How Boards can use Integrated Reporting as a strategic tool
This article was also published in the Board Dynamics magazine 2025/1, issued by the Network for Innovative Corporate Governance («NICG»).
An earnings call with a difference
Fast forward a few weeks and imagine the following: ByteSoft Labs, a software company, has just released its earnings for the year ended 30 June 2025. The CEO welcomes participants to the earnings call and provides an overview of the past year’s main operational, product and service offering achievements. He or she then hands over to the CFO to present the financial highlights. Revenues have significantly improved, exceeding investors’ consensus expectation by 4%. New, innovative, AI-powered services and reliable product offerings have boosted the company’s market position and noticeably enhanced its competitive advantage. The EBIT margin has remained stable in the high thirties and the company has continued to invest in R&D, as well as maintaining high levels of CAPEX spending.
Most earnings calls would then continue with a Q&A session. But not at ByteSoft Labs. Instead, the CEO continues to reflect on the increased engagement scores of the company’s workforce, the reduction in the number of cases of personal data loss incidents from cyber-attacks, and the increased supply of renewable energy to run the company’s data centres.
The CEO also then announces major new investment initiatives, explaining with quantitative metrics why ByteSoft Labs’ workforce is uniquely positioned to contribute to R&D innovation and how the company considers different CAPEX investment scenarios in various geographies given the current global political uncertainties.
A “what if” matrix on workforce engagement and diversity as well as CAPEX investment illustrates how the CEO is thinking about the future performance of the business, its drivers, and its growth.
Only then does the Q&A session begin.
Shortly after the earnings release, the company issues its integrated reporting, which includes a management commentary – covering aspects such as the business model, strategy, and risks and opportunities – sustainability-related information, and financial statements. The company’s integrated reporting is well received by the investor and stakeholder community. Not only does it set out the value created for shareholders, it also coherently explains how the company generated sustained improvements in its financial performance through its handling of human capital, the business model, innovation, and the environment over the last couple of years – and how it is positioned to continue doing so in the future.
ByteSoft Labs reporting is highly integrated. What does this mean? Integrated reporting is “a concise communication about how an organisation’s strategy, governance, performance and prospects, in the context of its external environment, lead to the creation, preservation or erosion of value over the short, medium and long term.”1
This form of reporting calls for integrated thinking within a company, making different functions not only understand how their activities, relationships and interactions sustain value creation, but also making them accountable for creating value and reporting on it. And integrated thinking can enhance how boards direct a company’s strategy.
To understand why integrated reporting is crucial in a company’s communication with its stakeholders, one should first understand how sustainability reporting has evolved over time. It is the evolution of sustainability reporting that has significantly contributed to stakeholder’s demand to integrate various aspects of corporate reporting and to provide a 360-degree view of corporate performance.
The evolution of sustainability reporting and the call for integration
Sustainability reporting began a few years ago as a loosely defined practice and was mainly used as a public relations tool to improve a company’s image. Now it is subject to numerous legislative efforts and far more stringent reporting requirements – even though still subject to political debate.
The application of sustainability regulations like the EU’s Corporate Sustainability Reporting Directive (CSRD) and European Sustainability Reporting Standards (ESRS) may now be amended by the EU’s Omnibus proposal. The new focus is on reducing the reporting burden for companies to help them remain competitive. This new proposal shows that the “how”, “who” and “when” of sustainability remain under discussion but sustainability reporting in the EU is here to stay.
Globally, the first set of International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards, with a strong focus on information for investors to help their decision-making, is beginning to be widely accepted. The number of countries which have adopted these standards has increased significantly during the last year. Canada, China, Japan and Singapore have already confirmed that they are adopting the Sustainability Disclosure Standards, and many other countries have announced their commitment to implementing these standards going forward2.
In Switzerland the Swiss Federal Council has proposed to amend the legislation on the Swiss Code of Obligation’s transparency reporting to strengthen sustainability reporting requirements and bring them into line with those of the EU’s Corporate Sustainability Reporting Directive (CSRD), and will decide on the potential revisions to the code by Spring 2026 at the latest. Since 2023 Swiss public interest entities with more than 500 full-time employees have been subject to reporting on non-financial matters.
Reporting on sustainability in one integrated framework
According to a current Deloitte study which analyses the state of sustainability reporting in Switzerland, approximately 40% of the Switzerland’s top 50 listed companies on the SMI Expanded index provide an integrated report on sustainability and financial matters to their stakeholders, rather than separate standalone reports3. This shows the increased efforts being made to give stakeholders the full picture on company performance.
However, the study also shows that connectivity between financial and sustainability reporting can be significantly improved. Nearly 60% of companies have made disclosures on their plans to transition to net zero, but only a minority disclose the financial resources, such as the future CAPEX demands, needed to bring about this transition.
Integration involves far more than simply putting financial and sustainability reporting into a single document. The question is how to improve sustainability reporting by combining it in with financial reporting in one integrated framework.
The fictional case above of ByteSoft Labs showed a company that had come a long way. Its integrated reporting had required the company to: (1) understand the various stakeholders’ information needs; (2) take stock of the reports already provided to both external and internal stakeholders; (3) involve functions beyond finance and accounting, such as procurement and HR in the reporting; (4) implement a system of procedures, controls and oversight allowing for timely and reliable communication with investors and other stakeholders4.
What are the key aspects for boards to consider?
We see three key aspects for boards to consider when asking management to build a truly integrated approach to shareholder and stakeholder communication and reporting. These are:
- Improve connectivity of financial and sustainability reporting through management commentary;
- Strengthen cross-functional collaboration; and
- Integrate sensitivity and scenarios analysis in stakeholder communication and reporting.
Final thoughts
An integrated approach to reporting is far more than just combining financial and sustainability reporting. Boards that direct their management to communicate on entity-specific matters and relationships that impact strategies in the long term, to break down functional silos and improve cross-functional collaboration, and to disclose sensitivities and scenarios in their communication with stakeholders, will not only shift the lens of corporate reporting to a more integrated approach. These boards will also build into processes the discipline needed to be prepared for future disruption and uncertainties.
Furthermore, implementing an integrated reporting approach also comes with benefits for internal processes. Working through the questions above may reveal how flexible a company’s strategy is or how resilient the organisation is. Conducting for example a sustainability double materiality assessment in which not only the impact on financials, but also the impact on environment and society of a company’s business must be considered, can help to obtain a comprehensive view of the risks and opportunities to address.
Integrated reporting is ultimately about integrated thinking – and a strategic tool boards can use.
