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Integrated Reporting - Do you start with a report or a thought?


​19, September 2016 - Investors wanting to understand the long-term value proposition of the companies they invest in are increasingly looking for a clear articulation of what makes them sustainable. There is a growing expectation on companies to demonstrate an “‘integrated” approach that presents a holistic picture of their business model and accounts for financial and non-financial inputs on which they depend. As a result, JLL’s Upstream Sustainability Services business has launched its ‘Integrated Thinking & Reporting Toolkit’ to help companies consider two valid routes to achieving successful integration – one starts with thinking, the other with reporting.

The ‘accepted wisdom’ is that companies develop an integrated strategy first, but the ‘think before you speak’ approach isn’t the only choice. JLL has seen real estate companies tackle Integrated Reporting from both starting points. Both have their merits provided a couple of preconditions are followed: Integrated Thinking can only be embedded through reporting and acting on the outcomes of an integrated strategy, while Integrated Reporting can only tell a convincing story if it is supported by Integrated Thinking.

JLL has developed a four-stage process to combine these two starting points. Firstly, a company should examine its business model to identify the many inputs, outputs and dependencies it has. It must then ensure it understands its material issues and focus on the most relevant inputs and outputs that could impact its business model and future success. Then it should focus on developing a value creation story by providing a detailed understanding of its business model and the value creation opportunities in relation to each material input and output. Finally, implementation and action. This requires a company to examine the changes it need to embed its strategy, organisational structure, engagement and incentives into value creation across the organisation.

Indeed a company’s chosen approach will depend on its preference to proceed conservatively and set out its thinking first, or to proactively engage with its stakeholders by reporting on its strategy as it develops. JLL believes both are valid starting points.

While Integrated Reporting remains in its infancy, the benefits are beginning to be crystallise. Companies report better long-term decision making, increasing connectivity between departments as internal silos are removed and aligned incentives linking business and sustainability performance. Externally, they are able to communicate the long-term value proposition and prospects to stakeholders and investors. Studies carried out by the International Integrated Reporting Council and partners show that among 66 organisations interviewed in 2012, 92 per cent stated that Integrated Reporting had improved their understanding of value creation while 79 per cent said it had helped improve business decision making.

The journey to Integrated Reporting might seem an intimidating prospect at first, but whatever starting point a company is at, the toolkit provides a clear roadmap capitalise on these benefits.

Tom Branczik, Senior Consultant, Upstream Sustainability, JLL