What integrated reporting actually involves

Integrated reporting (IR) is a framework developed by the International Integrated Reporting Council (now part of the IFRS Foundation) for producing a concise communication about how an organisation creates, preserves, or erodes value over time. An integrated report connects financial performance with strategy, governance, and the key capitals the business depends on and affects, financial, manufactured, intellectual, human, social and relationship, and natural. Rather than producing separate financial and sustainability reports, integrated reporting presents a unified narrative that shows how these elements interact. It is primarily aimed at providers of financial capital, investors and lenders, who need to understand value creation beyond short-term financial metrics.

Why it's harder in practice than it looks

Connectivity is the hardest element to achieve

The defining characteristic of an integrated report is the connectivity between financial and non-financial information, showing how ESG factors affect financial performance and vice versa. Most organisations produce financial and sustainability information separately, managed by different teams with different data systems and narrative styles. Producing a genuinely connected report requires cross-functional collaboration and a shared understanding of value creation that most organisations have not developed.

Conciseness is structurally difficult given the breadth of content

The IR Framework emphasises conciseness, but producing a report that covers strategy, governance, risk, performance, and prospects across six capitals in a way that is both concise and substantive is technically demanding. Reports that attempt to include everything produce unwieldy documents that defeat the purpose; reports that achieve genuine conciseness require ruthless prioritisation and skilled writing.

The six capitals framework is interpretive, not prescriptive

Unlike ESRS or GRI, the IR Framework does not specify which metrics must be reported. This interpretive flexibility allows each organisation to define what is material for its specific business model and value creation story. But it also means there are no standard benchmarks against which readers can compare organisations, which limits its utility for peer analysis.

Relationship to CSRD and ISSB creates overlap and confusion

CSRD, ISSB, and the IR Framework all address sustainable value creation but use different architectures, audiences, and materiality approaches. Companies producing all three must manage the risk of inconsistency between reports that cover similar ground from different angles.

What good looks like

A high-quality integrated report is structured around a clear business model narrative, uses the six capitals as a lens rather than a section structure, connects specific ESG risks and opportunities to financial performance with quantified or clearly evidenced links, is genuinely concise at under 80 pages, and is governed by the same board oversight as the financial statements. The best integrated reports make it immediately clear how the business creates value and what could disrupt that value creation.

When to bring in external support

Integrated report design, narrative development, and connectivity analysis between financial and non-financial information require both sustainability expertise and financial communication skills. Leafr's network includes integrated reporting specialists who have developed IR programmes for FTSE-listed and large private companies across multiple sectors.

Frequently asked questions

What is integrated reporting and how does it differ from sustainability reporting?

Integrated reporting aims to communicate how an organisation creates value over time for its financial capital providers, connecting strategy, governance, performance, and prospects across financial and non-financial dimensions. Sustainability reporting (whether under GRI, CSRD, or similar frameworks) focuses on disclosing an organisation's impacts on the environment and society. Integrated reporting is more concise and strategy-focused; sustainability reporting is more comprehensive on environmental and social metrics. Many large companies produce both.

Who developed the integrated reporting framework?

The International Integrated Reporting Framework was developed by the International Integrated Reporting Council (IIRC) and published in 2013, with an updated version in 2021. The IIRC merged with the SASB Foundation in 2021 to form the Value Reporting Foundation, which subsequently joined the IFRS Foundation in 2022. The framework is now maintained by the IFRS Foundation alongside the ISSB standards.

Is integrated reporting mandatory?

Integrated reporting is mandatory for companies listed on the Johannesburg Stock Exchange, where it has been required since 2010. It is encouraged but not mandated in most other markets. The UK's FRC encourages premium-listed companies to consider integrated thinking and reporting as part of good corporate governance. As CSRD and ISSB standards increase the integration of sustainability into mainstream financial reporting, the distinctions between integrated reporting and compliant financial reporting are becoming less clear.

What are the six capitals in integrated reporting?

The six capitals are: financial capital (funds available for production), manufactured capital (physical infrastructure and equipment), intellectual capital (intangibles including brand, knowledge, and systems), human capital (skills, motivation, and capacity of employees), social and relationship capital (relationships with communities, stakeholders, and institutions), and natural capital (the environmental resources an organisation depends on or affects). The IR Framework uses these capitals as a lens for analysing value creation rather than as mandatory reporting categories.

How does integrated reporting connect to investor relations?

Integrated reports are designed primarily for providers of financial capital, institutional investors and lenders. They are most valuable for investor relations when they clearly articulate the business model, explain how sustainability factors affect the financial outlook, and demonstrate that management understands both the risks and opportunities in the transition to a sustainable economy. Companies that produce integrated reports alongside ISSB-aligned disclosures provide investors with both strategic narrative and standardised data in a coherent package.