Integrated Reporting in swedish organizations : motives for implementation, benefits and challenges

Abstract: Sustainability reporting has increased over the years due to stakeholder demands. Traditional sustainability reports have an isolated approach to sustainability and disclose information regarding social and environmental issues separate from the financial report. Critics mean that isolated sustainability reports are too long and complex for numerous stakeholders, not provided in a way that facilitates stakeholders’ understanding of the business and the entire organization. Critics also claim that the reports fail to connect the different dimensions of sustainability, and thus does not create a comprehensive picture of a company’s sustainability impact. Integrated reporting has been praised as a solution to the issues, compared to traditional sustainability reporting. Integrated reporting combines social- and environmental information with financial information. Integrated reporting should also result in integrated thinking within the organization. However, the research field of integrated reporting is relatively novel and contains limited knowledge about how integrated reporting is applied and perceived in organizations, which is important for assessing its potential outcome. The aim of this project is to explain how integrated reporting is perceived by organizations applying it, and to clarify what enables and limits its development. This is done by placing integrated reporting in the context of corporate communication, stakeholder theory and the institutional context that shape organizational behavior. This project applies a qualitative, flexible, multiple case-study approach in which integrated reporting in Swedish organizations is the unit of analysis. To collect data, 13 in-depth interviews were conducted with representatives from seven Swedish organizations using integrated reporting, and two consultants serving as integrated reportingexperts. The findings suggest that integrated reporting is applied as annual reports instead of as separate reports, and that many reports are combined even though being referred to as integrated. According to the findings, the motive for implementing integrated reporting is either for the organizations to use it as a communication tool for signaling legitimacy towards stakeholders, or as a management tool. Furthermore, the most prominent perceived benefits of integrated reporting are integrated thinking, organizational changes, integration of sustainability throughout the organization and the breakdown of silos. Perceived challenges of integrated reporting are diffuse guidelines, lack of knowledge and resistance among auditors, a difficulty to combine integrated reporting with GRI-standards for sustainability reporting and, a misunderstanding about what integrated reporting is and how it should be applied.