Integrated Reporting

Towards Integrated Reporting - A practice to be revisited in Germany

Stakeholder Reporting and Incite South Africa on Integrated Reporting

At a time when legislation on non-financial reporting has been placed in the spotlight across Europe, many stakeholders in Germany are questioning the adequacy of corporate reporting standards and frameworks as a means of driving corporate sustainability. Following the “green wave” that washed over the EU parliamentary elections in May, and with the socio-political environment more receptive to sustainability issues and a corporate reporting landscape more fertile to sustainability disclosure, this begs the question: does integrated reporting deserve a revisit in Germany?

As German corporations conclude their second cycle of reporting under new legislation[i], environmental, social and governance (ESG) issues have seemingly taken centre stage. When reviewing the most recent annual reports in Germany, it is evident that companies have been very deliberate in demonstrating their compliance with the 2013/14EUDirective[ii] and the German CSR Directive Implementation Act[iii], with many reports overtly structured to reflect compliance with the requirements of the new legislation.

While sustainability issues ostensibly reside at the forefront of these annual reports, the purpose driving the activities, commitments and targets detailed across the reports remains vague beyond an act of compliance. Oddly enough, integrated reporting – the global governance initiative aimed at promoting a strategic appreciation of sustainability issues – still remains relatively unpopular in Germany, contrary to the picture recently portrayed by Eccles .R.G. et al[iv]. While momentum for integrated reporting is gaining globally, in Germany, its application appears to be slipping, beyond a few local champions[v] . In 2015, it appeared that DAX 30 companies were at a tipping point[vi] in the uptake of integrated reporting, with companies such as SAP, Bayer and Munich Airport all spearheading the practice and championing the cause. Yet in 2019, seven years since the emergence of the International Integrated Reporting Council’s (IIRC) International <IR> Framework , there is little evidence to suggest that this tipping point was reached.

Since the emergence of integrated reporting, environmental issues have continued to rise up the agenda, with growing pressure across Europe now coming from grassroot youth campaigners, resource insecure communities and investors[vii], all of whom are urging companies to demonstrate greater leadership in addressing challenges such as climate change and ecosystem degradation. Some investors in Europe have made demand on EU pension funds to include provision for ESG risks[viii]. While there is a continued focus by companies on producing separate sustainability reports, it is not always apparent that these reports have had a sufficient impact on traditional accounting practice, on prompting companies to rethink their business models, or on addressing the levels of distrust that many have on corporate performance; this suggests an even greater potential for integrated reporting today.

Revisiting Integrated Reporting?

The ambition behind the International Integrated Reporting Council’s (IIRC) International <IR> Framework is bold: to fundamentally change current reporting practice, embed ‘integrated thinking’ within mainstream business activities, and prompt a more efficient and productive allocation of financial capital, thereby acting as “a force for financial stability and sustainability”[ix].

Underpinning this shift is the growing realisation that largely backward-looking reporting and accounting practice has failed. By reflecting a flawed understanding of value that fails to properly account for the resources and relationships that organisations rely on to create value, and that unduly discounts the future, traditional accounting and disclosure has arguably contributed to the global financial crisis and to the growing social and environmental challenges. The IIRC believes that the impacts of a traditional short-term, focus on financial performance “has called into question the extent to which traditional corporate reporting disclosures sufficiently highlight the systematic risks to business”[x] and “demonstrated the need for capital market decision-making to reflect long-term considerations.”

Why do German companies remain on the edge of Integrated Reporting?

German corporate reporting appears to be characterised by a rigid compliance culture[xi], with many of the most recent annual reports, for example, reflecting very literally what is required of them by law. A key premise informing integrated reporting, is the belief that compliance with legislation alone will not deliver the systemic change that is needed to drive more sustainable business practice.

The underlying objective of an integrated report is to allow users of the report to determine whether the organisation’s governing structure has applied its collective mind in identifying the environmental, social, economic and financial issues that impact on the organisation’s capacity to create value, and to assess the extent to which these issues have been incorporated into the organisation’s strategy. An integrated report is not simply a case of compliance, nor is it a matter of combining the annual report and the sustainability report into one document; it is something far more strategic, offering German corporations the potential to address some of the key challenges with current reporting practices.

The challenge of corporate reporting in today’s German corporate landscape is not a lack of commitment to sustainability, nor is it the absence of targets and policies by the respective practicing corporations. Rather, it is the acute disconnectedness of non-financial information from core business value creation. As a result, the effort of progressive legislation outlining ESG requirements to guide companies towards sustainable business arguably has been diluted due to a lack of strategic direction and purpose.

From CSR compliance to integrated thinking

Integrated reporting is one of Stakeholder Reporting’s key transformative approaches to enhancing corporate disclosure in Germany. By leveraging integrated reporting, a company has the potential to better illustrate its commitment to integrating sustainability beyond compliance. While CSR compliance may assist in providing assurances that key environmental, social and governance concerns and regulatory challenges are being addressed, it still raises the question ‘’for what purpose’’. It is particularly in responding to this question that integrated reporting becomes significant. By emphasizing and embedding value in reporting, integrated reporting outlines the conditions and processes that are conducive to an inclusive process of decision making, management and reporting, based on the connectivity and inter-dependencies between ranges of factors that affect an organization’s success. An effective integrated reporting process will result in integrated thinking[xii]: a deeper appreciation within the organisation of those sustainability issues that impact on value.

In the context of new legislation and shifting stakeholder expectations, and at a time when many voters have prioritised the need for greater leadership on sustainability issues, integrated reporting presents German corporations with a valuable opportunity to improve corporate accountability, revisit business models and foster improved trust. At Stakeholder Reporting we support companies in their journey towards integrated reporting. For integrated reporting to fulfil its potential for companies in Germany, it is critical that the reporting process does not simply become a compliance-driven exercise administered in isolation by the sustainability team or investor relations department. Instead, it requires the active engagement of the organisation’s governing structure in the reporting process in identifying, communicating on, and responding to, those material issues that impact on the organisation’s capacity to create value.

Sanelisiwe Siyotula is a consultant in Integrated Reporting at Stakeholder Reporting GmbH. She provides advisory services in her capacity as a researcher undergoing her PHD focusing on integrated reporting at the Hamburg School of Business Administration and Nelson Mandela University in Germany and South Africa respectively.

Jonathon Hanks is a Managing Partner at Incite (, an international advisory network based in South Africa that works with leading corporates throughout emerging markets. He is a member of the Working Group of the Integrated Reporting Committee in South Africa and contributes to the work of the International Integrated Reporting Council (IIRC) and the Global Reporting Initiative (GRI). He recently convened the three-year GRI/IIRC Corporate Leadership Group on Integrated Reporting.


[i] Handelsgesetzbuch § 289 Inhalt des Lageberichts available at:

[ii] Directive2014/95/EU available at:

[iii] German Commercial Code available at:

[iv] Eccles, Robert G. and Krzus, Michael P. and Solano, Carlos, A Comparative Analysis of Integrated Reporting in Ten Countries (March 2, 2019). Available at SSRN: or

[v] Eccles, Robert G. and Krzus, Michael P. and Solano, Carlos, A Comparative Analysis of Integrated Reporting in Ten Countries (March 2, 2019). Available at SSRN: or

[vi] Integrtaed Reporting in Germany: the DAX Benchmark Germany 2015 available at:

[vii] Towards a sustainable future by 2030 available at:

[viii] Sustainable finance and disclosures Bringing clarity to investors available at:

[ix] The International Integrtaed Reporting Council available at :

[x] Jonathan Hanks in ‘’Integrated Reporting: Lessons from the South African Experience’’’

[xi] Corporate Compliance Systems The Effect on Risk, Performance and Firm Value available at:

[xii] CIMA Global Academic Research Program available at: