<IR> Integrated Reporting, six capitals

Integrated Reporting <IR>

 

• The aim is to give investors and shareholders a broader picture of how companies make their money and their prospects in the short, medium and long term. 
• Integrated reporting is about integrating material financial and non-financial information to enable investors and other stakeholders to understand how an organization is really performing. 
• This demonstrates how organisations really create value over time by utiltizing six capitals (Financial capital, Manufactured capital, Human capital, Intellectual capital, Natural capital, Social and relationships capital)
• IR is a report that describe a concise communication of an organization’s strategy, governance and performance
• This demonstrate the linkages between its financial performance and its wider social, environmental and economic context.

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IR is designed to make visible the capitals (resources and relationships) on which the organization depends, how the organization uses them and its impact upon them.

 

 

1. Financial capital

This describes the capital strucutre of both debt and equity which an organizaiton efficiently  source

 

 

2. Manufactured capital

This is the human-created, production-oriented equipment and tools used in production or service provision, such as buildings, equipment and infrastructure.

 

 

3. Human capital

This describes how an organization efficienly understand the knowledge, skills and experience of the company’s employees and managers, and explains how they contribute to  improving operational performance

 

 

4. Intellectual capital

This is a key element in an organisation’sorganization’s future earning potential, with a close link between investment in R&D, innovation, human resources and external relationships, as these can determine the organization’s competitive advantage.

 

 

5. Natural capital

This is any stock of natural resources or environmental assets which provide a flow of useful goods or services, now and in the future.

 

 

6. Social and relationships capital

Comprises the relationships within an organisation, as well as those between an organization and its external stakeholders, depending on where social boundaries are drawn. These relationships should enhance both social and collective well-being.