Integrated Reporting and Value Creation

This assignment delves into the concept of integrated reporting and its role in value creation. It examines the International Integrated Reporting Council (IIRC) framework, discussing its key elements, purpose, and implications for businesses. The analysis also considers the challenges associated with implementing integrated reporting and explores the potential benefits for stakeholders.

Running head: ANNUAL REPORT ANALYSIS OF UNILEVER
Annual Report Analysis of Unilever Company
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1ANNUAL REPORT ANALYSIS OF UNILEVER
Table of Contents
1. Executive Summary.........................................................................................................3
2. Unilever Value Framework Elements.............................................................................4
2.1. Business Model.........................................................................................................4
2.2. Governance...............................................................................................................5
2.3. Risk Management.....................................................................................................7
2.4. Remuneration............................................................................................................8
2.5. Financial Assets......................................................................................................10
2.6. Physical Assets.......................................................................................................11
2.7. Customers...............................................................................................................12
2.8. People and Culture..................................................................................................13
2.9. Brands and Intellectual Assets................................................................................14
2.10. Process and Supply Chain....................................................................................15
2.11. Operational Performance......................................................................................16
2.12. Economic Performance.........................................................................................17
2.13. Social....................................................................................................................18
2.14. Environmental.......................................................................................................19
2.15. Segmental.............................................................................................................20
2.16. Innovation.............................................................................................................21
2.17. Strategy and Objectives........................................................................................22

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3. Reporting and Material Matters.....................................................................................23
References..........................................................................................................................25

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1. Executive Summary
Value framework of Unilever Company explains that internal and external decision making
needs connected and complete data for developing sustainable value generation along with
supporting decisions regarding recent performance and future prospects of the company. The
results of the analysis revealed that both breadth and depth disclosure is consistent with the
company’s framework. Moreover, increased performance disclosure exists in the area of
strategic elements (strategy, business model, risk and governance) and performance elements
(segmental and economic). The paper analyzed the annual report disclosure of Unilever focusing
on alignment to integrated reporting framework of Unilever, comprehensiveness and
accessibility. However, the paper had certain limitations that encompass:
 The quality and nature of performance reporting will be distinct in several nations,
operating environments and industries.
 The annual report is a public document that can be followed by market competitors and
more the reporting level; more will be competitive advantages risk.

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2. Unilever Value Framework Elements
2.1. Business Model
Reporting Critique: Framework of the business model explains that the Uniliver generates
value in consideration to focused on interlinked performance as[pects.
Extensiveness and Accessibility: Business model of Unilever Company is explained through
the diagram above that can be easily referred to. Corporate responsibility and governance is also
indicates that additional information regarding all the aspects of the business model such as
consumer insight, sales, collaboration and marketing (Cheng et al., 2014).

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Comprehensiveness: The business model of Unilever Company is explained accurately within
the report. This model explains several performance aspects in order to attain the sustainable
growth objective.
2.2. Governance
Reporting Critique: Unilever Company’s governance framework explained the company’s
corporate governance information, strategies to mitigate risk and explains the way in which the
company remunerates its executives. Reporting process of the company is highly transparent.

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Extensiveness and Accessibility: Information and transparency depth is observed in Unilever
Company’s Corporate Governance Report that explains the way in which corporate governance
structure demonstrated the level of responsibility towards its investors and provides transparency
to all its readers.
Comprehensiveness: Level of transparency within Unilever Company is deemed to be high as
the corporate governance report of the company is in compliance with suitable code of conduct.
Annual remuneration report and directors’ responsibility report explained the major concerns and
community along with carrying out amendments in board constitution (Fried, Holtzman & Mest,
2014).

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2.3. Risk Management
Reporting Critique: Risk management framework aspect of Unilever explains the risk aspects
and its description regarding brand preference, sustainability, portfolio management along with
consumer relationships.
Extensiveness and Accessibility: Principal risks and its description regarding Unilever
Company is explained on page 44 of the annual report that has offered readers with updates
regarding product segment. Major risks of the Company are explained in the form of the tables
and charts along with risk description. 10 major risks are explained in the annual report that

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ex[plains the business and performance of the company along with explaining ways to mitigate
risks.
Comprehensiveness: Considering the risk description of Unilever Company the report has
explained major uncertainties and risks. The report has described the company’s strategic
objective, risk description, qualitative business impact description along with potential impact of
the principal risks (Haller & Van Staden, 2014).
2.4. Remuneration

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Reporting Critique: The annual report of Unilever Company explains the remuneration
framework element and explains the metrics based on which all its executives are rewarded.
These metrics includes impact on business and value offered to the company.
Extensiveness and Accessibility: The director’s remuneration report is explained in page
number 66. The report has maintained integrity of the company’s website that is audited. The
remuneration report explained the strategic links of rewards to performance of business (Hiller,
2013).
Comprehensiveness: Remuneration report of Unilever Company is observed to remain linked
with value objectives of the company. This report clearly explained aspects such as benefits
offered, salary, pension, share performance plans and annual incentives offered to the employees
every year.

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2.5. Financial Assets
Reporting Critique: Financial assets report of Unilever Company explains its financial health
and financial assets value including debt, securities and financial instruments.
Extensiveness and Accessibility: Financial assets are explained in the balance sheet of the
company and it explains increased information on the policies of financial assets, debt terms
along with other financial assets.
Comprehensiveness: From the financial asset section of the Unilever annual report it is gathered
that financial assets are not communicated properly and measured within the annual report and in

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an elaborated manner. Financial asset explanation does not clarify the performance of the
company.
2.6. Physical Assets
Reporting Critique: Reporting of financial assets in the annual report of Unilever focuses on
efficiency of the assets, future values along with asset book value disclosures.
Extensiveness and Accessibility: Physical assets framework explanation in the annual report of
Unilever is prepared in adherence to the set accounting policies. This section o the annual report
explained asset recognition techniques along with financial situation of the company.
Comprehensiveness: Physical assets of Unilever are observed to adhere with the quality
standards of “Physical assets information”. However, reporting of physical assets of Unilever
Company provided good value to all its investors but the such reporting lacks depth (Larson &
Ringholm, 2014).

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2.7. Customers
Reporting Critique: Consumer framework element of Unilever focused on consumer loyalty
along with revenue and depth of the consumer base.
Extensiveness and Accessibility: All the items within the Consumer section are depicted within
the annual report of Unilever Company. Consumer segment information is easily assessable
within the selected geographical sectors.
Comprehensiveness: No consumer specific information was mentioned in the annual report of
Unilever Company and no detailed information is provided on geographic locations, trends along
with consumer outlook (Mmako & Van Rensburg, 2017).

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2.8. People and Culture
Reporting Critique: People and culture framework aspect of Unilever Company is focused on
staff competency degree, advancement opportunity and employee culture.
Extensiveness and Accessibility: Corporate responsibility report of Unilever Company is
focused on detailing the accountability and integrity. People development strategies are also
explained as a part of the company’s growth strategy.
Comprehensiveness: People and culture segment of Unilever Company’s annual report offered
qualitative information that abides by the policy along with performance. An aspect that is
reflected in this segment in the annual report and offers readers with fewer contexts in evaluating
performance (Neta et al., 2015).

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2.9. Brands and Intellectual Assets

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Reporting Critique: Brands and intellectual assets framework aspect of Unilever Company in
the annual report explained brand recognition and reputation value, intangibles use and brand
protection.
Extensiveness and Accessibility: Intellectual property and portfolio of brands section of
Unilever Company is depicted in annual report. However, such information is explained in
adequate manner that is not accessible to the readers.
Comprehensiveness: In this case, the information is not depicted adequately in the annual report
of Unilever and, thus this section lacks comprehensiveness.
2.10. Process and Supply Chain
Reporting Critique: The supply chain of Unilever Company is based on buying materials,
effective manufacturing and the timely product distribution to the customers.
Extensiveness and Accessibility: The supply chain network of the organization is focused on
explaining the exposure of potentially adverse events. This might occur in the form of physical
disruptions, industrial and environmental accidents (Beattie & Smith, 2013).
Comprehensiveness: The supply chain management of the organization abides by the prevailing
laws, since the costs of the underlying materials and commodities have significant impact on the
product cost.

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2.11. Operational Performance
Reporting Critique: According to the annual report of the organization, it could be stated that
Unilever has depicted yearly bonus by depicting the underlying growth of sales along with the
improvement of operating margin.
Extensiveness and Accessibility: The operational performance of the organization is presented
in such a manner that it helps in delivering sharper category strategies along with higher focus on
the core and sustained investments behind the innovations of the organization. The readers of the
financial information of Unilever could find that the sales growth of the organization has been
4.1% along with a step-up in volume growth. In addition, they could identify that the core
improvement of operating margin has increased by 0.3 percentage points.
Comprehensiveness: The information pertaining to the operational performance of the
organization has been depicted in such a manner that the users could obtain the necessary
information and accordingly, the financial position of the organization could be evaluated.

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2.12. Economic Performance
Reporting Critique: According to the above figure, the organization has depicted the economic
performance by depicting its portfolio strategy for increasing its presence in the market.
Extensiveness and Accessibility: It has been observed that the portfolio strategy of Unilever has
been sharpened and there is adaptation for increasing the presence of the organization in rapidly
growing and greater profitable market segments. In addition, the readers could obtain
information about innovations of the organization in new markets, one of them has been the
launch of Lux in the Philippines in 2015 (Shin, Colwill & Young, 2015).
Comprehensiveness: The economic performance of Unilever has been depicted in a
comprehensive manner, as the users could obtain a fair idea of the same through evaluation of
the annual report.

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2.13. Social
Reporting Critique: The above figure clearly states that Unilever has maintained a sustainable
living commonplace, which is the most feasible strategy for ensuring the overall business
growth.
Extensiveness and Accessibility: The organization has adopted separate purpose and
operational expertise across the business model that has helped in recognizing vision of
increasing the overall business growth along with the social effects.
Comprehensiveness: Although the organization has stated its purpose; however, there is lack of
comprehensiveness, since sufficient information is not available to the readers for effective
evaluation.

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2.14. Environmental
Reporting Critique: According to the above figure, Unilever has depicted the environmental
impact on the overall community. This includes greenhouse gases, waste, sustainable sourcing
and water and the users could obtain such information from the annual report of the organization.
Extensiveness and Accessibility: The users could access information about the reduction of
environmental impact by depicting the detailed target, performance of the business operations
and the products in use, disposal and lifecycle (Sullivan et al., 2014).
Comprehensiveness: Since the detailed report of the environmental impact has been provided,
the users could access the same with greater amount of comprehension.

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2.15. Segmental
Reporting Critique: The above figure clearly states that Unilever has maintained a sustainable
flexible business model, which is the most feasible strategy for ensuring the overall business
growth.
Extensiveness and Accessibility: The organization has adopted unique portfolio and geographic
risk across the business model that has helped in mitigating the exposure to any specific
localized risk.
Comprehensiveness: Although the organization has stated its purpose; however, there is lack of
comprehensiveness, since sufficient information is not available to the readers for effective
evaluation.

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2.16. Innovation
Reporting Critique: The innovation aspect of Unilever has been carried out in the form of
research and development and the mission is to develop brands with the help of beneficial
innovation unlocked on the part of technology and science.
Extensiveness and Accessibility: The users could identify that the organization has incurred €1
billion every year on research and development through employment of 6,000 research and
development experts with six major sites.
Comprehensiveness: Since the detailed report of innovation has been provided, the users could
access the same with greater amount of comprehension.

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2.17. Strategy and Objectives
Reporting Critique: Strategy and objective framework element is observed to provide accurate
statement of its strategic objectives and goals. The framework of Unilever Company offers short,
medium and long-term targets.
Extensiveness and Accessibility: Strategies of Unilever are explained in a prominent way for
the readers of annual report. Moreover, business strategies and objectives on page 4 of the annual
report are assessable and communicated in a better manner both quantitatively and qualitative
way. Chairperson’s message section on page 7 of annual report indicates that the company has
linked key performance indicators and organizational strategies (Schnipper et al., 2016).
Comprehensiveness: The chief executive officers review on page 11 of Unilever’s annual report
indicates that it links with stakeholders’ value, strategies and opportunities and increased

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consumer focus. Moreover, chief executive officers’ review explained remuneration report,
strategy development and 2016 target.
3. Reporting and Material Matters
Material Matters Assessment and Corporate Responsibility
Unilever Company focuses on producing and offering a range of FMCG goods that
ensures to enhance and protect standard of living of all its consumers globally. Annual report of

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the company clarifies that, Unilever Company’s corporate responsibility is emphasized on
employee development and engagement, health and safety, corporate responsibility and
sustainability and ethics and human rights. Several Key Performance Indicators are developed on
the part of the company that signifies its importance of corporate responsibility and business
success (Unilever.com, 2017).
Materiality refers to clarity of information disclosed by a company to its shareholders.
Unilever Company’s materiality approach is observed to generate increased reader focus and
information to increase comprehension through:
 Proving information that is considered to be important by shareholders
 Presenting the highlights at the beginning of the annual report

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References
Beattie, V., & Smith, S. J. (2013). Value creation and business models: refocusing the
intellectual capital debate. The British Accounting Review, 45(4), 243-254.
Cheng, M., Green, W., Conradie, P., Konishi, N., & Romi, A. (2014). The international
integrated reporting framework: key issues and future research opportunities. Journal of
International Financial Management & Accounting, 25(1), 90-119.
Fried, A., Holtzman, M. P., & Mest, D. (2014). Integrated reporting: the new annual report for
the 21st century?. Financial Executive, 30(4), 24-32.
Haller, A., & van Staden, C. (2014). The value added statement–an appropriate instrument for
Integrated Reporting. Accounting, Auditing & Accountability Journal, 27(7), 1190-1216.
Hiller, J. S. (2013). The benefit corporation and corporate social responsibility. Journal of
Business Ethics, 118(2), 287-301.
Larson, J., & Ringholm, L. (2014). Governance Disclosures According to IIRC's Integrated
Reporting Framework-Are Annual Reports of Swedish Listed Companies in Line with
the Framework?.
Mmako, N., & van Rensburg, M. J. (2017). Towards integrated reporting: the inclusion of
content elements of an integrated annual report in the chairmen’s statements of JSE-listed
companies. South African Journal of Business Management, 48(1), 45-54.

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Neta, G., Glasgow, R. E., Carpenter, C. R., Grimshaw, J. M., Rabin, B. A., Fernandez, M. E., &
Brownson, R. C. (2015). A framework for enhancing the value of research for
dissemination and implementation. American journal of public health, 105(1), 49-57.
Schnipper, L. E., Davidson, N. E., Wollins, D. S., Blayney, D. W., Dicker, A. P., Ganz, P. A., ...
& Mulvey, T. (2016). Updating the American Society of Clinical Oncology value
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Clinical Oncology, 34(24), 2925-2934.
Shin, K. L. F., Colwill, J. A., & Young, R. I. M. (2015). Expanding the scope of LCA to include
‘societal value’: a framework and methodology for assessing positive product
impacts. Procedia CIRP, 29, 366-371.
Sullivan, S.D., Mauskopf, J.A., Augustovski, F., Caro, J.J., Lee, K.M., Minchin, M., Orlewska,
E., Penna, P., Barrios, J.M.R. and Shau, W.Y., 2014. Budget impact analysis—principles
of good practice: report of the ISPOR 2012 Budget Impact Analysis Good Practice II
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Unilever.com (2017). Unilever global company website | Unilever Global. [online] Available at:
https://www.unilever.com [Accessed 23 Sep. 2017].