Analysis of Integrated Reporting in National Australia Bank (NAB)

This report provides an analysis of the integrated reporting practices of National Australia Bank (NAB), focusing on its 2018 Annual Review. It explores how NAB's integrated reporting framework benefits shareholders by providing comprehensive information beyond traditional financial metrics, including insights into the external environment, community contributions, and corporate governance. The report examines the application of institutional theory, particularly isomorphism and decoupling, to explain NAB's adoption of integrated reporting. It also delves into the concept of integrated thinking, highlighting NAB's approach to decision-making that combines operational, functional, and capital aspects to create long-term value. The analysis references NAB's Management Discussion and Analysis reports, demonstrating the bank's commitment to sustainable development and customer relationships. The report concludes by discussing the impact of the Royal Commission on NAB's business and its implications for investor transparency and ethical practices.

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Integrated Reporting
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Integrated Reporting and benefits to shareholders
Shareholders are the most important part of an organisation as their funds are essential for
the survival and thriving of a firm. However, the traditional form of financial reporting provides
only specific information about the firm’s performance to them. There is no scope for the
shareholders to know the practices implemented by the firm in different aspects of the business
and its impact on them (Higgins, Stubbs & Love 2014). In case of National Australia Bank
(NAB), the commitment of the entity towards the integrated entity reporting framework is
beneficial to the shareholders. The integrated reporting framework followed by NAB provides
shareholders with information such as the external environment affecting the organisation, how it
supports communities to contribute towards sustainable development and its commitment
towards always doing the right thing. Previously, the information available to the shareholders
was limited to the amount of returns generated by their investments. The means through which
they were achieved was not always known and was considered to be unimportant. Due to the
integrated entity reporting, the firm’s implementation of good governance measures and the
usage of modern digital technology for an enhanced customer experiences are also known to the
shareholders. It also mentions about the impact of the Royal Commission on its business. While
it can be suggested that the increased disclosures may not all be understood by the shareholders,
it provides them with an assurance about the quality and integrity of the firm they have invested
in (Stubbs and Higgins 2014). The scope provided by integrated reporting towards corporate
disclosures is much wider.
Institutional theory and integrated reporting
With regards to corporate organisations, the institutional theory provides a rich and
complex view of the entities. The theory suggests that an entity has to deal with a lot of

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normative pressures which arise from a variety of factors like the external environment,
stakeholder expectations and the regulations of the governing body (Frias-Aceituno, Rodríguez-
Ariza and García-Sánchez 2013). It suggests that any particular activity undertaken by a firm is
not always driven by a single motive and is the result of the influence of a large number of
factors. After a certain point of time, these practices become the norms followed by the
organisations worldwide. The adoption of integrated reporting framework by NAB is the result
of the voluntary adoption of the same by organisations on a worldwide basis. To further justify
the adoption of integrated reporting by NAB, it is necessary to consider further two dimensions
of the institutional theory. They are known as isomorphism and decoupling. Isomorphism can be
defined as a constraining process that restricts the firm to such an extent that it begins to
resemble other firms operating in the industry. It has been stated that adopting integrated
reporting in the Australian Banking sector has been voluntary. Even though it is evident that
there was no compulsion for NAB to adopt integrated reporting, it had reached a point where this
form of reporting became the norm (de Villiers et al. 2014). Hence, in order to prove that it cared
about the customers and other stakeholders and to also suggest that it contributes towards
sustainable development, adopting an integrated reporting framework became necessary for the
entity. Hence, the six capital approach of the firm became the method for providing stakeholders
with necessary information. Decoupling is another dimension which suggests that organisations
consider it necessary to maintain a gap between the formal policies suggested by them and the
actual policies followed by the organisation. One of the reasons for NAB to adopt integrated
reporting is to obtain legitimacy with its external stakeholders while also remaining flexible
enough to meet its organisational objectives. It can be said that adopting integrated reporting
ensures the organisation is able to attract new investors and retain them for a long time, it does

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not affect the ability of the firm to improve its profit making opportunities (Collier 2015). One
instance where the firm was involved in unethical business practices was suggested by it in its
annual reports. Due to the nature of the investigation undertaken by the Royal Commission, it
became evident that unethical profits were earned by the business. However, reporting about it
provides potential investors with information about the possibility of misconduct by the firm. It
also warns them that reporting about a malpractice in the annual reports is not sufficient to make
sure that the firm will not be involved in a similar practice again in the future. These practices
may again become a part of the business.
Integrated Thinking
Integrated thinking by a company is a practice in which a company makes its decisions
by combining various aspects of its business like the operational and functional units together
while also considering the capital invested by it in the business. The main purpose of integrated
thinking is to create value for the business on a short term and long term basis. Most reports have
suggested that for an organisation to properly adopt integrated thinking, it is imperative for them
to have support from the highest authorities in the organisation like CEO, Board of Directors and
management (Busco et al. 2013). The Management Discussion and Analysis reports of NAB
suggest that the company acknowledges the importance of sustainable development and
customer relationships for the business to thrive (Nab.com.au. 2019). The chairman’s message
indicates that while profit making is important for the entity, it is not the sole purpose of its
existence. It also answers other relevant questions like why it exists and how the organisational
culture impacts the profits earned by it. It also considers the various external factors impacting its
business like economic situation of Australia and the problems caused by the increasing usage of
digital technology in the business. These reports also indicate that the company undertakes

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various corporate governance measures and also strives for the benefit of the Australian society
as a whole. All these aspects indicate that the company is aware of the various factors
influencing its business and considers all of them at the time of making important decisions in
the business.

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References
Busco, C., Frigo, M.L., Riccaboni, A. and Quattrone, P., 2013. Integrated reporting. Concepts
and Cases that.
Collier, P.M., 2015. Accounting for managers: Interpreting accounting information for decision
making. John Wiley & Sons.
de Villiers, C., Unerman, J., Rinaldi, L., Brown, J. and Dillard, J., 2014. Integrated reporting: On
the need for broadening out and opening up. Accounting, Auditing & Accountability Journal.
Frias-Aceituno, J.V., Rodríguez-Ariza, L. and García-Sánchez, I.M., 2013. Is integrated
reporting determined by a country's legal system? An exploratory study. Journal of cleaner
production, 44, pp.45-55.
Higgins, C., Stubbs, W., & Love, T. (2014). Walking the talk (s): Organisational narratives of
integrated reporting. Accounting, Auditing & Accountability Journal, 27(7), 1090-1119
Nab.com.au. 2019. [online] Available at:
https://www.nab.com.au/content/dam/nabrwd/documents/reports/corporate/2018-annual-review-
interactive.pdf [Accessed 4 Sep. 2019].
Stubbs, W. and Higgins, C., 2014. Integrated reporting and internal mechanisms of
change. Accounting, Auditing & Accountability Journal, 27(7), pp.1068-1089.

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