In a changing world, BNP Paribas, a leading international banking player and the leading bank in...
What is an Integrated Report?
Today's society increasingly expects corporate entities to uphold ethical values and implement socially responsible business models. In 2019, these expectations made their way into French law, which incorporated social responsibility (accounting for the social, societal and environmental aspects or impacts of a company's activity) into the definition of a business enterprise. Further reflecting these changes, there is a trend in favor of replacing the activity report with a new annual reporting document called the integrated report. The publication of the BNP Paribas 2019 Integrated Report offers a good opportunity to take a closer look at this synthetic document, its purpose and its contents.
Purpose of the Integrated Report
An integrated report (IR) is a synthetic document containing information about a company's business activity, its ecosystem and how value created is divided between its stakeholders (customers, shareholders and investors, employees, partners and suppliers, institutions and civil society organizations).
The prime objective of an IR is to provide financial and extra-financial elements that show how the company's strategic vision and modes of organisation enable it to generate value. In other words, this type of report integrates CSR and ethics-related reporting – along with financial reporting – into its business model and strategy and targets sustainability. The integrated report is frequently used to replace activity and CSR reports or, as in the case of BNP Paribas, the Report on Activity and Corporate Responsibility.
An integrated report is often the result of close cooperation between different corporate departments. At BNP Paribas, the production of this document calls for collaboration between all Group business lines and functions and is overseen by teams from the Communication, CSR, Finance and Company Engagement departments.
The BNP Paribas Integrated Report is divided into four key sections entitled “Challenges and Ecosystems”, “Business Lines and Expertise”, “Strategy and Performance” and “Governance”. This document is a valuable source of information for shareholders and investors as well as anyone else with an interest in the company's general positioning including personnel, existing or prospective customers, journalists and job candidates.
The Integrated Report is Gaining Traction
Since 2011, more and more companies worldwide are adopting this new type of annual report. In the United Kingdom – where it is known as the Strategic Report – and in South Africa, it has become mandatory. In France, the integrated report has been gaining ground: in 2019, 58% of the companies in the CAC 40 stock market index, and 33% of those in the SBF 120 index, issued an integrated report. In 2019, the publication rate in France was 29% higher than in 2018 and 220% higher than in 2017.
This type of reporting is not mandatory, but is based on the recommendations of the International Integrated Reporting Council (IIRC), an international coalition set up in 2010 which brings together pilot companies, investors, promoters of reporting standards and major audit firms. The IIRC provides a framework for integrated reporting, encouraging each business enterprise to appropriate it within a broader process of CSR reporting and integrated thinking.
Integrated Reports are Valuable Tools for Financial Analysts and Investors
The integrated report is successful because it is an effective addition to the existing family of corporate publications, some of which are required by regulations and others are not. In particular, this type of document is in step with investor demand: nearly 80% of investors today are interested in the extra-financial data of business enterprises and their short-, medium- and long-term social and environmental impacts. The integrated report also gives shareholders and investors an overall, forward-looking vision of a company both from the financial and extra-financial perspectives. It enables readers to form an opinion about the company's strategic trajectory, i.e. how the company uses its resources to develop its business activity; the company's ability to gain and maintain competitive advantages; and its effectiveness in managing business and environmental risks.
The Integrated Report within an Ecosystem of Annual Publications
Many different publications are used to report on business activity and performance. The integrated report has joined a large family that includes the annual report, quarterly financial statements and the Universal Registration Document. To shed light on the subject, let's look at the annual reports issued by BNP Paribas and their purposes.
Universal Registration Document (URD), the successor of the Document de reference (DDR), formerly required of listed companies in France.
In 2019, BNP Paribas issued its Universal Registration Document and Annual Financial report in replacement of its Document de référence and annual financial report. The Universal Registration Document, like its predecessor, contains detailed information about the company's business activity, finances and prospects. It is intended to inform the shareholders about the company's financial situation. Introduced in July 2019, this new type of report is becoming a common tool for countries within the European Union to improve transparency and the intelligibility of information provided.
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