.
Most organisations can describe what they do. Fewer can explain, simply and convincingly, how they create value. That's why developing a Value Creation Model is rarely a design exercise. By the time you begin arranging boxes and arrows on the page, most of the important work should already have been done.
The challenge is to understand the essential logic of the organisation, then distil it into a model that readers can quickly understand.
Start by understanding the business
Early discussions often begin with products, services, organisational structure or major operational processes. That's entirely appropriate. For some organisations, particularly those with complex manufacturing, logistics or service delivery, understanding the process is fundamental to understanding how the business works.
The challenge is deciding which parts of that story are central to explaining how value is created.
Financial performance is one outcome, but rarely the whole story. Organisations may also create value through stronger customer relationships, healthier environments, more capable people, valuable intellectual property, safer communities or more resilient infrastructure. They may also create outcomes that erode value or constrain their ability to create it in the future.
A good Value Creation Model helps readers understand how those outcomes arise from the way the organisation operates, rather than simply presenting a collection of positive results.
Put the Business Model at the centre
The Business Model is the heart of the Value Creation Model because it explains how the organisation transforms its most important resources, capabilities and relationships into products, services and ultimately outcomes.
For one organisation, that explanation may centre on a physical process. For another, it may focus on expertise, innovation, trusted relationships or stewardship of important assets. There is no standard formula, nor should there be.
What matters is that the Business Model is authentic, understandable and recognisable to the people who know the organisation best. A useful test is whether someone unfamiliar with the organisation could look at it and come away with a sound understanding of how the business works and why it succeeds.
This is also where strategy matters. The VCM describes how the organisation creates value, while strategy explains how it intends to succeed and strengthen that value creation into the future. The two shouldn't feel like unrelated stories.
See the Value Creation Model in action
Once the Business Model is clear, the mechanics of developing the Value Creation Model become much easier.
Rather than trying to explain all of those mechanics in words, the short video below shows how the elements of a VCM fit together and how they can be used to explain the value-creation system clearly.
▶ Developing a Value Creation Model (13-minute video)
[Embedded video]
(Consider showing 2 or 3 examples of different VCMs that exemplify some of these characteristics)
Focus on what matters
One of the most common mistakes is trying to include too much.
Every organisation is complex, but a Value Creation Model doesn't need to describe every resource, activity, relationship or outcome. Its job is to reveal the essential logic of how the organisation creates value.
The <IR> capitals can be useful prompts for thinking broadly about the resources and relationships the organisation depends on. But they aren't six boxes that need to be populated simply because the Framework provides them. Use whatever language and groupings best explain the organisation.
That requires editorial judgement. What is genuinely important to value creation? What is distinctive? What can be left to supporting detail elsewhere in the report?
The strongest models are often simpler than their authors first expect.
Distinguish outputs from outcomes
This distinction is easy to blur and important to get right.
Outputs are what the organisation produces or delivers through its Business Model, most commonly products and services.
Outcomes are what changes as a result. They may include financial returns, stronger customer relationships, healthier ecosystems, more capable people, improved customer experiences, intellectual property, community outcomes or changes to the resources and relationships the organisation will depend on in the future.
Outcomes can be positive or negative, and they can feed back into the value-creation system. Strong relationships may increase future capacity to create value. Depleted resources, lost trust or weakened capability may constrain it.
Thinking this way helps prevent activity from being mistaken for progress. It also makes the VCM a more realistic picture of value creation than a simple left-to-right production line.
Show the connections
A VCM is a model, not a collection of labelled boxes.
Readers should be able to see the logic connecting the organisation's important inputs and relationships, its Business Model, what it produces or delivers, and the outcomes that follow.
Those connections don't all need arrows. In fact, too many arrows can make the model harder to understand. But the relationships should be clear enough that readers can follow how value is created and where important dependencies sit.
This is also where trade-offs may become visible. Value isn't necessarily created everywhere at once. An organisation may strengthen one outcome while creating pressure elsewhere, or accept a short-term cost to build longer-term capability. A VCM doesn't need to explain every trade-off, but it shouldn't imply a frictionless system in which everything only gets better.
Use the model to strengthen the report
A strong Value Creation Model shouldn't appear once and then disappear. It can become a useful reference point throughout the report, helping readers connect strategy, material matters, risks, performance and future direction back to the same underlying value-creation system.
That doesn't mean every report should be organised around the VCM, or that every section needs to point back to it. Sometimes another structure will communicate more effectively. But the model and the report should clearly describe the same organisation. If the VCM says one set of things drives value while the strategy, KPIs and risks suggest another, something hasn't joined up.
Insight
If the VCM could belong to any organisation in your sector, it probably isn't finished.
A useful Value Creation Model is selective enough to reveal what is distinctive about your organisation, connected enough to explain how value is created, and simple enough for readers to understand without somebody standing beside it to explain what all the arrows mean.
Next step
Once you've developed your Value Creation Model, use the VCM Quality Review to test whether it clearly explains how your organisation creates value and whether the important connections are visible.
-
A Value Creation Model helps explain how an organisation creates value through the resources, relationships and activities it depends on. But value creation rarely happens without choices.
Invest now or protect current returns. Build capability or maintain cost discipline. Move faster or manage risk. Improve one outcome knowing that doing so may create pressure somewhere else.
Those trade-offs are often particularly visible when developing a VCM because it requires the organisation to look at value creation as a connected system. But the principle extends well beyond the model itself. Important choices and their consequences can run through strategy, performance, investment, risk, sustainability and outlook.
Yet annual reports often present progress as if everything can improve simultaneously, with no competing priorities, constraints or consequences. Real organisations don't work like that.
Acknowledging important trade-offs can make reporting more credible because it helps readers understand not only what the organisation is doing, but the choices behind it.
Trade-offs are part of value creation
Integrated thinking recognises that value can be created, preserved or eroded across the resources and relationships an organisation depends on.
Improving one outcome may require investment or sacrifice somewhere else. Capital expenditure may constrain short-term returns while strengthening future capability. Cost reduction may improve financial performance but place pressure on people or customer experience. Moving faster on decarbonisation may require greater near-term investment. Delaying investment may preserve cash today while increasing future operational or resilience risk.
The <IR> Framework often describes these relationships through the capitals. The terminology is less important than the principle: choices have consequences, and those consequences can play out differently over time.
Focus on the trade-offs that matter
Reporting trade-offs doesn't mean exposing every internal decision or turning the annual report into a record of management debate. Most decisions don't warrant that treatment.
The trade-offs worth making visible are those that help readers understand the organisation's strategy, performance or future prospects. They may explain why a strategic choice was made, why progress has been slower in one area, why investment has increased, why a target has changed, or why management has accepted pressure today to strengthen value creation tomorrow.
For example, investing in automation may improve productivity and efficiency over time, while creating near-term costs and workforce implications. Investing for growth may constrain short-term returns or dividends. If understanding the trade-off helps readers make better sense of the organisation, it's worth making visible.
Explain the thinking, not the debate
Readers don't need to know every option that was considered or every discussion that took place around the Board table. They do need enough context to understand why an important choice makes sense.
Usually that means explaining:
what the competing priorities or consequences were
what the organisation chose to prioritise
why that choice was made
what consequence or constraint was accepted
what the choice means over the short, medium or long term.
This doesn't need to become a formula repeated every time a trade-off appears. Often a sentence or two of explanation is enough. The objective is simply to make the decision intelligible.
Don't hide the downside
Trade-offs lose their meaning if reporting describes only the benefit of the choice.
If investment strengthens future capability but depresses near-term returns, both sides matter. If a strategic decision improves efficiency but creates a workforce implication, acknowledging that consequence gives readers a more complete picture. If environmental progress is constrained by technology, economics or security of supply, explaining the constraint is more credible than presenting an ambition without context.
That doesn't mean giving every consequence equal prominence. It means avoiding a version of value creation in which every decision appears to produce only positive outcomes.
Good reporting can acknowledge tension without becoming negative.
Think across time
Many trade-offs only make sense when viewed over different time horizons.
A decision that appears unattractive in the current year may strengthen capability, resilience or competitive advantage over the medium or long term. Conversely, a decision that improves current performance may consume resources, weaken relationships or create risks that emerge later.
Making the time dimension clear helps readers understand what management is optimising for, and why.
This is particularly important when strategy requires significant investment or transformation. Without the longer-term context, today's cost can look like underperformance rather than a deliberate investment in tomorrow's value.
Use the VCM to make trade-offs visible
A Value Creation Model is a particularly useful place to identify and reveal important trade-offs because it brings the organisation's resources, relationships, activities and outcomes together as parts of one system.
It may show, for example, that strengthening one form of value requires greater investment of another, that an activity creates benefits for one stakeholder while creating pressure elsewhere, or that today's use of resources is intended to strengthen value creation over a longer time horizon.
The VCM doesn't need to carry the full explanation. Often its role is simply to make the relationship visible, with the narrative providing the context where the choice itself matters, whether within strategy, performance, investment, risk, sustainability or outlook.
Nor does there need to be a separate Trade-offs section in the annual report. Trade-offs should strengthen the organisation's story, not become another disclosure layer.
What good looks like
Good reporting leaves readers with confidence that leadership understands the consequences of its choices.
They can see that competing priorities have been weighed rather than ignored, that constraints are understood, and that current decisions have been considered in the context of future value.
You don't need to reveal every decision to create that impression. But a report in which strategy progresses smoothly, every KPI improves and every stakeholder benefits equally can feel less credible than one that acknowledges the realities of making choices.
Sometimes the tension is part of the story.
Insight
Good strategy involves choices. Good reporting doesn't pretend otherwise.
Making important trade-offs visible helps readers understand the judgement behind decisions, the constraints the organisation is working within and how leadership is balancing performance today with value creation tomorrow.
Next step
Use the Connectivity Review to test whether important trade-offs and their consequences are visible across the report, rather than explained in isolation.
-
Annual reporting no longer necessarily means producing one document.
Depending on the organisation, the reporting suite may include the annual or integrated report, climate disclosures, sustainability information, modern slavery statements, detailed data, regulatory disclosures and other supporting material.
That raises a practical question: what belongs in the annual report, and what is better reported elsewhere?
There is no universal answer. But there is a useful principle: the annual report should remain the primary narrative account of the organisation, while separate publications provide additional depth where regulation, specialist audiences or the nature of the information justify it.
Keep the central story together
The annual report should give readers a coherent understanding of the organisation without requiring them to assemble the story from several publications.
Strategy, performance, material risks and opportunities, governance, sustainability issues and outlook should connect sufficiently for readers to understand where the organisation is heading, how it performed and what matters for the future.
That doesn't mean everything needs to sit in one document. It means the story shouldn't be fragmented simply because the reporting is.
Separate publications can carry greater detail, but readers shouldn't need to move between them to discover the organisation's overall direction or make sense of its performance.
Separate where there is a good reason
Some information has a natural reason to sit elsewhere.
Climate disclosures may have their own regulatory requirements and reporting architecture. Modern slavery statements may be separate compliance documents. Detailed sustainability data may be more useful in a data book or online resource than embedded within the annual report.
The test isn't whether a topic is important. Important issues may still be reported separately in depth.
The better question is: what does the annual report need to say about this issue for readers to understand its significance to the organisation?
If the issue materially affects strategy, performance, risk, resilience or future value, its significance belongs in the annual report narrative. The detailed supporting information can then sit where it is most useful.
Don't create separate reports for separate audiences
It can be tempting to solve different stakeholder needs by creating different versions of the organisation's story.
Usually, that creates more problems than it solves.
Investors, employees, customers, regulators and other stakeholders may want different levels of detail and focus on different subjects, but they should still encounter the same underlying organisation, strategy and direction.
A well-structured reporting suite accommodates those differences through depth, navigation and supporting information, rather than by constructing separate narratives for different audiences.
Think of a reporting suite as a connected system
Where multiple publications are necessary, their roles should be clear.
The annual report carries the central business narrative. Supporting publications provide deeper Reference information, specialist disclosure or additional data. Direct links help readers move between them where appropriate, while consistent terminology, measures and messages make it clear that the publications belong to the same reporting system.
That distinction also helps reduce duplication. The annual report doesn't need to reproduce a detailed climate disclosure or sustainability data set simply to demonstrate that the information exists. It needs to explain the significance of the issues, provide the most useful evidence at the appropriate level and make deeper information easy to find.
Don't let the suite grow by accident
Reporting suites tend to accumulate.
A new regulatory requirement creates another document. A sustainability report develops separately. Data tables move online. Investor presentations and other communications begin to sit alongside the formal reporting.
Each addition may make sense on its own, but over time the organisation can end up with a collection of publications whose roles overlap or are unclear.
Periodically ask what job each publication is doing. Does it have a distinct purpose? Is it the best home for that information? Does it duplicate something reported elsewhere? And is it obvious to readers how it relates to the annual report?
The objective isn't fewer documents for the sake of simplicity. It is a reporting system in which every document earns its place.
Insight
One organisation doesn't necessarily mean one document. It does mean one coherent story.
Separate publications can provide different depths and fulfil different reporting requirements. What matters is that readers can understand the organisation without having to reconcile competing versions of it.
-
Organisations communicate constantly.
Annual reports, profit announcements, investor presentations, executive interviews, internal communications, recruitment material and media responses all tell parts of the organisation's story, for different audiences and different purposes.
They shouldn't tell different stories.
Behind them should sit a common narrative foundation: a considered understanding of where the organisation is heading, what matters most, what has changed, what the evidence tells us and what it means for the future.
The annual report is one expression of that foundation. But it also provides one of the most rigorous opportunities to test it.
Get the story straight first
Ideally, the narrative foundation is settled before anyone starts writing the annual report.
It brings together strategy, context, performance, material issues, risks and opportunities, and outlook into a coherent account of the organisation and its direction. It isn't finished copy or a set of approved messages. It is the underlying story that major communications can draw from.
Different communications will emphasise different things and speak differently to their audiences. But the underlying direction, priorities and evidence should remain consistent.
Put the story to the test
The annual report puts that narrative foundation under unusual pressure because so much of the organisation has to come together in one place.
Strategy has to connect with performance. Financial results have to support the account being given of the year. Risk, governance and sustainability need to make sense alongside priorities and outlook. Claims need evidence. Tensions and setbacks can't simply disappear because they complicate the story.
The report is also subject to unusual levels of scrutiny from management, directors, advisers and, in relevant areas, auditors, assurance providers and regulators.
That makes annual report preparation a powerful test. Does the story still hold when all the evidence is brought together? Sometimes the process confirms it. Sometimes it exposes inconsistencies or changes the organisation needs to acknowledge.
Both are valuable.
Sometimes the thinking is worth more than the report
For some organisations, the most valuable outcome of annual report preparation isn't the report itself.
It is the process of stepping back from the day-to-day flow of communication and settling the narrative foundation: reaching a considered view of where the organisation stands, where it is heading and what the evidence says about its progress.
That thinking can have a much longer life than the report. Captured clearly, the agreed narrative can become a communication foundation for the year ahead, informing the profit announcement, investor presentations, executive interviews, media and PR activity, internal communications and other communications throughout the year. The expression may change for different audiences and channels, but the underlying story remains consistent.
The annual report benefits too. Instead of starting from a blank page, the reporting team begins with an established story and asks what has changed, what has been learned and what this year's evidence tells us about the road ahead.
So why call it a source of truth?
Because the finished annual report is usually the most comprehensive, scrutinised and enduring expression of that narrative foundation.
It puts the organisation's story and supporting evidence on the record. That gives it unusual authority and makes it a valuable touchstone for subsequent communication: are we still telling the same underlying story? If something has changed, can we explain what changed and why?
The annual report isn't the origin of the organisation's story, and other communications shouldn't simply copy it. But it is one of the places where that story is tested most thoroughly and expressed most completely.
That's what makes it an important source of truth.
Insight
The annual report shouldn't invent the organisation's story. It should put it to the test.
A strong narrative foundation gives major communications a common starting point. Annual reporting tests that story against the evidence and puts a considered version of it on the record.
Tools
-
A practical workshop for getting the reporting project off to the right start
Every reporting project needs a timetable. Good reporting needs something before that: agreement about what the project is trying to achieve, what is being produced, how decisions will be made and who needs to be involved.
Every organisation's process will be different. Reporting obligations, governance, team structure, approval requirements and external dependencies all affect how the project needs to run.
This workshop isn't a prescribed process. Use it to get the important decisions on the table before the timetable takes over.
1. What are we trying to achieve?
Before discussing deadlines and deliverables, agree what success looks like.
Publishing an accurate, compliant report on time is essential. But what else should this year's reporting achieve? What do stakeholders particularly need to understand? Is there something about the organisation, its strategy, performance or future direction that reporting needs to communicate more clearly?
Agreeing the ambition at the outset gives later decisions something to be tested against.
2. What are we producing?
Define the reporting suite before production begins.
What must be produced? What else genuinely adds value? How will the annual report relate to climate disclosures, sustainability information, modern slavery statements or other supporting material?
Be clear about the purpose of each publication and where the central organisational story will be told. This is also the time to question anything being produced simply because it was produced last year.
How will the report be experienced? Are we producing primarily a printed/static document, a digital or interactive experience, or something that needs to work equally well in both? That decision will influence how we structure and navigate the report, how we write for it, and the opportunities we have to layer, reveal and bring information to life.
3. What needs to be decided before writing starts?
Not every content decision can be made upfront, but some are much easier to resolve before drafting begins.
Consider:
What is the emerging reporting story?
What deserves greatest prominence this year?
What belongs in the central narrative, and what is primarily supporting Reference?
What does the intended format and reading experience mean for how we structure and write the report?
Are there significant issues that will require early management or Board discussion?
What evidence and information will be needed to support the story?
The aim isn't to settle the report before the work begins. It is to avoid using drafting as a substitute for decisions that should have been made earlier.
4. Who needs to be involved, and when?
Map the people who need to contribute, decide, review or approve.
This may include executive sponsors, the Board, subject matter experts, finance, sustainability, legal and regulatory advisers, auditors or assurance providers, and external reporting, writing, design and production partners.
The important question isn't simply who? It is when?
Bringing the right people in early can shape the work. Bringing them in late often means reworking it.
5. Where are the major decisions and dependencies?
Identify the points that could determine the critical path.
When will the reporting story and structure need approval? What requires executive or Board sign-off? When do financial results become available? Where do audit or assurance processes intersect with reporting? Which decisions depend on information or approval from somewhere else?
Then identify what doesn't need to wait. Photography, case studies, data gathering, governance content, design development and other work can often progress in parallel.
A good programme distinguishes between genuine dependencies and habitual sequencing.
6. Where will the pressure come from?
Every reporting project has predictable pressure points.
Executive and Board availability, late financial information, complex data collection, audit timetables, regulatory review and external suppliers can all create bottlenecks. So can internal contributors for whom the annual report is important but never quite the most urgent thing on today's desk.
Identify the likely constraints before finalising the programme. Planning around them is easier than recovering from them.
7. Have we allowed enough time for thinking?
Writing and design are visible parts of annual report production, but they are not necessarily what takes the most time.
Discussion, decisions, review, challenge and refinement often determine both the quality of the report and the length of the process.
Build time for thinking into the programme rather than treating it as something that happens between deadlines.
8. Are we ready to start?
Before the project moves into production, make sure the core team has a shared understanding of:
what success looks like
what is being produced and why
the emerging reporting story and priorities
who is responsible for what
the major decision and approval points
the critical dependencies and likely bottlenecks.
A timetable tells everyone when things need to happen. Good planning makes sure everyone understands why, what and who before the clock starts running.
Related guidance
One report or many?
Who is the annual report really for?
The annual report as the organisation's source of truth
-
A workshop for finding the story the year is actually telling you
A strong reporting story rarely emerges from asking, "What do we want to say this year?"
That starts in the wrong place.
The better starting point is to bring together the different perspectives that should shape the report: the organisation's strategy and direction, the issues that matter to stakeholders, the context in which it is operating, and the evidence of what actually happened during the year.
The reporting story sits somewhere in the intersection.
This workshop is designed to help a reporting team find it.
1. Start with the business perspective
Begin with the organisation itself.
What is the strategy for success? What are the priorities that matter most to delivering it? What was the organisation trying to achieve this year, and what longer-term direction was that intended to support?
Then consider the context. What changed in the operating environment? What pressures, opportunities or decisions became more significant? Did anything happen that changed the organisation's priorities or tested its strategy?
The objective is to understand the year in the context of where the organisation is trying to go.
2. Bring in the stakeholder perspective
Now look through the other end of the telescope.
What issues matter most to the organisation's stakeholders? What has formal materiality work revealed? What are investors, employees, customers, regulators or other significant stakeholders likely to be trying to understand?
Materiality brings an important stakeholder perspective, but it doesn't determine the reporting story on its own. Nor does strategy.
Put the two alongside each other and look for the points of connection, tension and difference.
3. What did the year actually tell us?
Now bring in the evidence.
What changed during the year? Where did the organisation make meaningful progress? Where did performance fall short? What important decisions were made, and why? What assumptions were tested? What unexpected developments changed the picture?
Look across financial and non-financial performance, not just the achievements people are keenest to talk about.
This is often where the reporting story begins to reveal itself. The year may have validated the strategy, tested it, accelerated it or exposed a need to adapt. The significance lies in what happened in relation to the direction of travel.
4. Find the organising idea
Step back from the detail and ask:
What is this year's report really about?
Try to express the answer in one or two sentences before looking for polished language.
A useful organising idea should connect:
where the organisation is heading
what was significant about this year
what the evidence says about progress
what that means for the future.
It should be specific enough to belong to this organisation in this year. If it could comfortably headline a competitor's report, keep working.
And don't worry about making it sound clever. At this stage, clarity is much more useful than copywriting.
5. Test it against the awkward stuff
Now try to break it.
Does the story still work when you consider weaker performance, difficult trade-offs, material risks, stakeholder concerns or things that didn't go to plan?
Does it acknowledge the most significant developments of the year, or quietly step around anything inconvenient?
A good reporting story doesn't need to give equal weight to every issue. But it does need to accommodate reality.
If the evidence complicates the story, make the story more nuanced. If it contradicts it, change the story.
6. Look forward
A reporting story shouldn't end at balance date.
What does the year's performance tell us about what comes next? What has changed in the short-, medium- or long-term outlook? What needs to go right? What priorities, dependencies, risks or opportunities will shape the next stage?
This future perspective is what turns an account of the year into an explanation of the organisation's direction.
7. Build the narrative foundation
Once the organising idea holds up, develop it into a short narrative foundation the reporting team can work from.
Capture:
the strategic direction and context
the significance of the year
the few messages that most need to land
the evidence that supports them
important tensions, trade-offs or qualifications
what it means for the future.
This isn't report copy. It is the settled story base that the report will express and test, and that can also inform other major communications.
Keep it short enough to be useful. If the narrative foundation needs several pages to explain, the central story probably isn't settled yet.
8. Use it, and keep testing it
The narrative foundation should now guide the report.
Use it to test structure, prominence, content and evidence. Does the report make the central story visible? Are the important messages supported? Do individual sections reinforce the whole rather than developing their own competing narratives?
And keep testing the foundation as the report develops. New results, Board discussion, audit findings or late information may change the story.
The narrative foundation is settled thinking, not sacred text.
Workshop output
By the end of the session, aim to have:
a clear articulation of what this year's report is really about
the 3 to 5 messages that most need to land
the evidence that supports those messages
the important tensions or qualifications the story needs to accommodate
a concise narrative foundation to guide the report and other communications.
Related guidance
Every great annual report starts with one clear story
What deserves prominence?
The Narrative Spine
Using materiality well
The annual report as the organisation's source of truth
-
A practical guide to deciding what belongs where
Annual reporting increasingly involves more than one publication.
The annual report may sit alongside climate disclosures, sustainability information, modern slavery statements, detailed data or other regulatory and supporting material. The challenge is not simply deciding how many documents to produce. It is deciding what job each one should do.
Use this guide to test the structure of your reporting suite before content becomes locked into particular documents.
1. Start with the annual report
Begin with the document that needs to give readers the clearest overall understanding of the organisation.
Ask:
What do readers need to understand about our strategy, performance and future direction?
Which risks, opportunities and material issues are important to that understanding?
What information needs to remain in the annual report for statutory, regulatory or governance reasons?
What supporting evidence needs to be close enough to the narrative for readers to understand and trust it?
The annual report should work as a coherent account in its own right. A reader shouldn't need to assemble the central business story from several publications.
2. Identify what has a reason to live elsewhere
Now consider the other information you need or want to publish.
For each potential companion document or resource, ask:
Why should this be separate?
There may be a clear reason:
regulation requires or encourages separate reporting
the information serves a specialist purpose or audience
the level of detail would overwhelm the annual report
extensive data or methodology is more usable elsewhere
the format allows information to be maintained or accessed more effectively.
"Because we produced one last year" isn't a reason.
Nor is importance itself a reason for keeping something in the annual report. A topic can be highly significant while its detailed disclosure sits elsewhere.
3. Separate the story from the depth
It can be useful to think about reporting information as Narrative and Reference, although the two don't map neatly to separate documents.
The annual report contains both. Its Narrative content explains what matters, what changed and what it means. Its Reference content provides financial statements, governance information, metrics, disclosures and other evidence that belongs within the report.
Companion publications may provide additional Reference depth.
So for each significant topic, ask:
What does the annual report need to explain for readers to understand its significance?
Then:
What additional detail belongs here, and what is more useful elsewhere?
For example, a material climate issue may need to be integrated into the annual report's strategy, risk, performance or outlook narrative, while detailed climate disclosures sit in a separate publication.
The objective is not to move Reference information out of the annual report. It is to put information at the depth and location where it does its job best.
4. Map the connections
Once the proposed suite is clear, look at it as one reporting system.
For each major topic, identify:
where the central narrative sits
where the key evidence sits
where additional detail sits
how readers move between them.
Use direct links wherever possible. If the annual report discusses a climate risk, sustainability metric or other issue supported elsewhere, take the reader to the relevant information rather than merely naming another document.
Readers should never have to become detectives.
5. Test for gaps and duplication
Now look across the suite.
Gaps: Is anything important falling between publications because each assumes another document explains it?
Duplication: Are the same explanations, tables or disclosures being reproduced unnecessarily?
Contradictions: Do terminology, measures, targets, boundaries or time horizons change between publications without explanation?
Orphans: Is there a document or body of information that no longer has a clear purpose but continues to be produced?
Some repetition is useful. Important context may need to appear in more than one place so each publication can stand alone. The test is whether repetition helps readers understand, or simply reproduces content.
6. Test the suite from the reader's point of view
Finally, ignore the internal reporting structure and imagine arriving as a reader.
Can you understand the organisation from the annual report without needing to read everything else?
If you want more depth, is it obvious where to go?
Do links take you to useful destinations?
Can you tell why each publication exists?
And, wherever you enter the suite, do you encounter the same underlying organisation, strategy and direction?
If the answer to those questions is yes, the architecture is probably doing its job.
Decision output
By the end of the exercise, aim to have a simple reporting-suite map showing:
each publication or reporting resource
its purpose
the information it owns
where related narrative or evidence appears elsewhere
the links required between publications
any duplication, gaps or legacy content to resolve.
Insight
Every document should earn its place.
A reporting suite doesn't become better by becoming bigger. Separate information where there is a good reason to, then make the connections strong enough that
readers still experience one coherent story.Related guidance
One report or many?
Narrative vs Reference
Climate disclosures in context
Digital reading and machine/AI readability
-
The best annual reporting briefs start with the business, not the report.
Before an agency can help communicate an organisation clearly, it needs to understand where the business is heading, how it is progressing, what it depends on, what's changing around it and what matters most now and for the future.
Some of that will already exist in strategy documents, Board papers, investor presentations and previous reporting. But documents rarely tell the whole story. A good briefing process gets beneath them, drawing out the context, judgement, challenges, aspirations and organisational character that will ultimately make the report distinctive and credible.
Brief the problem, not the solution.
1. Where are you trying to take the business?
What is the organisation ultimately trying to achieve? What is the strategy for getting there, and what are the few priorities that matter most?
How far along that journey are you? What has changed since the strategy was established? What should be different about the organisation if the strategy succeeds?
And who should benefit? Consider the value the organisation aims to create for shareholders, customers, employees, communities and other stakeholders it depends on.
Understanding the destination provides the context for understanding the year.
2. How is the strategy working?
An annual report shouldn't simply restate the strategy. It should help readers understand how it is translating into action and results.
Where are you making good progress? Where is progress slower than expected? What evidence tells you the strategy is working? What have you learned along the way?
Have circumstances required you to change course, accelerate, invest differently or reconsider an assumption? Are some strategic priorities becoming more important while others are receding?
This is often where the real reporting story begins to emerge.
3. What's making the journey harder, or easier?
No organisation operates in isolation.
What are the significant headwinds and tailwinds? Where are the pressures and opportunities coming from? Customers, competitors, regulation, technology, workforce capability, supply chains, access to capital, climate, changing social expectations or something particular to your sector?
Which are short-term conditions to navigate, and which could fundamentally change the business over the longer term?
Understanding the environment around the organisation helps explain not only performance, but the context in which strategic decisions are being made.
4. What does the organisation depend on to succeed?
Think beyond financial capital.
What are the resources, capabilities and relationships the organisation couldn't succeed without? Its people and their knowledge? Customer trust? Suppliers? Communities? Natural resources? Intellectual property? Infrastructure? Access to capital? Its reputation or social licence to operate?
Which of these does the organisation create value for as well as draw value from?
How are those dependencies changing? Which need to be protected, strengthened or replenished if the organisation is to continue creating value over the long term?
These questions can reveal much more about the business than a conventional description of its operations.
5. What choices are you making?
Strategy involves choices, and sometimes trade-offs.
Where are you investing now to create value later? What are you choosing to prioritise, and what are you consciously giving less priority to? Where are there tensions between short-term performance and longer-term ambition?
Are decisions being made today to strengthen workforce capability, customer relationships, communities, environmental resilience or other resources and relationships the organisation will depend on tomorrow?
Not every internal debate belongs in the annual report. But understanding the important choices helps explain the judgement behind the organisation's direction and performance.
6. What could change the future?
Look beyond the current reporting period.
What emerging risks and opportunities could materially affect the organisation over the next few years? What assumptions about the future underpin today's strategy?
How might changes in society, technology, regulation, climate, customer expectations, workforce expectations or resource availability alter the organisation's ability to create value? Where could those same changes create new opportunities?
What capabilities, resources and relationships will become more important? Where is the organisation most resilient, and where is it vulnerable?
Future focus isn't about predicting what will happen. It's about helping readers understand how well the organisation is preparing for what might.
7. What has this year taught you?
A year's results become more useful when they tell us something.
What surprised you? What worked better than expected? What didn't? What do you understand about the organisation now that you didn't understand a year ago?
Have customer behaviour, operational performance, stakeholder feedback, materiality work, sustainability reporting, risk analysis or other processes revealed something that is changing your thinking?
What will you do differently as a result?
These learnings often provide the bridge between reporting past performance and explaining future direction.
8. What do you most need readers to understand this year?
Now turn the business thinking into a communication challenge.
If readers remember only a handful of things, what should they be? Is there something about the strategy, performance, outlook or organisation that isn't well understood? Has the story moved on from last year?
What deserves particular prominence this year, and why? What difficult issue needs context rather than simply disclosure? Where do you need to build understanding, confidence or belief?
Don't worry yet about the headline or creative proposition. Give the agency the intelligence it needs to help find the clearest story.
Define the assignment
Once the business context is clear, the practical brief becomes much easier to write.
What are we producing?
Define the reporting suite and the role of each component. What must be produced, what else genuinely adds value, and where will the central organisational story be told? How will the report be experienced: print, static PDF, digital or a combination?What is fixed, and what is open to challenge?
Identify genuine constraints, including regulatory requirements, governance processes, timing and brand requirements. Also make clear where the agency has room to question established structures, approaches or conventions.What does the agency need access to?
Provide the relevant strategy, performance information, research, materiality work, sustainability information, investor and stakeholder feedback and other source material. Just as importantly, provide access to the people who can explain the thinking behind it.Where do you want the agency to add value?
Be clear about the role you expect it to play. Is it there to help find the story, challenge thinking, shape structure, write, design, develop the digital experience, or work across all of these?What should the organisation feel like?
What personality should readers experience through the report? Confident or understated? Progressive or pragmatic? Ambitious, warm, challenging, precise, entrepreneurial? Think beyond a list of brand attributes. What should someone who knows the organisation well recognise as unmistakably you?What will success look like?
What should readers understand more clearly as a result of the report? What should feel different or work better than it did last year? Success doesn't always require a formal measure, but there should be agreement about what the work is trying to achieve.How will we work together?
Clarify who owns the project and the key decisions, who needs to contribute, when senior management and the Board will become involved, how feedback will be consolidated and where the agency is expected to lead, advise or execute.Insight
The better your agency understands the business, the better it can explain the business.
A strong brief doesn't simply describe the report you need produced. It gives the agency access to the organisation's direction, progress, challenges, choices, dependencies and aspirations, and enough freedom to turn that intelligence into a what report that helps others understand where the business is going and why.