1

Integrated Reporting: The IIRC

Framework
Chiara Mio

Abstract The International Integrated Reporting Council (IIRC)

Framework is arguably the most important guide for companies will-
ing to implement Integrated Reporting (IR). This chapter offers a review
and discussion of the most important guiding principles and content ele-
ments that are the backbone of the IIRC Framework. It also compares the
Framework with the main sustainability reporting standard, the Global
Reporting Initiative (GRI) Guidelines. Following such a comparison, we
argue that IR can be seen as an evolution of financial reporting rather
than as sustainability reporting. Finally, the chapter discusses some of
the most critical aspects of the IIRC Framework, such as its approach
towards materiality and capitals.

C. Mio ()
Department of Management, Ca’ Foscari University of Venice, Venice, Italy

© The Author(s) 2016 1

C. Mio (ed.), Integrated Reporting,
DOI 10.1057/978-1-137-55149-8_1
2 C. Mio

Introduction
The International Integrated Reporting Council (IIRC) was formed in
2010 and it contributed significantly to the development and advance-
ment of Integrated Reporting (IR). Before 2010, some innovative report-
ing organizations had individually pioneered such practices (for instance,
Novo Nordisk in Denmark) and in South Africa the King commission
on corporate governance fostered IR, which is now a listing requirement.
This chapter provides a comprehensive overview of the IIRC Framework,
published in its final version in late 2013. It focuses in particular on the
most relevant guiding principles and content elements, and on their cur-
rent and prospective role in IR development. It also reorganizes such
content elements and guiding principles following an IR implementation
perspective. The chapter also compares the IIRC Framework with the
GRI Guidelines, highlighting similarities and differences.
The process that ultimately led to the current version of the IIRC
Framework started in September 2011, with the issuance of the first IIRC
publication: the Discussion Paper. The paper presented the rationale for
IR, offering initial proposals for the development of the Framework. The
next month, the IIRC Pilot Program was launched and this represented
an important step towards IR, as the pilot program companies provided
useful indications on how the Framework would have to develop. In June
2012, the IIRC published the summary of the responses to the Discussion
Paper, and the following month the draft outline of the Framework.
Later on, in November 2012, the IIRC released the Prototype of the
International IR Framework, which marked a significant further step
towards the eventual publication of the Framework in 2013. Between
March and July 2013, the background papers were released. Such papers
dealt with specific issues of the IR Framework and in particular: how
organizations articulate their business model; how they use or affect the
six forms of capital; how they apply the concept of materiality; how they
communicate the value creation process; and how the connectivity of
information must present a holistic view of an organization’s strategy,
governance, performance and prospects.
 1 Integrated Reporting: The IIRC Framework 3

In April 2013, a Consultation Draft of the Framework was released,

which led to the publication of responses to the draft and, eventually to
the publication of the current version of the IIRC Framework on the
9th of December 2013. The Framework establishes guiding principles for
organizations adopting IR, helping to ensure consistency across sectors
and national boundaries. It also explains the key content elements that
might be expected of an integrated report, and the fundamental con-
cepts that underpin them. The Framework was released alongside two
documents—the Basis for Conclusions and the Summary of Significant
Issues—to provide further explanations about the development of the
final version of the Framework.
The IIRC Framework has been attracting a great deal of attention not
only among practitioners but also among scholars. In a recent article,
Flower criticizes the current version of the Framework because (among
other things) IR “is not to cover in a comprehensive fashion the impact
of the firm’s activity on stakeholders” (see Flower 2015, p. 15), rather, it
gives priority to serving the information needs of the providers of finan-
cial capital.
The author refers to one of the most important and controversial
IIRC Principles: materiality, which we discuss below. Paragraph 3.11 of
the Framework states that “it does not mean that an integrated report
should attempt to satisfy the information needs of all stakeholders” (IIRC
2013a) and, in defining materiality, the IIRC states: “a matter is mate-
rial if it is of such relevance and importance that it could substantively
influence the assessments of providers of financial capital with regard to
the organization’s ability to create value over the short, medium and long
term” (IIRC 2013b).
We believe that the IIRC approach should not be judged from a “static”
perspective but from a “dynamic” one.
Following the static perspective, companies, in order to define material
issues, consider whether each issue impacts on the assessment of pro-
viders of financial capital. If the company believes that a certain issue
is not going to have any effect on such assessment, it will exclude the
issue from the IR. This would in turn damage those stakeholders having
an interest connected to the issue that has been excluded, because they
4 C. Mio

would not be able to rely on any information provided by the company.

The static perspective does not go further and does not consider possible
subsequent actions by stakeholders and the relative responses of compa-
nies. Most scholars (including Flower 2015) seem to rely on this perspec-
tive, which is ultimately only connected to the assessment of providers of
financial capital.
Conversely, the dynamic perspective also takes into consideration
the subsequent possible actions of stakeholders and of the company.
Stakeholders believing that the company should not have excluded a
certain issue from the IR can actively intervene in order to make their
voice heard. This requires stakeholders being “active” in the engage-
ment process and taking responsibility. For instance, stakeholders may
question companies about the exclusion or organize web or social
media campaigns. The company will then have to decide how to deal
with the opinion of stakeholders, through stakeholder engagement and
dialogue.
After having considered the instances of stakeholders, the company may
decide to amend its decision, including the issue on the IR. Alternatively,
the stakeholders’ attitude may directly impact the assessment of providers
of financial capital on the issue (for instance, in the case of an exclusion of
an issue relevant to customers and subsequent boycott threats). Lastly, the
company may confirm its decision of excluding the issue. In any case, the
dialogue following the stakeholders’ stance is fundamental to the process
of reaching true integration and prioritization and is made possible by
the IIRC Framework approach to materiality.
We believe that the IIRC approach should be evaluated from a
dynamic perspective, which is the only perspective that makes it possible
to capture the opinion of stakeholders and start a dialogue. When evalu-
ated from this perspective, the IIRC approach appears to be a necessary
first step toward the real integration of information on the six capitals,
through interaction between companies and stakeholders.
The IIRC chose to give priority to the providers of financial capital,
but this is clearly only one of the possibilities. Other possible priorities
may be explored, but they should always be evaluated under the dynamic
perspective we defined above.
 1 Integrated Reporting: The IIRC Framework 5

IIRC Guiding Principles and Content Elements

The IIRC Framework is based on the Guiding Principles and on the
Content Elements, which are the backbones of IR and mirror all its main
innovative aspects:
– strategic focus and future orientation (“An integrated report should
provide insight into the organization’s strategy, and how it relates to
the organization’s ability to create value in the short, medium and
long term and to its use of and effects on the capitals”, IIRC
(2013a));
– connectivity of information (“An integrated report should show a
holistic picture of the combination, interrelatedness and dependen-
cies between the factors that affect the organization’s ability to cre-
ate value over time”, IIRC (2013a));
– stakeholder relationships (“An integrated report should provide
insight into the nature and quality of the organization’s relation-
ships with its key stakeholders, including how and to what extent
the organization understands, takes into account and responds to
their legitimate needs and interests”, IIRC (2013a));
– materiality (“An integrated report should disclose information
about matters that substantively affect the organization’s ability to
create value over the short, medium and long term”, IIRC (2013a));
– conciseness;
– reliability and completeness (“An integrated report should include
all material matters, both positive and negative, in a balanced way
and without material error”, IIRC (2013a));
– consistency and comparability (“The information in an integrated
report should be presented: (i) on a basis that is consistent over
time; (ii) in a way that enables comparison with other organizations
to the extent it is material to the organization’s own ability to create
value over time”, IIRC (2013a));
– organizational overview and external environment (“An integrated
report should answer the question: What does the organization do
and what are the circumstances under which it operates?”, IIRC
(2013a));
6 C. Mio

– governance (“An integrated report should answer the question:

How does the organization’s governance structure support its ability
to create value in the short, medium and long term?”, IIRC
(2013a));
– business model (“An integrated report should answer the question:
What is the organization’s business model?”, IIRC (2013a));
– risks and opportunities (“An integrated report should answer the
question: What are the specific risks and opportunities that affect
the organization’s ability to create value over the short, medium and
long term, and how is the organization dealing with them?”, IIRC
(2013a));
– strategy and resource allocation (“An integrated report should
answer the question: Where does the organization want to go and
how does it intend to get there?”, IIRC (2013a));
– performance (“An integrated report should answer the question: To
what extent has the organization achieved its strategic objectives for
the period and what are its outcomes in terms of effects on the capi-
tals?”, IIRC (2013a));
– outlook (“An integrated report should answer the question: What
challenges and uncertainties is the organization likely to encoun-
ter in pursuing its strategy, and what are the potential implica-
tions for its business model and future performance?”, IIRC
(2013a));
– basis of preparation and presentation (“An integrated report should
answer the question: How does the organization determine what
matters to include in the integrated report and how are such matters
quantified or evaluated?”, IIRC (2013a)).
Hereafter, we will provide a comment on the four guiding principles
and content elements that we believe to be the most relevant, as they are
the most innovative compared to traditional financial and non-financial
disclosure: business model, strategic focus and future orientation, con-
nectivity and materiality.
Business model, strategic focus and future orientation are tightly
connected to each other and they are the means through which IR
introduces future performance, which is a “revolutionary” perspective
 1 Integrated Reporting: The IIRC Framework 7

compared to that of annual reports. Traditional financial disclosure is

almost exclusively focused on past performance, with little possibility to
predict the future ability to create value in the long run. Information on
future performance in traditional financial disclosure is scant and limited
to a section included in the management commentary. In this section,
managers often tend to provide the minimum amount of information
on the evolution of the macroeconomic scenario in order to comply with
regulations. Conversely, IR aims at providing relevant information on
the future performance of the company. In this perspective, the busi-
ness model is central, because the future performance of the organization
depends to a large extent on the business model and on its interrelations
with the ever-changing external environment.
Connectivity and materiality are also two very innovative principles
within IR, compared to traditional financial and non-financial disclo-
sure. In particular, connectivity reflects the integrated (as opposed to the
silo) thinking approach. According to the IIRC, “integrated thinking is
the active consideration by an organization of the relationships between
its various operating and functional units and the capitals that the orga-
nization uses or affects” (IIRC 2013a, p. 2). Materiality plays a central
role in IR because it is necessary in order to reach conciseness. The IIRC
Framework proposes a four-step approach in which investors and provid-
ers of financial capital play a central role. This approach is very different
compared to that of sustainability reporting and has been criticized by
some for this reason (see Flower 2015).
As we already argued above, the strategic focus and future orientation
principle captures one of the main benefits IR aims at introducing in the
corporate reporting arena, i.e. the ability of providing future oriented
information. This aspect is fundamental from an external reporting per-
spective, but it is also of paramount importance internally. An effective
management, in fact, should pay a great deal of attention to the future
evolution of the external environment and to future performances. Thus,
the approach proposed by the IIRC may also be useful to companies,
helping them to prevent management from focusing on the short term,
which has proven to be one of the main problems in the current business
environment (see Brochet et al. 2014).
8 C. Mio

According to PWC (2012), “defining the business model in the con-

text of integrated reporting means considering all the relevant capitals on
which performance depends, and explaining their role in how the com-
pany seeks to create and sustain value” (PWC 2012, p. 11). A clear defi-
nition of the business model is fundamental in communicating externally
how the company produces value. At the same time, it forces companies
to review their own business model, potentially allowing for relevant
“internal” benefits. To summarize the business model of the organiza-
tion, possibly in the form of a chart or graph, allows one to communicate
the model within the company, resulting in great potential benefits for
employee morale and motivation. Often, not all the employees working
in an organization have an overall idea of how the company is producing
value. This may be an issue, both in terms of motivation and of the abil-
ity of employees to make decisions and to effectively communicate the
values of the company.
Such information about the business model is also particularly rele-
vant to current and potential investors, who are much more interested in
understanding how the company actually works rather than in knowing
about its more formal or “bureaucratic” aspects. According to KPMG,
“the journey to Better Business Reporting, culminating in an Integrated
Report prepared under the IIRC’s Integrated Reporting Framework,
should be of particular interest to CEOs, CFOs and directors as they face
the challenge of convincingly telling their organization’s ‘story’ to the mar-
kets so they can obtain capital at a reasonable cost” (KPMG 2011, p. 7).
Connectivity of information (which is tightly linked to integrated
thinking, as opposed to silo thinking) and materiality are two of the most
challenging principles proposed by the IIRC. These are the two principles
that companies usually find more challenging to implement and really
require a strong commitment by top management. To decide what the
material issues are and how the different forms of capital combine are
challenging tasks that need a great amount of judgment. It is interest-
ing to notice that the four elements we identified as the most innovative
(strategic focus, business model, materiality and connectivity) are closely
related to each other: in order to understand material issues, companies
necessarily need to take into account their business model and the future
evolution of external and internal environments. Once materiality is
 1 Integrated Reporting: The IIRC Framework 9

determined, connectivity shows the interrelationships between material

issues and how they impact on future performance, conditional on the
business model.
Such principles are also central in the definition of the two IIRC
Framework mechanisms that may shape an organization’s decision about
sustainability disclosure (and investments): the market and the voice of
stakeholders.
Another one of the main innovations introduced by IR is the shift
in the identification of the main object of study. In other words, while
Sustainability Reporting (and in particular the GRI Guidelines) focuses
on the subject (the stakeholders), IR focuses on the object (the capitals).
The capitals store value that’s needed by organizations to create sustain-
able profit and prosperity for society. These values can be transformed,
increased or decreased through the activities and outputs of the organiza-
tion (EY 2014).
The latter is a striking difference that strengthens the diversity between
IR and sustainability reporting, suggesting that IR is an evolution
of financial rather than sustainability reporting. Such a difference in
approach is even more pronounced if we consider that it is not possible to
identify a 1 to 1 relationship between capitals and stakeholders. The same
stakeholder has an impact on different capitals, and IR requires organiza-
tions to focus on the latter. Stakeholders maintain a fundamental role in
IR, because the concept of capitals itself derives from the consideration
that the organization deals with different subjects, each of which influ-
ence and are influenced by the organization. Nevertheless the concept of
stakeholder in IR, when compared to Sustainability Reporting, is much
less prominent. This diminished importance is clear if we examine the
definition of materiality, which requires companies to assess the relevance
of the issues to the providers of financial capital, rather than to the wider
array of stakeholders.
It is interesting to compare the stakeholder and the capital approach
under the perspective of the current evolution of society. As Bauman
(2000) noted, we live a “liquid modernity”, in which a person can shift
from a position to another in a fluid manner. The same person can simul-
taneously be the customer, employee and shareholder of the same com-
pany. He may even be a member of the community where the company
10 C. Mio

operates (as a matter of fact, this is a likely occurrence). In such a context,

stakeholder-based classifications become less relevant, because the
boundaries between different stakeholder categories are less relevant. On
the contrary, the capital approach seems to be more appropriate, because
it captures the ultimate impacts of the different stakeholders (indepen-
dently from their categories) on capitals, which are the relevant objects of
analysis for companies.
Interestingly, the IIRC capital approach has been linked to business
resilience (see IFAC 2014). Putting the focus on capital reinforces the
concept that businesses are part of a larger, interconnected system and
this promotes a wider perspective that allows the company to understand
dependencies and impacts. According to IFAC (2014) “This understand-
ing can lead to the development of a more resilient business model that is
the basis for creating and sustaining value over time”.
One of the main factors that will probably determine the success of
IR in the future is the actual possibility of measuring the stocks and
flows of capital. In other words, KPIs are going to play a central role,
even if the IIRC Framework does not list any specific indicators. Some
guidance may be found in other documents published by the IIRC (see
IIRC 2013c) and by the German Association for Financial Analysis and
Asset Management, together with the European Federation of Financial
Analysts Societies (EFFAS 2011), that jointly published a paper includ-
ing an extensive list of KPIs for each of the 114 subsectors presented.
Academic researchers will have to play a significant role in this field. It
is commonly recognized that the general idea underlying IR holds, but
what is going to determine the actual ability of the Framework to spread
around the world is the possibility of finding adequate measures for capi-
tals. Such measures do not need to be excessively “deterministic”, but aca-
demics, policy makers and companies must accept the fact that measuring
the IR capitals is a challenging task that necessarily requires judgment,
forecasts and approximations. Even traditional financial accounting relies
to a large extent on appraisals (for instance, provisions) that often have a
significant impact on the bottom line. Probably, the perception of such
appraisals is weaker in annual reports, because everything is ultimately
measured in financial terms.
 1 Integrated Reporting: The IIRC Framework 11

Guiding Principles and Content Elements:

An IR Implementation Perspective
In this paragraph, we are re-organizing the IIRC Framework Guiding
Principles and Content Elements and classifying them from an IR imple-
mentation perspective. In other words, we are identifying the main IIRC
principles that an organization creating its IR ought to consider and we
are linking them to specific phases of IR implementation (Fig. 1.1).
Companies employ the first set of principles in order to identify the
potential information to be considered for analysis. In this respect, the
organization ought to consider the strategic focus and future orientation
and the Stakeholder relationship principles. Despite the organization still
being in the first potential information selection phase, the stakeholder
relationship principle already requires some judgment in order to identify
relevant stakeholders. In fact, unlike GRI Guidelines and other forms of
sustainability reporting, the IIRC focuses on the whole performance of
the company, and not merely on sustainability performance.
Since one of the main features of IR is conciseness, it is of paramount
importance for the company to select information that is material,

IIRC GUIDING PRINCIPLES AND

CONTENT ELEMENTS

Strategic focus and future orientation

IMPLEMENTATION PHASE

POTENTIAL INFORMATION
TO BE CONSIDERED Stakeholder relationships

SELECTION OF INFORMATION Materiality

RELATIONSHIPS AMONG
Connectivity of information
INFORMATION

Reliability and completeness

INFORMATION Consistency and comparability
CHARACTERISTICS Conciseness

Fig. 1.1 Implementation phases and IIRC guiding principles

12 C. Mio

through the materiality principle. The IIRC (2013a) argues that “a matter
is material if it is of such relevance and significance that it could substan-
tively influence the assessments and decisions of the organization’s high-
est governing body, or change the assessments and decisions of intended
users with regard to the organization’s ability to create value over time.”
Since this principle is probably one of the most challenging and requires
much judgment, the IIRC issued a specific document, providing infor-
mation on how to identify material issues (IIRC 2013a).
Once the information has been selected, the company needs to connect
it in a proper way, therefore implementing the connectivity principle.
To communicate the performance of the company in a really connected
(integrated) way requires a deep understanding of the business model
and strategy. Finally, the organization needs to consider the Reliability
and completeness, Consistency and comparability and Conciseness prin-
ciples, which are needed in order to present the information.

GRI Guidelines and IIRC Framework:

A Comparison
This paragraph aims at comparing the GRI Guidelines and the IIRC
Framework along some of their main principles. Comparing the IIRC
Framework with the main, non-financial reporting framework is rele-
vant in order to highlight the differences arising between the two and to
understand the underlying IR “philosophy”. In this respect, it is possible
to see that the IIRC Framework shares relevant similarities with financial
reporting rather than with sustainability reporting (for instance, in the
definition of materiality). We therefore consider IR to be an evolution of
financial annual reports rather than of sustainability reports.

Stakeholder Relationships

The key difference in the definition of the stakeholder relations lies in

the identification of the report recipients. According to the GRI, compa-
nies need to identify stakeholders (and their “reasonable expectations and
 1 Integrated Reporting: The IIRC Framework 13

Table 1.1 GRI and IIRC (stakeholder relationships)

GRI IIRC
Stakeholder inclusiveness Stakeholder relationships
principle An integrated report should provide insight into
The organization should the nature and quality of the organization’s
identify its stakeholders, relationships with its key stakeholders,
and explain how it has including how and to what extent the
responded to their organization understands, takes into account,
reasonable expectations and responds to their legitimate needs and
and interests interests

interests”) who will probably employ the report in their decision making
process. The reporting entity must therefore determine the level of detail
of the information that is useful to the stakeholders and consider their
expectations. The IIRC, on the other hand, requires companies to focus
on the stakeholders that the company believes to be fundamental in the
value creation process, thus resulting in a more narrow selection of stake-
holders compared to the GRI (Table 1.1).

Materiality

According to the GRI, materiality is a threshold that makes an issue suf-

ficiently important for the organization to report on it. The threshold
should consider both the magnitude of the impact (economic, social
and environmental) connected to the issue and the relevance of the issue
to the stakeholders. Clearly, the identification of the threshold for non-
financial matters is more challenging compared to financial ones. In
order to define the relevance of the impact of a certain issue on financial
performance one may simply consider a threshold that is determined as a
percentage of revenues. But how can one define the relevance of an issue
having a non-financial impact? Given that not everything is traded in an
active market, this task may turn out to be quite challenging (Table 1.2).
The IIRC identifies as material those issues that have a significant
impact on the ability of the organization to create value. In other words,
the company ought to consider the potential impacts of such issues
14 C. Mio

Table 1.2 GRI and IIRC (materiality)

GRI IIRC
Materiality principle Materiality
The report should cover An integrated report should disclose
aspects that: information about matters that substantively
Reflect the organization’s affect the organization’s ability to create
significant economic, value over the short, medium, and long term
environmental, and social
impacts; or
Substantively influence the
assessments and decisions of
stakeholders

on strategy, governance, performance and future outlook. As the IIRC

focuses on long-term value creation, such material issues are often the
same issues that are tackled by the most important governing bodies of
the organization.
The main differences between GRI and IIRC, therefore, are: the
parameters for the definition of materiality (social and environmental
aspects for the GRI and value creation for the IIRC) and the subjects to
be considered in this process (main stakeholders for the GRI and provid-
ers of financial capital for the IIRC).

Comparability

The GRI focuses on stakeholders and should be able to analyse changes

in the organizational performance over time. Conversely, the IIRC refers
(once again) to the value creation process, in the sense that information
should be presented in a way that enables comparison with other orga-
nizations to the extent that it is material to the organization’s ability to
create value (Table 1.3).
The perspectives of the two frameworks are therefore different: they
range from focusing on stakeholders (GRI) to focusing on the reporting
entity itself (the IIRC).
 1 Integrated Reporting: The IIRC Framework 15

Table 1.3 GRI and IIRC (comparability)

GRI IIRC
Comparability principle Consistency and comparability
The organization should select, compile, and The information in an
report information consistently. The integrated report should be
reported information should be presented presented:
in a manner that enables stakeholders to On a basis that is consistent
analyze changes in the organization’s over time
performance over time, and that could In a way that enables
support analysis relative to other comparison with other
organizations organizations to the extent it
is material to the
organization’s own ability to
create value over time

Connectivity of Information

The GRI Guidelines are inspired by sustainability, therefore they require

the report to present the performance of the organization in the wider
context of sustainability. Conversely, the IIRC introduces the concept
of “connectivity of information”, that requires information to be inter-
related both in terms of content and time frame. In other words, IR
aims to extend beyond the boundaries of non-financial and sustainability
disclosure and to make a closer connection with financial performance
(Table 1.4).

Reliability and Conciseness

While the GRI employs four different principles connected to the reli-
ability and completeness principle (completeness, accuracy, balance
and reliability), the IIRC manages to synthesize all these aspects in the
Reliability and completeness principle (Table 1.5).
16 C. Mio

Table 1.4 GRI and IIRC (connectivity of information)

GRI IIRC
Sustainability context Connectivity of information
Principle An integrated report should show a holistic
picture of the combination, interrelatedness
and dependencies between the factors that
affect the organization’s ability to create value
over time
The report should present
the organization’s
performance in the wider
context of sustainability

Table 1.5 GRI and IIRC (reliability and conciseness)

GRI IIRC
Completeness principle Reliability and completeness
The report should include coverage of An integrated report should
material Aspects and their Boundaries, include all material matters,
sufficient to reflect significant economic, both positive and negative, in
environmental and social impacts, and to a balanced way and without
enable stakeholders to assess the material error
organization’s performance in the reporting
period
Accuracy principle
The reported information should be
sufficiently accurate and detailed for
stakeholders to assess the organization’s
performance
Balance principle
The report should reflect positive and
negative aspects of the organization’s
performance to enable a reasoned
assessment of overall performance
Reliability principle
The organization should gather, record,
compile, analyze and disclose information
and processes used in the preparation of a
report in a way that they can be subject to
examination and that establishes the quality
and materiality of the information
 1 Integrated Reporting: The IIRC Framework 17

Conclusions
This chapter offers a review of the IIRC Framework, and in particular
of the guiding principles and content elements, which are the backbone
of such a framework. In particular, we focused on the most important
elements of the framework: business model, strategic focus and future
orientation, connectivity of information and materiality. They contain
some of the most important and innovative features of IR, compared
to traditional financial and non-financial disclosure. Besides this, they
are closely related to each other, as materiality determination requires
companies to take into account their business model and the future evo-
lution of external and internal environments. Connectivity shows the
interrelationships between material issues and how they impact on future
performance, conditional on the business model.
We compare the stakeholder approach, which is typical of sustain-
ability reporting, with the IR capital approach and we argue that the
latter is more in line with the liquid society in which we are living. In
current society, the same person can simultaneously be the customer,
employee and shareholder of the same company and, in such a context,
the stakeholder-based classifications become less relevant. On the other
hand, the capital approach captures the ultimate impacts of the various
stakeholders (independently from their categories) on capitals, which are
the relevant objects of analysis for companies.
Capital measurability will probably play a central role in the future
diffusion of IR practice. On the one hand, academic researchers will have
to play a key role in the advancement of this issue. On the other hand,
IR users need to accept the idea that appraisals are necessary and play a
central role in traditional financial reporting as well.
We also compare the IIRC Framework with the GRI Guidelines, high-
lighting similarities and differences along the following dimensions: stake-
holder relationship, materiality, comparability, connectivity of information
and reliability and completeness. Such analysis allows us to conclude that
IR is more closely linked to financial than to sustainability reporting and
should therefore be considered as an evolution of the former.
Finally, we posit that the IIRC approach to materiality should not be
judged from a “static” but from a “dynamic” perspective. The dynamic
18 C. Mio

perspective also takes into consideration the stakeholder’s voice and dia-
logue, both of which are necessary to reach true integration and prioritiza-
tion. When evaluated from such a perspective, the IIRC approach appears
to be a necessary first step toward real integration of information on the
six capitals, through interaction between companies and stakeholders.
The IIRC chose to give priority to the providers of financial capital,
but this is clearly only one of the possibilities. Other possible priorities
may be explored, but they should always be evaluated under the dynamic
perspective defined above.

References
Bauman, Z. 2000. Liquid modernity. Cambridge: Polity.
Brochet, F., Loumioti, M. and G. Serafeim. 2014. Short-termism, investor cli-
entele, and corporate performance. Working Paper, Harvard University.
EFFAS. 2011. KPIs for ESG. http://www.effas-esg.com/wp-content/
uploads/2011/07/KPIs_for_ESG_3_0_Final.pdf
EY. 2014. Integrated reporting. Elevating value. http://www.ey.com/Publication/
vwLUAssets/EY-Integrated-reporting/$FILE/EY-Integrated-reporting.pdf
Flower, J. 2015. The International Integrated Reporting Council: A story of
failure. Critical Perspectives on Accounting 27: 1–17.
IFAC. 2014. Accounting for sustainability. From sustainability to business resil-
ience. https://www.ifac.org/publications-resources/accounting-sustainability-
sustainability-business-resilience
International Integrated Reporting Council (IIRC). 2013a. The International
<IR> Framework. http://www.theiirc.org/wp-content/uploads/2013/12/13-
12-08-THE-INTERNATIONAL-IR-FRAMEWORK-2-1.pdf
———. 2013b. Materiality. Background paper for IR. http://integratedreport-
ing.org/wp-content/uploads/2013/03/IR-Background-Paper-Materiality.pdf
———. 2013c. Capitals. Background paper for IR. http://integratedreporting.
org/wp-content/uploads/2013/03/IR-Background-Paper-Capitals.pdf
KPMG. 2011. Integrated reporting. Performance insight through better busi-
ness reporting. https://www.kpmg.com/Global/en/IssuesAndInsights/
ArticlesPublications/Documents/road-to-integrated-reporting.pdf
PWC. 2012. Integrated reporting: The future of corporate reporting. http://
www.pwc.de/de/rechnungslegung/assets/integrated_reporting.pdf