Integrated Reporting with integrity: avoiding the pitfalls of selective adoption

Integrated reporting is much more than ticking boxes or following a rigid template.

It’s a flexible framework designed to bring together an organisation’s strategy, governance, performance, and prospects in a way that reflects the full story of how value is created over time. The beauty of integrated reporting lies in its principles-based nature: it sets a direction, not a detailed script.

Right now, I’m seeing four challenges playing out concurrently:

• Climate mandates diverting attention and resources - the must-haves are taking oxygen from the nice-to-haves

• Long-term vision is almost impossible, making it very difficult to foresee how strategies might play out over the short, medium, and long term

• The backlash against DEI and backtracking on environmental commitments provides companies with tacit permission to scale back their focus on these non-financial areas

• These three factors are conspiring to weaken the integrity of cohesive <IR> reporting

In response, some companies are falling into the trap of paying lip service to <IR> principles - selectively adopting a few iconic components, such as the Value Creation Model (VCM), to maintain the appearance of a genuine integrated report. When organisations pick and choose headline elements like the VCM without embedding them within the wider <IR> framework, the result can be polished reports that lack real substance. This selective use risks reducing integrated reporting to a superficial exercise, mirroring greenwashing - highlighting some aspects to appear responsible while deeper transparency and connectivity remain absent. Such an approach undermines the framework’s true intent.

So, how do you leverage the flexible nature of the framework without falling into tokenism?

To prepare an integrated report that captures the proper spirit - even with reduced affirmative action - focus on these key approaches:

1. Lead with value creation, not process
   The framework encourages clarity on how your organisation creates value. Rather than getting bogged down in strict rules, keep the focus on explaining how your strategy and business model interact with your resources and relationships to deliver sustainable value as far ahead as you can see. Fashioning an accurate Value Creation Model can provide the foundation for this narrative thread.

2. Think holistically, tell a connected story
   Integrated reporting isn’t about separate reporting streams but about weaving aligned insights across financial, social, environmental, customer, and governance dimensions. The report should feel like a coherent narrative showing interdependencies and trade-offs, not a segmented checklist. And if you have stepped back from earlier commitments, such as SBTi, explain why with full transparency.

3. Use the capitals concept as a lens, not a formula
   The six capitals provide a useful way to consider resources and relationships that matter, but they don’t have to dictate structure or become the narrative focus. Let the capitals guide your thinking about what’s important, then craft your story in a way that makes sense to your stakeholders. The principles remain sound, even if current conditions require easing off the accelerator.

4. Focus on what matters, not how you decided it
   Materiality helps you zero in on the issues that truly affect value creation. Rather than over-explaining the process of identifying material topics, use the outcomes (the material issues list) to narrow your narrative’s focus to what makes a difference and keep the report meaningful. Consider relegating your materiality process to an appendix.

5. Avoid being overly jargon-heavy
   The best integrated reports speak plainly and authentically. They avoid dense language and overly formal tone. Think about how you would explain your value creation story to a trusted partner or customer. Particularly in unpredictable times, speaking frankly builds trust.

6. Iterate and improve, don’t chase perfection
   Integrated reporting is a journey. Use the framework as a guide to evolve your reporting over time, learning from each cycle rather than striving for a perfect, formulaic product at the outset. You can adjust your sophistication as expectations return.

In short, approach integrated reporting as a principles-based tool that helps you tell a clear, connected, and meaningful story - not a checklist to be ticked or a rigid structure to be followed. By keeping the spirit of the framework alive - even in a more sketchy fashion suited to the current economic climate - your integrated report becomes a powerful platform for engagement and strategic insight, not just a compliance exercise.

But resist the temptation to “tick the integrated reporting box” by selectively including a few popular components. The integrity and value of <IR> depend on organisations embracing its connectedness — not just its most attractive fragments.