- A. Emergence of the Integrated Report
Institutional reports prepared by institutions to meet the information needs of their stakeholders have changed in line with the needs and wishes of the stakeholders in the historical process. Financial reports comparing the past and current financial performances of institutions and highlighting only profit-oriented results are the first examples of institutional reporting. As the factors such as globalization and climate change have begun to affect our lives, financial reports published by institutions have become unable to meet the needs of stakeholders on their own. At this point, institutions have started to publish environmental reports in addition to financial reports. In fact, over time, the social effects of the activities of the institutions have also begun to be taken into account and environmental reports were replaced by sustainability reports. As a result of these developments, today, in addition to the financial performances of institutions, their social and environmental performances are also reported and taken into account by the stakeholders.
Even though the deficiency of reporting the non-financial results of the activities of the institutions was eliminated with the sustainability reports, the increased amount of information due to these reports caused other deficiencies for the stakeholders. That the information in the sustainability reports is mostly presented independently of financial information and cannot be associated with the business model and strategies of the institutions has been the subject of criticism by the stakeholders and has led to the need for a type of report prepared through adopting a holistic approach. Thus, a new type of institutional reporting, namely integrated reports, emerged as a solution to this need.
- B. Historical Development
Even though the emergence of integrated reporting dates back to earlier times, the most important step was taken with the establishment of the International Integrated Reporting Council (IIRC) in 2010. As a result of the establishment of the International Integrated Reporting Council, the popularity and awareness of integrated reporting have increased rapidly. Firstly, opinions on integrated reporting were received from stakeholders through a discussion article titled "Towards Integrated Reporting - Communicating Value in the 21st Century" in 2011. Later, as a result of the positive feedback received, first, a draft framework was published, followed by the publication of the International Integrated Reporting Framework in 2013. Aiming at the use of the International Integrated Reporting Framework by a wide variety of countries and sectors in the international arena, the International Integrated Reporting Council has prepared the framework to be as flexible and simple as possible. In fact, the need for revision was not felt from 2013, the date of its first publication, until 2021, and it has been considered as a guide by those preparing integrated reports in the international arena. In January 2021, revisions were made in the International Integrated Reporting Framework and it gained its current form. In June 2021, the International Integrated Reporting Council and the Sustainability Accounting Standards Board (SASB) joined forces under one roof with the name Value Reporting Foundation.
The biggest development in this field in our country was the establishment of the Integrated Reporting Network Turkey (ERTA) in 2016. Involving important institutions such as Borsa İstanbul and TÜSİAD among its founding members, ERTA operates with the purpose of increasing awareness of integrated reporting and integrated thinking in our country and spreading the practices in this field. In this respect, it arranges organizations and training in cooperation with national and international institutions.
- C. Integrated Report and Its Benefits
In the International Integrated Reporting Framework, the integrated report is defined as: "It is a succinct report of how an organization's strategy, corporate governance, performance, and prospects, in the context of its external environment, lead to the creation, preservation, and erosion of the value in the short, medium, and long term." In this context, integrated reports are not only reports where financial and non-financial information are presented together but also reports where this information is presented in a manner integrated with the strategy and business model of the institutions. This is only possible with the application of integrated thinking. Thus, while institutions have the opportunity to adopt a holistic perspective on the effects and results of their activities, decision-makers have a mechanism for healthier decision-making about institutions.
Hence, the benefits of integrated thinking, which is the most important component of the integrated report, were addressed in the report titled "Integrated Thinking: A Virtuous Loop" published by the Value Reporting Foundation in June 2021. In the study, it has been determined that the integrated thinking system provides a better understanding of the results, improves the corporate culture and objectives, supports the integration of financial and non-financial aspects, and increases transparency and connectivity. In many other studies conducted by international companies, it has been demonstrated that integrated reporting and integrated thinking are beneficial for institutions.
- D. Conclusion and Recommendations
At this moment where we focus on sustainability, integrated reporting and integrated thinking are gaining more and more importance day by day. Because institutions can implement sustainability correctly only if they can accurately analyze the effects and results of their activities. In this context, it is extremely important for participation banks that attach importance to sustainability to utilize the benefits of the integrated reporting by including integrated reporting in their corporate regarding practices. The steps to be taken for the integrated reporting will also be an important step for the ideals of participation banks to increase their power in the sector and to become strong players in the international arena. For this purpose, first steps can be taken by employing people who are knowledgeable and experts in integrated reporting or by encouraging existing personnel to receive training in this field. Later on, the process of preparation and publication of the integrated report, a new trend in corporate reporting, can be started.
Ahmet Kürşat Alkoyun
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