Businesses are disclosing an increasing volume of information through financial statements, corporate governance reports, sustainability reports, and investor materials. However, these reports often exist as separate “pieces of the puzzle”: financial information may not fully explain the resources that drive performance, while ESG data may not clearly demonstrate its implications for strategy, cash flows, and future prospects.
The issue is therefore not simply how much information a company discloses, but whether that information is sufficiently connected to help readers understand how the company creates value. The Integrated Reporting Framework was developed to address this gap.
What is the Integrated Reporting Framework?
According to the IFRS Foundation, Integrated Reporting (IR) is a concise form of communication about how an organisation’s strategy, governance, performance, and prospects, in the context of its external environment, lead to the creation, preservation, or erosion of value over the short, medium, and long term. The Integrated Reporting Framework adopts a multi-capital approach, considering the resources and relationships that an organisation uses or affects in the process of creating value.
The Framework was first published in 2013 and revised in 2021. It is now part of the IFRS Foundation’s corporate reporting ecosystem and plays an important role in promoting integrated thinking and greater connectivity across corporate information.
The Integrated Reporting Framework is not simply about combining financial statements, annual reports, and sustainability reports into a single document. A report truly reflects an integrated approach when it demonstrates the connections between:
- the operating context, strategy, and business model;
- governance, risks, opportunities, and resource allocation;
- financial and non-financial performance;
- past performance and future prospects; and
- value created, preserved, or eroded.
In this sense, “Integration” first and foremost requires integrated thinking in governance and the connectivity of information, not merely a choice of how the reporting is presented.
How widely is the Integrated Reporting Framework being applied?
According to the KPMG Survey of Sustainability Reporting 2024, the use of the Integrated Reporting Framework varies considerably across regions and groups of companies. Key findings include:
- 45% of N100 companies in the Middle East and Africa use the Integrated Reporting Framework;
- 16% in Europe;
- 24% of N100 companies across the overall survey sample use the Framework; and
- 17% of G250 companies use the Integrated Reporting Framework.
In KPMG’s study, the N100 comprises the 100 largest companies by revenue in each surveyed country, territory, or jurisdiction, while the G250 comprises the world’s 250 largest companies by revenue.
These figures indicate that the adoption of Integrated Reporting remains uneven across markets. They also illustrate that the Integrated Reporting Framework is an approach companies may choose to enhance the connectivity of corporate information, rather than a single reporting model universally adopted by all companies.
Why does Corporate Reporting still lack connectivity?
In practice, corporate reporting typically involves multiple departments and functions.
Finance and Accounting provides financial data; sustainability, environmental, human resources, and other relevant functions compile ESG information; Corporate Governance or the Corporate Secretary provides information on the Board of Directors and governance mechanisms; while Investor Relations, Communications, or Marketing may support the consolidation, editing, and presentation of the report.
Such cross-functional involvement is essential to Integrated Reporting.
However, without effective coordination and integrated thinking, a report can easily become a collection of disconnected sections that fail to demonstrate the relationships between strategy, governance, the business model, risks and opportunities, performance, and the organisation’s ability to create value.
Common limitations may include:
- strategy not being clearly linked to objectives and resource allocation;
- the business model being limited to a description of activities;
- risks being listed without clear connections to strategy and future prospects;
- ESG information being disconnected from financial performance and investment decisions;
- inconsistent indicators in terms of scope, reporting period, or measurement methodology; and
- the Board becoming involved only at the final approval stage.
The underlying issue is the degree of integration within the governance system. When strategy, risk, performance, finance, and sustainability continue to be managed separately, the Board may struggle to obtain a holistic view, investors must connect fragmented information themselves, and management may continue making decisions within functional “silos”.
In such circumstances, a report may contain a large amount of information without necessarily being useful.
6 capitals – 7 guiding principles – 8 content elements of the Integrated Reporting Framework
The Integrated Reporting Framework is built around three foundational components: 6 capitals, 7 guiding principles, and 8 content elements.
Together, these components help organisations address three fundamental questions:
- What resources and relationships does the organisation depend on and affect?
- What key information should the report communicate?
- What principles should guide the selection, connection, and presentation of information?
Organisations are not required to use the exact terminology of the six capitals, report on all six capitals, or structure their reports around the eight content elements. Rather, these components serve primarily as a reference framework to help organisations consider the factors affecting their ability to create, preserve, or erode value over time.
More importantly, the information should be connected. For example, a material risk should be linked to the organisation’s response strategy, allocated resources, performance indicators, actual results, and future outlook.
A business decision can affect multiple capitals
The multi-capital approach helps organisations identify the interdependencies and trade-offs among different resources arising from business decisions.
For example, investing in a new production line may improve operational capacity while requiring additional financial capital and potentially increasing energy consumption, water use, or emissions.
Similarly, investment in employee training creates short-term costs but may strengthen employees’ skills, productivity, and capabilities over the longer term. A company should therefore consider not only:
“How much profit will this decision generate?”
but also:
“Which capitals are being used, increased, or diminished in generating this outcome?”
This is one of the important distinctions of integrated thinking.
How does conventional annual reporting differ from reporting that applies the Integrated Reporting Framework?
An integrated report does not necessarily have to be a completely separate report from an annual report. Companies may apply the principles of the Integrated Reporting Framework within their annual reports to improve the connectivity of information.
How does the Integrated Reporting Framework relate to IFRS S1, IFRS S2, and GRI?
The Integrated Reporting Framework is a principles-based framework focused on connecting information to explain an organisation’s ability to create value over time. It does not prescribe a standardised set of ESG metrics to be applied uniformly across all organisations.
In practice, the Integrated Reporting Framework can therefore be used alongside other disclosure standards:
- IFRS S1 requires disclosure of sustainability-related risks and opportunities that could affect an entity’s cash flows, access to finance, or cost of capital;
- IFRS S2 focuses on climate-related risks and opportunities;
- SASB Standards support the identification of sustainability-related topics and metrics by industry;
- GRI Standards support reporting on an organisation’s significant impacts on the economy, environment, and people; and
- the Integrated Reporting Framework provides an overarching structure for connecting material information with strategy, governance, the business model, risks and opportunities, performance, and prospects.
Put simply, Integrated Reporting provides an overarching framework for connecting and communicating the organisation’s value-creation story, while IFRS S1, IFRS S2, SASB Standards, and GRI Standards provide requirements or guidance designed for different information needs and reporting objectives.
These frameworks and standards do not necessarily replace one another; rather, they can complement each other in building a more connected corporate reporting system.
Integrated Reporting in the Vietnamese context
In Vietnam, public companies are required to prepare and disclose annual reports in accordance with Circular No. 96/2020/TT-BTC and relevant amendments and supplements. Annual reports cover areas including business performance, corporate governance, Board assessments, and information relating to environmental and social impacts.
However, an annual report prepared in accordance with the prescribed requirements of Circular 96 does not automatically constitute an integrated report under the Integrated Reporting Framework.
Companies should therefore distinguish between three levels:
- Legal compliance: Meeting applicable requirements concerning the content, format, and timing of corporate disclosures;
- Application of reporting standards: Using IFRS S1, IFRS S2, GRI Standards, SASB Standards, or other relevant standards to identify and disclose information for specific reporting objectives;
- Application of the Integrated Reporting Framework: Connecting material information into a coherent narrative that explains how the organisation creates value over time.
This approach is also consistent with the spirit of Principle VI.A.3 of the G20/OECD Principles of Corporate Governance 2023, which highlights connectivity between sustainability-related disclosures, financial reporting, and other corporate information.
For Vietnamese companies, the Integrated Reporting Framework can therefore serve as a reference framework for enhancing the quality of annual reporting, improving the connectivity of information provided to investors, and progressively strengthening readiness for increasing sustainability disclosure expectations in capital markets.
Recommendations for companies
Companies should not begin with report design. Instead, the starting point should be strategy, the business model, risk management, and the way the organisation creates value.
Integrated Reporting should be treated as a cross-functional governance initiative, with early Board involvement in identifying material matters, overseeing strategic trade-offs, and ensuring balanced reporting.
Reports should remain concise and focused on material information, while detailed data can be provided through specialised reports, appendices, or corporate websites. Most importantly, external disclosures should be consistent with the information that the Board and management actually use in decision-making.
A high-quality Integrated Report, therefore, is not created only during the final reporting and editing process. It needs to originate from integrated thinking embedded within the organisation’s governance and management practices.
How can CGS Vietnam support companies?
CGS Vietnam provides advisory services to develop and enhance the quality of annual reports, integrated reports, and sustainability reports in line with companies’ business characteristics, regulatory requirements, and capital-market objectives.
Support may include readiness and gap assessments against GRI and IFRS S1–S2; development of transition roadmaps and value-creation models; identification of capitals and material matters; connecting strategy, risks, KPIs, and ESG; establishing governance structures, processes, and data controls; advising on report content; training internal teams; and preparing for independent assurance.
The objective is not simply to publish a better report, but to foster integrated thinking in governance and decision-making. When strategy, resources, risks, performance, and sustainability are considered within the same system, Integrated Reporting can become a tool for strengthening accountability, investor dialogue, and long-term value creation.
Further reading: Financial information and Sustainability information: Why companies need to connect these two data streams?
References
- IFRS Foundation (2021), Integrated Reporting Framework
- KPMG (2024), The Move to Mandatory Reporting – Survey of Sustainability Reporting 2024
- IFRS Foundation (2023), IFRS S1 – General Requirements for Disclosure of Sustainability-related Financial Information
- IFRS Foundation (2023), IFRS S2 – Climate-related Disclosures
- IFRS Foundation, SASB Standards
- Global Reporting Initiative, GRI Standards
- Government of Vietnam, Circular No. 96/2020/TT-BTC
- OECD (2023), G20/OECD Principles of Corporate Governance 2023
About CGS Vietnam
CGS Vietnam Consulting Joint Stock Company provides specialized advisory services in Corporate Governance, Sustainability (ESG), Risk Management, and Internal Audit.
Backed by a team of experienced professionals with deep expertise in international best practices, CGS Vietnam partners with businesses to strengthen corporate governance, enhance management capabilities, meet investor expectations, and achieve long-term sustainable growth.
Contact CGS Vietnam:
Hotline: (+84) 363 581 520 | Email: [email protected] | Website: https://cgsvietnam.com/
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