As business operations are redefined, organisations move to embrace the principles stakeholder capitalism, acknowledging the importance of delivering long-term value to all stakeholders, including employees, suppliers, communities, and shareholders.
In such a world, integrated financial reporting has slowly become the bedrock for modern business.
Although traditionally, accounting functions existed to deliver the information needs of a diverse set of business stakeholders, numerous dynamic companies have begun to identify the potential of financial reporting practices to contribute to not only steering the strategic direction of a business but also contribute to corporate innovation and value creation processes.
For highly regulated life insurance companies grappling with the critical responsibility of dealing with public money, transparent financial reporting practices have come to bear great significance to the continuance of successful operations.
It exists to offer a level of deep, actionable insight that helps businesses remain compliant, streamline their finances across the board, enhance stakeholder confidence and extract strategic value from their own data.
This level of integrated reporting, governed by global best practices and guarded by external assurers, promotes transparency, disclosure and trust.
Creating opportunity from complexity
Creating value is important for all stakeholders, and integrated financial reporting in its essence is centered on value creation.
Integrated reports disclose and connect financial, social, and governance inputs and performance information on one page.
They improve transparency of a company’s social responsibilities and help demonstrate how a company creates social value over time.
It helps the companies themselves and other stakeholders think beyond just numbers to make improved assessments and long-term decisions.
Most importantly, it instils a culture of 'integrated thinking' within a business.
For a growing corporate, the right governance framework based on integrated thinking is a must to generate and create value for all stakeholders.
Further, effective innovation is the cornerstone of leveraging financial data and delivering actionable insights to senior management.
Needless to say, in present day, it is difficult to overstate the crucial importance of innovation and thereby financial reporting for organizations seeking to survive and thrive in the globally competitive business environment.
For example, reflecting the company’s strong commitment to transparency, accountability and responsibility as a listed entity, Softlogic Life's Integrated Annual Report voluntarily embraces global benchmarks such as the ‘International <IR> Framework’ and the Global Reporting Initiative (GRI) Standard ‘Core’ option.
As it is a part of the company’s vision to share its journey of value creation with all its stakeholders (beyond mere shareholders), even when it was not required by the regulator for the company to adopt the Six Capital Reporting Framework (under the Integrated Reporting Framework), Softlogic Life did so with the mere intention of creating value across the board.
Just this year, the company was thrust into the spotlight for being the first entity in Asia and Sri Lanka (Seventh companyglobally) to obtain external assurance on integrated reporting practices.
Further, the company went above and beyond to innovate and deliver Sri Lanka's first video annual report four years ago, in an attempt to effectively deliver their progress and vision to stakeholders in a novel manner.
The power of 'integrated thinking'
Integrated thinking involves a company's top drivers acting as a collective unit in understanding, knowing, and then planning how the company will make its profit.
It forces teams to determine the company’s business model, embracing its governance, enterprise risk management, strategy, and internal controls.
It helps companies view value creation through a new lens and enhance decision-making by taking a holistic view of the factors that can create or erode value.
The adoption of ‘integrated thinking’ enables companies to critically evaluate its business and value creation process to provide further insights into how Environmental, Social and Governance (ESG) issues are integrated into its core business management.
This also offers business drivers a clear cut view of a company’s operations, and help them react faster in times of great market volatility such as during the pandemic.
Further to this, it should also be noted that modern markets move at unprecedented speed.
Increasingly, companies have become eager to gain and maintain competitive advantage by leveraging digital solutions that help them achieve greater efficiency, speed, accuracy, and transparency.
In terms of finance, without the integration of new technologies, companies will struggle to harvest and leverage the insights delivered by integrated reporting while they’re fresh and actionable.
With the start of the pandemic, dynamic, agile companies such as Softlogic Life who constantly foster a culture of innovation and integrated thinking were able to bounce back faster and find new ways to continue their job of protecting lives when it mattered the most.
It helped the brand's management and employees suit themselves up through the use of totally digital processes, novel robotic process automation technologies and big data analytics to maintain a steady cash flow and redefine insurance market standards to keep over 1.5 million Sri Lankan lives safe and insured.
In Conclusion
Integrated financial reporting isn't merely a mandatory reporting guideline but a recipe that helps transform businesses year on year as balanced, responsible entities.
For forward-thinking companies who are ready to embrace the power and potential of integrated reporting and thinking, the future is filled with higher productivity, greater stakeholder satisfaction, accurate strategic direction, and competitive advantage driven by sustainable innovation and value creation.
The writer is Nuwan Withanage, the Chief Financial Officer of Softlogic Life Insurance PLC / Board member of Integrated Reporting council of Sri Lanka / Chairman Finance and Technical committee of Insurance Association of Sri Lanka.
Photo Caption Nuwan Withanage, Chief Financial Officer of Softlogic Life Insurance PLC