Integrated Reporting and its Impact on South African Institutional Investment

This report explores the impact of integrated reporting on South African institutional investment and identifies the position of companies listed under Johannesburg Securities Exchange. It examines the shift in attitude towards ESG among investment companies and perceived obstacles to the development of IR.

Running head: ADVANCED MANAGEMENT ACCOUNTING
Advanced Management Accounting
Name of the Student
Name of the University
Author’s Note

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Table of Contents
Introduction..........................................................................................................................2
Impact of Integrated reporting among organizations...........................................................3
Factors incorporating integrated reporting..........................................................................4
Shift in the attitude to the ESG among the investment companies......................................5
Reactions of the institutions investors for integrated reporting...........................................8
Perceived obstacles associated to the development of the IR..............................................8
Conclusion...........................................................................................................................9
References..........................................................................................................................11

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Introduction
The concept of integrated reporting refers to the common interest of the global coalition
among the parties which are seen with improving the communication based on value creation
and evolution of corporate reporting. This is also based on listing of the contributions for the
sustainable development and financial stability. The main coalition comprises of the global
communities and entities along with the financial capital, policy makers, regulators and
exchanges. In addition to this, the main concerns considered under the IR framework is depicted
to be based on standard setters, civil society, and academia. The report aims to discover the
responses of the South African institutional investment in the community and identify the
position of the companies listed under Johannesburg Securities Exchange. The important
findings of the report have been related to the several aspects of Integrated reporting in South
Africa in 2012 as per viewpoints from South African investors (Flower 2015).
The analysis of the detailed interview process has been considered to find out the
important findings of the IR in South Africa. This report is further conducive in designing about
the respective theories which are associated to traditional and non-financial measures. The study
will also explore about the relevant concepts of IR and interpretive styles which are associated to
effective reporting standards. South Africa is considered as one of the first nations which was
known to introduce de facto on a mandatory basis. In addition to this, some of the different types
of the other mandates issued by the country relates to the economic and environmental
challenges. Moreover, both “Integrated Reporting Committee of South Africa (IRCSA)” (2011)
and “International Integrated Reporting Council (IIRC)” are seen to be acknowledging the
changes pertaining to the relevant culture of the country and reporting system (Thomson 2015).

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Main components of Integrated reporting
The first components of IR in organizations is seen with examining the various perspectives
of the stakeholders and first set of IR. In this theory the country’s main formal investors have
responded to the IR project report and the way it needs to be dealt. The institutional investors in
general are considered as the primary users of such a report. The main aspect of the study will
examine the different form of the shifts in the attitudes of these investors based on the ESG,
which is prevalent in investment communities around the world. They are also considered as the
drivers of IR and the depictions are seen to be based their understanding of the obstacle to high
quality reporting (De Villiers, Rinaldi and Unerman 2014).
Secondly, the retention aspect of the study has been considered with the opinions of key
users for identification of the main points and its integration with the corporate governance
community. The important discourse of the study is also able to know about the various types of
the consideration which deals with the views of institutional investment community around the
world. In addition to this, the research has been able to provide an initial framework for
providing a detailed review of IR and publication of the frameworks issued by IIRC in 2013.
This has been further able to emphasize on the capital providers as per IR of the project. It needs
to be also seen that there is no effort made for the measuring up the quantum and quality of the
disclosures (Dumay et al. 2016).
Thirdly, the important areas of the report have also acknowledged the study which is
constrained to a single group of users. The perspectives of the report have been able to focus on
the comprehensive review pertaining to the development of the ESG and IR as per the analysis of
the results (Serafeim 2015).

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The main limitation of the IR is evident among the finding out the net effect on the global
investors. For instance, as per global investors perspectives it cannot be said that IR is an
unprecedented experiment.
Integrated reporting framework and its role among global investor
The previous studies of international framework are identified with the recent developments
which are depicted with the integrated financial and non-financial measures done as per the
primary communication with the stakeholders. This is depicted as the first point of agreement
(Serafeim 2015).
Secondly, the objective of the IIRC is further embedded with the mainstream practice of the
business which is seen to be based on the corporate reporting norm of IIRC 2012. The second
code of the CG of most of the companies are based on the inclusion of the ESG framework
which is given in the annual report of most companies of the world. The release of the King-III
in 2009 has been however able to consider the non-financial aspect of reporting. In several types
of the other cases the organizations have been able to define the key role for considering the
information needs of the stakeholders and rising anticipation of the balanced financial and non-
financial measures. The recent reports have been able to reveal about the different types of role
of IR in terms of value it has contributed to ESG (Simnett and Huggins 2015).
Thirdly, factors such as ESG disclosures have provided the evidence taken from the business
case associated to high quality reporting of the integrated reports. It needs to be also seen that the
report does not provide a causal relationship among the variables thereby providing unfavorable
correlation among the share price and corporate responsibility. This is further identified to be
consistent among the American Multinationals which are seen to disclose more than a single
financial indicator for the parameters which are establishes with the stakeholders. The financial

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case for the IR is depicted to be supported by emerging concern along with their interpretive
reporting. This is also seen to go hand-in-hand with the institutional burdens and large
investments coupled with the importance of the organizational legitimacy (Stubbs and Higgins
2014).
As per the data extracted from the global investors perspectives it cannot be said that IR
is an unprecedented experiment. However, despite of the various types of the guidance of the
report it needs to be identified that the various types of the considerations for the reporting needs
to be identified as per the uncertainty in the structure of the IIRC framework.
The preliminary analysis of the study has revealed that IR has found significant number of
repetitions which is stated with promoting of reforms for the engagement of the stakeholder in
various countries across the world. Moreover, the preliminary analysis of the study has been able
to able to discern that in the first set of the launch of the IR there are significant number of the
issues which often relates to risk of legalistic style of application of the framework. However, the
limitation is depicted with ESG reporting space considered with managing the expectations of
the stakeholders which is often limited to the operating practices.
In a similar way both the investees and investors need to employ the stage impression which
is done for creating dual myth for environmental and social accountability. The initial research
suggests that there is a considerable emphasis as per demonstrable acts of compliance rather than
communicating on the way an organization which are managed with the sustainability concerns.
Till date the limited context of the research is often based on the significant nature of the users
and preparers of the report (Simnett and Huggins 2015).

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Shift in the attitude to the ESG among the investment companies
Firstly, the main agreement of the shift in ESG among the entities with the IR journal is seen
with interviews presented along with incorporation of ESG, which is segregated into several
investment decisions-making factors which are gradually considered with the local capital
market.
Secondly, the way the respondents have opined about the ESG disclosure with increasing
efficiency are directly related to the IR journal (Eccles and Krzus 2014).
Thirdly, from the journal it can be inferred that the ESG among the investment companies are
depicted as per addressing the social norms in a country. The more critical form of the reviews
pertaining to the investors has been able to disclose about the real financial implication of IR.
The critical investors have taken additional initiative for incorporating several types of measures
in the investment and decision-making process. This finding was not unexpected as it is seen
with a unique relationship among them especially at the time of evaluating the non-financial and
financial measures. It needs to be further stressed the respondents did not deny of the
significance of the ESG issues in the IR. There are also large number of concerns which are often
identified with the additional insights of the ESG issues with a more specific perspective of the
macro-economic forces. Therefore, as per the journal of IR all discussions about the Shift in the
attitude to the ESG among the investment companies cannot be agreed. For instance, it needs
understood that there may be several types of the consideration for water related problems in
various countries which is particularly having a detrimental impact on the construction sector of
the country. It needs to be also made clear that climate change is often seen with number of
issues which are considered with the issue of sustainability in the Platinum Sector. This will be
able to provide a more refined opinion on the market dynamics and how the same will be able to

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impact on the long-term performance of the organization (Perego, Kennedy and Whiteman
2016).
Regardless of the critic’s opinion, the general position in the companies are often depicted
with the appreciation of the ESG issues which are often considered with the “soft” or “non-
financial” which are needed depicted as per the financial analysis. A leading form of the asset
manager will be further able to provide a real example of the ESG issues as per the procedure of
valuation. There are also seen to be greater emphasis on the number of ESG issues which are
often traditionally viewed with evidence of the long-term assessment by the investment houses.
There had been several numbers of the individuals who were of the opinion about the industry.
Despite of the development in the IR and emergence of the leading discussions for describing
the stakeholder message in SA are viewed to be same as per accountable investment practice
(Alfiero et al. 2017).
The interviewees have also indicated about the differentiation strategy as per the findings
which are needed to be complied as per CRISA and active appointment with their investees. The
similar nature of the differences in the responsible investments are dependent on the pressures
exerted from various types of the other stakeholders (Higgins, Stubbs and Love 2014).
IR is a good communication to the investor and the stakeholder
Firstly, as per the journal the investors, the interviewees have defined about the integrated
reporting in the light of risks of opportunities pertaining to the communication among the
stakeholder. For example, these are consistently viewed as the major emerging body addressing
the relevant risk and issues of IR. This shows that the reporting needs to be done as per deep
understanding of decision-making process (Burke and Clark 2016).

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Secondly, the positive aspect of IR as a good communication is considered as key part of the
combined investigation where the companies are able to act in a more comprehensive manner.
Thirdly, the main perspectives of the IR emerged during the interview process and these are
concerned with multidimensional perspective, forward looking of the integrated thinking and
enhancing the corporate accountability to the stakeholders. It is also depicted with creating a link
among the ESG issues and financial performance. In addition to this, the main perspectives of
the IR emerged during the interview process are also concerned with vehicle for revealing the
risks and opportunities and creating a balance among financial and non-financial measures
(Dumay et al. 2017).
In contemporary terms the interview has emphasized on the financial orientation of the IR
along with balancing of the realization of the broad range of users who are engaged in the IR for
several reasons. It is also seen that in many cases the integrated reporting is identified with the
mechanism of acting in a greater manner for the stakeholders and accountability which is
required for communicating with the information providers as per suggested by IIRC. It Is also
important to mention potential investors also play an important role (De Villiers et al. 2017). The
information provided by the interviewees has been able to stress about the importance of the
stakeholder-centric reporting which is a part of capitalist system. In such an instance the
sustainability and accountability are often identified as a part under the entrepreneurial system.
Therefore, it needs to be mentioned that the only disagreement of the IR as communication to the
investors is mainly associated to the long-term sustainability of the companies which are
particularly bearing an economic issue. If business is not depicted to be economical then it may
not be sustainable. In case a business is not seen as worth of the discounted value the IR is able
to specify the appropriate value of the future cash flow available.

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Investor’s impact pertaining to integrated reporting
The IIRC and IRCSA discussions have shown the intention of the IR to highlight the
interconnection among the organizational and operational strategy (Adams et al. 2016).
The goals of the reporting have been further seen to be considered as per the useful decision
making in the investor community.
The important respondents of the study have indicated about the various types of the
concerns which are associated with the respondents who have complied with the introduction of
the various elements of IR among different types of the companies (Haller and van Staden 2014).
Points to Disagree
The varied reactions pertaining to the IR is recognized with mixed response of investors
who are seen to perceive both the positive and negative features pertaining to the IR. The overall
evaluation of the interviewees is further considered as per the improvements are made over the
outdated approach and preparing the oriented annual report which is complemented only by
distinct report on sustainability (Reimsbach, Hahn and Gürtürk 2018).
Perceived obstacles associated to the development of the IR
Points to agree
Firstly, the agreement with the IR journal is depicted with the information which is published
with normative recommendations pertaining to the acceleration of the decision relevant to the IR.
Secondly, the perceived level of the IR is further depicted to be resonated as per the
environmental and social engagement of the investors. It is also interestingly seen that there are
clear distinguishing factors made as per the activities which are in favor of the workers
(Monciardini, Dumay and Biondi 2017).

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Thirdly, the interviewees of the community engagement program are also seen to be actively
taking part in the construction of the IR.
However, the disagreement can be depicted with the institutional not encouraging about
the issues which are directly associated to the satisfaction of the needs. There is consistent and
centric approach of reporting identified as per the recommendation of most of the interviews
which will assist the companies in identifying the primary and secondary stakeholders and
engaging with the same for appropriate reporting (Veltri and Silvestri 2015).
Conclusion
The overall depiction from the integrated reporting in SA have shown that the decision
to introduce the IR to many companies has established a gradual shift for the acknowledgement
of the importance of the ESG issues in the corporate reports. A large number of the individuals
recognized that IR included the interconnections among the non-financial and financial
procedures which the fund managers have stated in traditional terms in their analysis process.
Other findings have been further able to reveal about the number of issues pertaining to the
relevant level of the concerns which are portrayed with the interconnections among the financial
and non-financial measures pertaining to the fund managers and who have traditionally
incorporated the soft issues in their investment forecasting process. Due to such issues, there is
number of findings which are concerned with the IR in the beginning of the comprehensive
reporting philosophy along with integrated approach related to the business activities. The
important financial and non-financial measures are further related to the identification of
organization’s sustainability and performance. It needs to be also depicted that there is an
increased requirement of avoiding the disclosure checklist and making assurance on the elements
of the report which are needed for forward looking assessments. The most important aspect
needs to be identified as per the formulating an active strategy which have been able to identify

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the relevant information of the stakeholder and ensure that the IR is able to provide an
appropriate report on the generic disclosures associated to ESG and crossed referenced financial
results. The final findings need to be considered with the engagement of the SA institutional
investment in the community of the process along with improving the integrated reporting of SA
listed companies. The research further adds to the number of concerns which are relevant to the
examine the future prospect of the IR. In this particular aspect it needs to be defined that the IR
concept is often identified with the relevant role which is related to the perception in a broader
group of stakeholders.
Moreover, the findings of the previous studies have been able to show that the
stakeholders perception consists of the various types of the strategies which are integrated in the
viewpoint of the organizational systems and practices. Lastly, it can be said that the South
African reporting has included IR based on conspicuous absence of the notions pertaining to the
investors and monetary markets which may be integral aspect to financial stability, social
injustice and environmental un-sustainability. In case the IIRC is looking for a true IR then it is
important to consider the long-term sustainability and ideas and reporting aspects.

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