We are challenged to make a difference: “What counts in life is not the mere fact that we have lived. It is what difference we have made to the lives of others that will determine the significance of the life we lead.”
These words from global icon Dr. Nelson Mandela speaks to this current world that we live in, the world that is overpopulated and faced with calamities such as those of global warming, corporate failures, various pandemics such as Ebola and Covid-19, as well as global financial crises. We are challenged to make a difference in the lives of others as we battle these global issues. These challenges emphasize the greater need for the business world to be reminded that they do not exist in isolation from society and the natural environment. It is vital that the business world must conduct its business affairs in a manner that does not compromise the ability of future generations to meet their own needs to exist and function. Following many global calamities, like those mentioned above, there was a global consensus that the business world should formulate an agreement to form a Council to deal with the effects of global disasters on business, society, and the natural environment. This agreement led to the formation of the International Integrated Reporting Council (IIRC) to contribute to addressing these global disasters.
The IIRC, a global coalition of those from private and public companies, the accounting profession, non-governmental organizations (NGOs), standard setters and policy makers, regulators, investors, and state owned companies (SOCs), among others, has devoted significant resources to understand the current business practices and reporting. The IIRC is dedicated to promoting the use of integrated reporting practices within business environments.
Following the formation of the IIRC, integrated reporting practices were developed to guide and provide a different, enlightened business mind-set and approach on how countries and their corporations should conduct business affairs. These practices were founded upon the concept of “integrated thinking” through the utilisation of “categories of capital” or “framework capitals” (financial, manufactured, intellectual, human, social and relationship, including natural capital), including the consideration of “elements” or “ content elements” (organizational overview and external environments, governance, strategy and resource allocation, business model, risk and opportunities, performance and future outlook). In addition, the IIRC considers the application of guiding principles (strategic focus and future orientation, connectivity, stakeholder relationship, materiality, conciseness, reliability, and integrity as well as consistency and comparability) within business practices.
The approach of the IIRC integrated reporting practices indicates that a value creation process requires sound internal functioning within business practices and the adoption of an incorporated mind-set. This is the mind-set that considers all factors that influence the corporation’s ability to create sustainable value. To this day various studies conducted on the adoption of these practices have revealed that there is a greater global movement towards the adoption of these practices within business environments and practices of corporations.
The IIRC practices were developed around the notion that the society, the natural resources, and the business community are inseparable. This notion is supported by various stakeholders all over the world as they call for a more cohesive and efficient approach to business practices that considers all the material matters—whether positive or negative—of the corporations when making decisions. The stakeholders’ views are that sustainable value creation processes should be informed by internal and external factors of the corporation. It is for this reason that the various stakeholders expect corporations to contribute to better living conditions for all and further redress the impact their business activities have on the environment and society.
Initially the IIRC integrated reporting practices were focused more on their ability to enable corporations to compile annual integrated information about their organizations’ or companies’ affairs. However, various other sources, including the King III Report on Corporate Governance for South Africa, began to promote and introduce the IIRC integrated reporting practices as a process of change. These practices should be understood as a journey to embark on to create sustainable value and improve internal business functioning, as opposed to only enabling an incorporated corporate information or an “integrated report” (referring to the end result).
This book serves as a tool to provoke dialog among corporate environments, country leaders, government officials, and academics, just to name a few, about the real impacts of our business activities or otherwise on the natural environment and societal well-being. To further encourage them to engage and invest in sound business practices such as those of the IIRC for the preservation and maintenance of our planet (the Earth). To encourage and enable the global business world to function sustainably within their business environments and consider all the factors that contribute to their value creation, including the natural environment and the society in which they operate. This book presents an integrated conceptual model developed by Dr. Magdeline Ramaboea during her doctoral studies at the University of South Africa (Unisa). The model explains and demonstrates the strategic use of the IIRC’s integrated reporting practices as agents of sound internal functioning and sustainable value creator within business practices. The use of these practices as agents of change within business environments is a developing phenomenon that managers and many other interested parties might lack knowledge of regarding how to apply them within their business practices. The model of this book will assist them to adopt these practices with ease and in a cost-effective manner.
The model of this book is underpinned by organizational and field theories that are explained in this book, along with other theories that were identified as contributing to the development of the IIRC integrated reporting practices. Organizational and field theories explain how various parts, factors, and complexities of an organization should function to affect and maintain sound internal functioning. These factors and complexities include social structure, strategy, finances, operational matters, human resources, corporate brand, and communication for value creation purposes. The notion and approach of these two theories are similar to those of the IIRC integrated reporting practices, hence the author’s choice to underpin the model of this book. The model in question is presented in picture format along with tables (in a text format) explaining each component part of the model, their relationships, and how to apply them within business practices.
In conclusion, the key benefits of adopting the IIRC integrated reporting practices is that they can be used to enhance sustainable value creation processes and enact sound internal functioning simultaneously. This can happen in two ways. First, the corporate environment can embed integrated thinking, which is an enlightened business mind-set when considering value creation through the use of categories of capital (financial, manufactured, intellectual, human, social and relationship, as well as natural capital), which will result in enhancement of their corporation value.
Second, they can improve internal functionality and construct informed decisions as well as improve service delivery by applying elements and guiding principles such as governance, risk and opportunities, strategy and resource allocation, performance, outlook, and business models within their business practices. Please note that in this book integrated reporting practices refers to the application and use of the combination of “integrated thinking,” “categories of capital” and “elements,” as well as “guiding principles” within business practices.
I hope that this book will enlighten various actors and organizations in all parts of the world to understand the importance of adopting habits, customs, values, and practices that guide and remind us how we ought to function to preserve the future sustainability of our planet. I am confident that it will further trigger useful constructive educational dialogs among global communities talking and learning about better ways of functioning to protect and maintain our planet for future generations.
We can preserve our planet Earth. We just need to see the natural environment, the society, and the business world as one.
“It always seems impossible, until it is done.”
Enjoy the read and please share lessons learned from this book.