INTEGRATED REPORTING FOR DIRECTORS

OF PUBLIC LISTED COMPANIES

Sunita Devi
Disclaimer
This material has been prepared for educational purpose only. The examples, references, cases and
issues contained in the material are only for illustration purpose to enable better understanding and
learning objective and do not purport to show actual results.

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Course Outline

Module 1: Integrated Reporting = Integrated Thinking

1.1 : Corporate Responsibility and Setting Clear Directions
1.2 : Malaysian Regulatory Requirements
1.3 : Malaysian Code of Corporate Governance – ESG Guidance
1.4 : Directors’ Foresight

Module 2: Malaysian Regulatory Framework

2.1 : Principles of Step Up in the Malaysian Code of Corporate Governance
2.2 : Bursa Malaysia: Sustainability Reporting Guideline & Toolkit
2.3 : Value Creation Business Model

Module 3: Merits of Integrated Reporting

3.1 : Strategic Resource Allocation – For Business Sustainability
3.2 : Value of The Board of Directors to the Business
3.3 : Benchmarking Integrated Reporting to Global Standards that are Led by Investors, Assets and
Governance
3.4 : Applied Accountability, Transparency and Sustainability in Integrated Reporting Capitals
3.5 : Directors Provide Guidance to High Impact Goals with Integrated Reporting
3.6 : Ultimate Purpose of Integrated Reporting
Introduction

The issues addresses by Integrated Reporting:

• Unclear or rapidly evolving reporting standards and frameworks
• Lack of management guidance
• Resources; cost, time, trained expertise, technology

Integrated Reporting is all about demonstrating.

1) Accountability is the: “state of being answerable for decisions and activities to the
organization’s governing bodies, legal authorities and, more broadly, its stakeholders” (those
who are affected by its actions)
2) Transparency is the: “openness about decisions and activities that affect society, the
economy and the environment, and willingness to communicate these in a clear, accurate,
timely, honest and complete manner”

The Integrated Reporting framework is:

• A series of investments by the organisation in an financial year.
• Based on strategic goals set by the Board of Directors for the business in each financial year.
• Operationalised by the business model.
• A series of measurable intended outcomes for the business.
An example of How an Organisation Complies With and Reports Using The Integrated
Reporting Framework

Module 1: Integrated Reporting = Integrated Thinking

Integrated Reporting is the story of the Board of Directors on how they thinks and provide guidance
for the company’s performance, how they communicate value creation, and make better decisions.
1.1 Corporate Responsibility and Setting Clear Directions

 Corporate Responsibility Reporting

Evolution SR- AR- IR (AR+ CH Stmt +
MD&A)

 Malaysian Regulatory Requirements-

Bursa Malaysia & MCCG

 Gaps in Directors’ foresight (ESG)

1.2 Malaysian Regulatory Requirements

Listing Requirements Main Market Listing ACE Market Listing

by Bursa Malaysia Requirements Requirements Revision to the
[paragraph (30) of Malaysian Code of
[paragraph 9.45 (2) Part A of Appendix 9C Appendix 9C Corporate
and paragraph (29), (supplemented by (supplemented by Governance 2017
(BMSRG pg 38/102)] Practice Note (9) Guidance Note I)]

Bursa Malaysia aims to ensure companies carefully review and communicate long term value creation
for:
1) Reputation & Relationships - Companies need to build trust and enhance brand value with
their stakeholders.
2) Cost Savings & Efficiency - Measure cost saving methods and enhance profitability by each
capital investments.
3) Risks & Resilience - Minimising vulnerabilities and anticipating upcoming issues help to
improve business resilience.
4) Innovation & Insights - Set goals for new profitable opportunities with each capital
investments.
1.3 Malaysian Code of Corporate Governance (MCCG)

Intended Outcome: Every company is headed by a board, which assumes responsibility for the
company’s leadership and is collectively responsible for meeting the objectives and goals of the
company

Identify
The exemplary
Greater focus practices which
Comprehend,
The shift from and clarity on Guidance to support
Apply and
comply or the Intended assist companies in
Report
explain to apply Outcomes for companies in moving towards
approach -
or explain an each Practice applying the greater
CARE
alternative Practices excellence –
Step Ups

1.4 Directors’ Foresight

Integrated Reporting requires the Board of Directors to set clear targets and intended outcomes from
investments.

Winds of Change: MEGAFORCES

Identify long term sustainability trends

Navigation: INFLUENCE
Determine how to adapt and influence the trends

North Star: AMBITION

Define a bold transformational vision
Module 2: Regulatory Recommendation

Regulatory bodies provide a precursor to corporate behaviour. Bursa Malaysia’s Sustainability

Reporting Guideline (2nd ed. 2019).
Directors of companies are recommended to apply practices to enhance accountability,
transparency and sustainability.
Board exercises corporate governance by adopting those sustainability best practices.

Complexity of Sustainability Requires A Holistic Approach

2.1 Apply Step Up Guidance of the Malaysian Code of Corporate Governance

Corporate governance practices lies in; the required vision/strategy, process/technology and
organization/ structures that ensure long-term sustainability.

2.2 Bursa Malaysia: Sustainability Reporting Guideline & Toolkit

Bursa Malaysia’s SR Guideline (Page 13)

“Given the interesting focus by investors, improving sustainability performance and disclosures may
provide organisations increased access to capital, locally and globally”
2.3 Value Creation Model (Example: A bank)

The pool of funds available to the bank. This

FC Financial Capital consists of; Shareholders’ Equity and Deposits from
Customers.

Encompasses organisational and knowledge-based

IC intangible that can include intellectual property such
Intellectual Capital
as software or licences or proprietary knowledge,
systems or procedures.

Covers the skills and experience of all employees,

HC which enable the Group to deliver its strategy,
Human Capital
products and services to create value for
stakeholders.

Includes bank’s infrastructure, i.e. the physical

MC branches, data centres and equipment and digital
Manufactured Capital
technology, which facilitate bank’s services to
customers.

Includes managing natural resource consumption

NC Natural Capital and the resultant impact on the environment. Eg;
the use of energy, air, water and waste.

The relationships built between communities,

SRC Social and Relationship stakeholders and other relevant groups. This also
Capital includes the Group’s brand and reputation
management.

Module 3: Merits of Integrated Reporting

3.1 Strategic Resource Allocation – For Business Sustainability

Discussion of a recent pandemic scenario to describe how IR can help directors guide their organization
towards sustainable development. Referring to this article on google. [Link]
business-through-the-coronavirus-crisis.

Examples of how resources should have been allocated which demonstrates step up guidance provided
by a Director:

❖ Communication – How frequent are updates provided for the pandemic situation?
❖ Employee needs – Is their feedback gathered?
❖ New ways of working – Was there some changes in the way employees work now? How does
this effect performance or productivity?
❖ Supply chain stabilisation – How much is allocated to stabilize supply chain?
❖ Business tracking and forecasting: Dashboard – How is your business? How dynamic is the data
which is collected by the business?
❖ Solution focused – What can we offer as a solution to stakeholders?
3.2 Value of The Board of Directors to The Business

“… promote financial stability and sustainable development. This can be achieved if investment
decisions are made on the basis of long-term valur creation, especially if corporate behaviour is aligned
to this aim. Demonstrating the link between investment decisions, corporate behaviour and reporting is
the aim of Creating Value.”

Discussion Example

In this Group, there is a commitment to

eliminate single use plastic globally by
2025 and are now firmly headed in that
direction with a campaign called ‘Say No to
All Plastic’(SNAP) which was rolled out
early 2019.

The goal is to reduce up to 1,000,000

plastic water bottles and 200,000 straws
from few properties, under the group.

3.3 Benchmarking Integrated Reporting to Global Standards That are Led-By Investors, Assets
and Governance

As a Directors of the Board, you add value by guiding accountability, transparency and sustainability of
your business. Ask your management these questions:
• What is the baseline, number, which would be a significant number of reduction? 1 million/
100,000?
• Which subsidiary should Champion this campaign?
• How long do you plan to reach this target?
• What are contingencies?
• Who are your collaborative partners to achieve this target?
• HOW WOULD THE CAMPAIGN ADD VALUE TO THE PROFITABILITY OF THE COMPANY?

3.4 Applied Accountability, Transparency and Sustainability in IR Capitals

Source:
[Link]
CAPITALS-MODEL-AND-THE-TRIPLE-
BOTTOM-LINE_fig2_292148019
 Element Question

Purpose What is the company purpose and in what way is it interlinked to the existing
sustainability program?
Materialities Are the most relevant sustainability topics identified and have drivers, such
as geographical areas of operation, customer segments served, sctructure
of the value chain, products and services and key stakeholders, been
factored in?
Business Case What is the business case for sustainabilitu and in what way is it connected
to the overall company strategy?
Differentiation What are the areas of industry-wide collaboration and what strategic areas
will make the company enlarge its competitiveness, for instance, through
enhanced reputation, product cost reduction or innovative products and
services?
Targets & Is the present set of key performance indicators (KPIs) covering our
Ambitions business case and differentiation focus? Was there a senior managemnet
commitment to the objectives and were they externally communicated?
Means & Tools Are the appropriate tools available to implement the required changes
within the company and towards our stakeholders?
Action Planning Is there a concrete multi-year roadmap for the implementation of the
sustainability program and is it actionable enough?

3.5 Directors Provide Guidance to High Impact Goals with IR

Financial – May be related to 14 of the goals

Manufactured – May be related to 10 of the goals
Intellectual – May be related to 9 of the goals
Human – May be related to 12 of the goals
Social and Relationship – May be related to all 17 of
the goals
Natural – May be related to 9 of the goals
For example: the No Straw Campaign corresponds with United Nation’s Sustainable Development
Goal, 12.2, 5,7,8,12.b, and 17.

For Goal 17 the exact KPIs met are 17.16 and 17.17.
 Enhance the global partnership for sustainable development, complemented by multi-
stakeholder partnerships that mobilize and share knowledge, expertise, technology and
financial resources, to support the achievement of the sustainable development goals in all
countries, in particular developing countries.
 Encourage and promote effective public, public-private and civil society partnerships, building
on the experience and resourcing strategies of partnerships., data, monitoring and
accountability.

3.6 Ultimate Purpose of IR

Source: [Link]