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Reporting

The Integrated Reporting Roadmap: Insights, Tips, and the Workiva Way

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Your company's reporting should tell a story. A chronicle of operational triumphs and challenges that stakeholders, investors, analysts, and the like can use to make informed decisions. But as you know, that gets harder to pull off by the day as regulations evolve, the economy flutters, and competitors flex. But that's exactly what makes integrated reporting such an ace-in-the-hole.

As we're about to discuss, assured integrated reporting is an accurate, revealing peek behind the operational curtain, providing a holistic view of an organization that traditional reporting can't match. And, just as importantly, thanks to solutions like Workiva, integrated reporting isn't just possible, but is now within arm's reach. Stick around and we'll explain.

What Is Integrated Reporting and Why Is It So Important?

Integrated reporting is a transformative approach to your standard corporate reporting and communication. It combines financial and non-financial reporting into a single, comprehensive report that companies can use to provide stakeholders with a holistic view of their performance, strategy, and long-term value creation.

In today's environment, integrated reporting is most often associated with environmental, social, and governance (ESG) data, and for good reason. And while we'll zero in on the benefits it brings to sustainability reporting in just a bit, that's not to say integrated reporting is exclusively for ESG-related purposes. Far from it.

At its core, integrated reporting combines financial and non-financial dimensions to create a more accurate and complete representation of a company's current state and future prospects. The result is concise, connected reporting that blends financial metrics and non-financial information – including ESG – into a single narrative on an organization's strategy, governance, and performance.

Additional key points on integrated reporting:

  • The non-financial aspect of integrated reporting can encompass areas like ESG, intellectual capital, human resources, and social impact, amongst others.
  • An integrated report aims to explain how all forms of "capital" – financial, manufactured, intellectual, human, social, and natural capital – connect to create value over time.
  • Genuinely integrated reporting provides a complete picture of a business to stakeholders. It breaks down internal silos and adopts a broader perspective beyond just finances.
  • Although many organizations use integrated reporting to meet emerging ESG disclosure requirements in a more connected, strategic way, improving value creation narratives, reducing departmental silos, and promoting integrated thinking across business units are benefits even without regulatory pressures.

The bottom line – in an age characterized by increasing scrutiny over corporate behavior, integrated reporting provides a strategic advantage. Organizations that adopt it demonstrate a future-oriented mindset and a commitment to addressing today's challenges, particularly around sustainability issues.

All of this aligns with the expectations of investors, regulators, and stakeholders who seek greater transparency, and accountability, as well as an understanding of how environmental and social issues impact financial performance. And, yes, that's as good as it sounds.

The Challenges of Traditional Reporting

But as beneficial as integrated reporting is for a company and its stakeholders, we understand that old habits die hard. Old-fashioned, traditional reporting is ingrained into corporate DNA at this point, making it tough to see beyond those traditional constraints for many.

However, just because you've done something a certain way forever doesn't mean it's the right way. Because, as we all know, an entirely traditional approach to reporting often includes inherent flaws that can undermine accuracy, transparency, and efficiency. These flaws are particularly pronounced when an organization tries to mesh two separate reporting silos, as is the case with sustainability reporting.

The result of such attempts is manual, disconnected data management that ultimately provides outdated, inaccurate, and unreliable information for report users. And nothing about that last sentence is good. So, on that note, let's take a closer look at the challenges and consequences of entirely traditional reporting in this complex, splintered modern world.

Manual, Disconnected Data Silos

Traditional reporting practices involve distinct departments handling financial reporting on one side and other reporting areas elsewhere. This siloed approach creates barriers that impede the integration of essential information.

The accounting team, of course, manages and reports financial data – revenue, expenses, and the like – while entirely separate groups handle other reporting areas like sustainability metrics related to environmental, social, and governance factors.

Unfortunately, the disconnection between these data silos leads to manual exchange processes, often reliant on spreadsheets and emails. This manual handling of data not only increases the risk of errors and inconsistencies but also lacks the necessary audit trails for thorough review. As a result, companies face a significant challenge in ensuring the accuracy and reliability of the combined financial and non-financial information.

Moreover, the limited visibility across teams within these siloes inhibits effective collaboration and hampers the generation of comprehensive insights. Finance, sustainability, and other relevant teams can't fully leverage each other's data and expertise, making it difficult to make fully informed decisions and adopt strategic initiatives that align with organization-wide goals.

The Risks of Getting It Wrong

This is an easy one. Sure, incorrect or incomplete data can lead directly to costly reporting mistakes and financial restatements. And as we've discussed in the past, restatements can be complex, treacherous territory for a company to traverse.

But the risks don't end there, of course. In fact, in many ways, restatements are often where they're just starting, especially in a corporate environment where so many already look at businesses with a suspicious eye. The impacts on stakeholder trust and reputation are arguably the costliest repercussions of getting your reporting wrong.

In the case of sustainability, that scarlet letter is hard to shake. Perhaps even impossible in the often unforgiving public eye. Such damage to trust and reputation, fair or not, can be a death knell for even the strongest of companies.

The Critical Role of Assurance

To state the obvious, an assurance framework is crucial to mitigate the risks we just discussed and enhance the accuracy of reported data. By introducing independent, third-party assurance measures similar to financial audits, organizations can significantly improve the precision and credibility of their integrated reporting efforts and, thus, dodge an incredibly damaging bullet in the court of public opinion.

But discussing assurance might be putting the cart before the horse for companies still laser-focused on their comfortable, familiar traditional reporting processes. So, to take an even more basic approach, just acknowledging the dangers of traditional reporting can be a critical first step. First and foremost, companies must recognize the urgency of transitioning toward integrated reporting and adopt innovative solutions that address the flaws of the current state.

Put another way, some businesses and leadership teams need to have their cage rattled a bit to see things for how they are today and where they’re heading, not how they were in the halcyon days of yore. And there's no better way to rattle such cages than to take a deeper dive into what amounts to the reporting boogeyman for many organizations these days – ESG.

Integrated Reporting in the ESG Era

Regulatory pressures and stakeholder expectations around sustainability are putting the squeeze on companies. And then some. Up is down, left is right, and traditional reporting tactics aren't cutting the proverbial mustard anymore. Thankfully, all is not lost since, as you might have guessed, integrated reporting offers a powerful solution to companies willing to look at their reporting differently than they have before, particularly as it pertains to ESG.

Regulatory Pressures

One key regulatory development driving integrated reporting is the European Union's Corporate Sustainability Reporting Directive (CSRD). This directive requires in-scope companies to provide integrated annual reports that combine financial and sustainability information.

Actually, the CSRD goes a step further by requiring independent assurance over reported ESG metrics, ensuring a level of rigor similar to that of financial statements. Obviously, with the CSRD, integrated reporting is no longer a voluntary practice but a regulatory requirement for certain companies.

Similarly, in the United States, the Securities and Exchange Commission (SEC) has proposed climate risk disclosure rules for public companies to standardize and enhance the disclosure of climate-related risks, greenhouse gas emissions, board diversity demographics, and executive compensation metrics.

The SEC’s objective is to establish comparability across public companies regarding their ESG performance, so, while not as explicit as the CSRD, there's an obvious push for integrated reporting that will only grow with time. And, like it or not, the CSRD, ESRS, SEC, IFRS from the ISSB (International Sustainability Standards Board), and other servings of ESG-related alphabet soup are only the tip of the ESG regulatory iceberg.

Stakeholder Expectations

In addition to regulatory pressures, stakeholders play a vital role in shaping the demand for integrated reporting, particularly with ESG. Investors and shareholders have increasingly voiced their expectations for standardized and comparable ESG disclosures, wanting comprehensive information that lets them benchmark companies' performance within their industry and across sectors.

Voluntary sustainability reports, while commendable, often lack the standardization required to fulfill this need for comparability. Imagine an entirely laissez-faire approach to financial reporting – would stakeholders end up with the consistent, comparable information they need to make well-informed decisions? Not a chance. It'd be the Wild Wild West for reporting, and no stakeholder wants that.

Some companies have already taken the initiative to integrate ESG factors directly into their financial filings. By doing so, they showcase the relationship between financial performance and sustainability progress. Likewise, these organizations recognize the importance of proactively adopting integrated reporting to reduce risks, enhance access to capital at lower costs, and demonstrate their commitment to sustainable practices.

Ultimately, integrated reporting allows companies to better respond to stakeholder demands for comprehensive and standardized ESG disclosures. This approach ensures they incorporate relevant information into financial filings and, thus, provide a clearer view of performance in terms of environmental, social, and governance factors.

The Benefits of Using Workiva for Integrated Reporting

We know what you're thinking – all of this sounds fine and dandy, but where do we even start with this integrated reporting? And we get that. Many companies – perhaps even most – are still just trying to wrap their heads around ESG itself.

But like it or not, the ESG train slows for no one. Not even you. Therefore, embracing it with everything you have is in your best interest since sustainability reporting is very much the future. A future that is pretty much already here.

That's where Workiva enters the picture, giving companies a fleshed-out, impactful solution for integrated reporting that flexes and evolves with the reporting landscape, not to mention ESG and anything else you might throw at it.

As a matter of fact, we think so highly of Workiva's cloud platform and how it helps companies connect data, control collaboration, and drive transparency, we wanted to shine an extra bright spotlight on some of its key benefits, particularly around sustainability reporting.

Connected Data, Controlled Collaboration

Workiva's cloud platform provides robust capabilities designed to streamline the integrated reporting process. It gives an overview of the data ecosystem to ensure seamless connectivity between financial and non-financial information. In doing so, the platform empowers teams to collaborate effectively, breaking down silos and enabling cross-functional communication.

Also, data securely stored in the cloud significantly reduces the risk of data inconsistencies and errors resulting from manual processes.

Automation and Controls

But let's not glance over the benefits of collaboration so quickly. As we said, Workiva's platform automates the collection and integration of data from various systems, eliminating the need for manual data entry and reducing the risk of human error. As such, the automation capabilities drive the seamless flow of data across departments, enabling finance, sustainability, risk, and compliance teams to work together efficiently.

Just as importantly, the platform provides robust controls and audit trails, ensuring end-to-end data integrity and streamlined reporting processes. This level of automation and control optimizes the accuracy and reliability of integrated reports.

Optimized for Evolving Regulations

Given its place at the forefront of this topsy-turvy regulatory environment, Workiva is well-versed in helping companies align their reporting practices with recognized industry standards. Case in point – the platform supports embedded frameworks such as SASB (Sustainability Accounting Standards Board), TCFD (Task Force on Climate-related Financial Disclosures), and GRI (Global Reporting Initiative).

This functionality ensures the platform remains in sync with emerging reporting obligations. Therefore, by utilizing Workiva, organizations can stay ahead of the regulatory curve and maintain compliance with evolving reporting frameworks.

Trusted by Leading Global Organizations

We wouldn't be focusing on Workiva right now if it hadn't established itself as a trusted provider of integrated reporting solutions. That’s why the solution boasts an extensive customer base spanning industries and geographies.

To that point, organizations of all sizes – from multinational corporations to small enterprises – have turned to Workiva for their integrated reporting needs. And for good reason. By connecting data, controlling collaboration, and driving transparency, Workiva's platform ensures a seamless flow of information across departments. Once again, the automation and control features enhance efficiency and accuracy, while the platform's adaptability to evolving regulations guarantees compliance. 

And, yes, we understand this sounds like a paid ad for Workiva, but we assure you it's not. Ultimately, our job at Embark is to do right by the client, whether that means implementing Workiva or another solution for their integrated reporting needs.

But that's the thing – the "right" solution is so often Workiva, it's become the de facto, go-to platform for companies wanting to board the Integrated Reporting Express. And that's exactly why we've singled Workiva out today.

Still, we suggest doing your own due diligence before jumping into the pool since there are certainly more integrated reporting solutions out there. For efficiency's sake, though, we recommend beginning the process with Workiva – you'll thank us later.

How to Transition to Integrated Reporting

Of course, even a comprehensive, cutting-edge solution like Workiva isn't magic. For integrated reporting to take root and flourish in your organization, you must do some legwork first.

Specifically, transitioning to integrated reporting requires a systematic approach to assess the current situation, choose the optimal reporting platform, prepare a compelling business case for investment, and plan a thoughtful implementation. By following these steps, organizations can ensure a successful transition that aligns with their compliance objectives and strategic goals.

Assess the Current Situation

The first step in the transition to integrated reporting is to conduct a comprehensive assessment of the current reporting practices within the organization. This involves surveying teams – including finance, sustainability, enterprise risk management, and internal audit – to gain a clear understanding of the existing processes, systems, and pain points.

Through this assessment, organizations can identify gaps between the current state of reporting and future needs. This analysis will reveal the specific challenges leadership should address to seamlessly integrate financial and sustainability reporting data.

Choose the Optimal Reporting Platform

Once you've completed the assessment, the next step is to define measurable goals aligned with regulatory compliance requirements and overall corporate strategy. These goals will serve as a benchmark for selecting the optimal reporting platform.

To choose the most suitable platform, organizations should compile a list of must-have capabilities based on the limitations and gaps identified in their current reporting systems. These capabilities may include cloud collaboration, audit trail support, data connectivity, and embedded frameworks for reporting on ESG metrics.

Once again, we recommend beginning the process with Workiva since it's the platform most likely to check all the boxes. However, since buy-in across the enterprise is critical in any new project or investment, it still pays to be thorough with your research.

In other words, go through demonstrations, cost analysis, and review case studies to gauge effectiveness in addressing similar challenges. Leadership, the Board, stakeholders, and other interested parties will want to see a deliberate, expansive search and selection process.

Obtain Buy-In Across Functions

Speaking of buy-in, it's crucial for any integrated reporting initiative. If people don't believe in the cause, it will inevitably flatline. And that's a scenario where everyone loses, including investors and other stakeholders.

Thus, since one of the fundamental aspects of integrated reporting is breaking down silos and promoting collaboration among different departments, be sure to get buy-in from all key departments in the reporting process. Representatives from finance, sustainability, risk management, compliance, and other relevant functions should come together to review the findings from the assessment phase and align on the goals and objectives of integrated reporting.

By considering all perspectives and engaging in open dialogue, organizations can ensure an integrated reporting approach captures the unique expertise and insights of each department. This collaborative process fosters a sense of ownership and collective responsibility for the success of integrated reporting.

Prepare a Business Case for Investment

The next step involves preparing a persuasive business case highlighting the problems identified during the assessment, the key stakeholders involved, and the proposed solutions offered by the selected reporting platform. The business case should emphasize the return on investment (ROI) and other benefits the organization will likely gain from adopting integrated reporting.

In particular, decision-makers need to understand the value a reporting platform can bring to the organization and how it aligns with strategic objectives. By emphasizing the benefits and value proposition – such as increased data accuracy, efficiency gains, improved decision-making, and critical improvements in key areas like ESG reporting – the business case will gain the necessary support for investment in the chosen platform.

Plan a Thoughtful Implementation

After securing the investment approval, plan the implementation phase with careful consideration. This includes setting realistic timelines that align with reporting cycles, ensuring you meet deadlines for data collection and report publication.

The implementation plan should also define detailed requirements for the selected reporting platform, including data integration, customization, and user training. Ideally, you want to partner with proven specialists who can help develop clear training plans and ensure all stakeholders understand how to effectively use the integrated reporting platform, not to mention assistance with data migration, processes, and other critical areas.

By adopting a thoughtful and well-planned implementation approach, organizations can effectively transition to integrated reporting, utilizing a reporting platform that aligns with their compliance obligations, strategic objectives, and reporting cycles, helping them hit the ground running.

Implement Effective Controls

As you'd expect from any facet of business reporting, effective controls play a critical role in integrated reporting frameworks. It's essential to manage these controls within a secure and collaborative environment and centralize controls within an integrated reporting platform. This way, organizations can ensure consistent oversight and guardrails throughout the reporting processes.

Integrating controls within the reporting platform allows for real-time monitoring and tracking of data, ensuring accuracy, reliability, and consistency. It also lets organizations identify and address any potential issues or discrepancies promptly. Automated controls testing can also be integrated into reporting workflows, reducing the reliance on manual and error-prone processes.

In the end, effective controls not only enhance the accuracy and reliability of the reported data but also instill confidence in the information provided to stakeholders. And as we said earlier, that's an essential component of effective ESG reporting. Report users aren't going to take you at your word, putting your reporting under a harsh, unforgiving spotlight.

Assure Non-Financial Data Rigor

The best reporting platform and processes in the world still won't do you any good if you continue with disparate systems and a messy data environment. So, to revisit a previous topic, applying assurance processes similar to financial audits is essential to strengthen the credibility and reliability of non-financial data, especially around sustainability. This means subjecting ESG metrics to rigorous scrutiny and providing independent verification of the accuracy and validity of the reported data.

By applying assurance over sustainability metrics, organizations can mitigate risks associated with inaccurate or incomplete data. Assurance processes involve independent auditors assessing the reliability and completeness of the reported information, providing stakeholders with confidence in the integrity of the sustainability data.

To further enhance the rigor of sustainability data, focus on connecting environmental factors to financial metrics. This requires a solid understanding of the impact factors from the external environment have on financial performance and demonstrating the association between sustainable practices and financial outcomes. By making these connections, you can effectively communicate the value creation potential arising from sustainable practices.

Long story short – by implementing robust assurance processes and establishing the linkage between ESG metrics and financial performance, organizations can enhance their overall reporting practices and build trust with stakeholders.

A Final Word from Embark

Do you feel the heat? The stares from stakeholders? Because your reporting is under a microscope, and will remain so ad infinitim. Therefore, integrated reporting is a very big deal to your company's well-being and future viability. Or at least it should be. And we didn't even bring up the IIRC (the International Integrated Reporting Council) or application of the content elements and guiding principles of – you guessed it – its International Integrated Reporting framework. So, needless to say, we've only scratched the integrated reporting surface today.

Long story short – there's much work to do. Thankfully, Embark's cross-functional team of Workiva, ESG reporting, accounting, and technology specialists are just what the integrated reporting doctor ordered, ready, willing, and able to make your reporting far more transparent, collaborative, and comprehensive. So let's talk and see how Embark can help your company tell a more accurate, timely, comprehensive story.

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