Scientific coordination: Livia Piermattei and Tommaso Venturini
Methodos, the Change Management Companywww.methodos.com
NIBRNetwork Italiano
Business Reporting
Foreword by the IIRC, International Integrated Reporting Council
INTEGRATED REPORTING <IR>: FOCUS ON INTEGRATED THINKING A HANDBOOK FOR THE CHANGE JOURNEYSTRATEGY, GOVERNANCE, CULTURE, ORGANIZATION
C O N T E N T S
4/5
6
8
9
11
14
17
21
24/25
26
27
FOREWORD BY THE INTERNATIONAL INTEGRATED REPORTING COUNCIL
THE PURPOSE OF THIS HANDBOOK
CHAPTER 01 - A GLOBAL APPROACH
CHAPTER 02 - METHODOLOGY
CHAPTER 03 - TASK FORCE 1 - IDENTIFYING RELEVANT ISSUES AND STAKEHOLDERS
CHAPTER 04 - TASK FORCE 2 - IDENTIFYING AND ENGAGING LEADERS
CHAPTER 05 - TASK FORCE 3 - IDENTIFYING KPIs AND THE DASHBOARD OF THE JOURNEY
CHAPTER 06 - TASK FORCE 4 - DEFINING AND IMPLEMENTING A CHANGE ACTION PLAN FOR THE JOURNEY
THE INTEGRATED THINKING JOURNEY TABLE
CHAPTER 07 - INTEGRATED REPORT
KEY TERMS - REFERENCES
3
As described in the International <IR> Framework, “integrated thinking is the active consideration by an organization of the relationships between its various operating and functional units and the capitals that the organization uses or affects. Integrated thinking leads to integrated decision-making and actions that consider the creation of value over the short, medium and long term” (p. 2).
We welcome the publication of this Handbook by an ad hoc multi-stakeholder Working Group of the Italian Network for Business Reporting (NIBR), led by Livia Piermattei. It rightly emphasizes the benefits of integrated thinking within <IR>. We know that it is an area of significant interest for organizations and investors globally, and we appreciate the practical approach and insight offered.
Integrated thinking is integral to the concept of Integrated Reporting – much like the riddle ‘Which came first, the chicken or the egg?’ it is impossible truly to embrace Integrated Reporting without embracing the concept of integrated thinking throughout the organization. So, although some organizations may start by increasing integrated thinking, e.g. through aligning strategy to value creation and performance across their business, others have begun with the integrated report, in the expectation that this would drive strategic alignment and integrated thinking. There is no right answer. In the end though, to be considered a good integrated report and properly to reflect the collective mind of the board, organizations will need to enhance integrated thinking and ensure the output of the report is to a high standard before they can truly say they are embracing Integrated Reporting.
Over 1,000 organizations around the world have adopted Integrated Reporting, with many of them highlighting to us the benefits of introducing integrated thinking. These benefits include a shared understanding of strategy and how value is created throughout the business,
FOREWORD
4
with fewer silos and more cohesive management information and informed decision-making, enhancing accountability and performance. Boards are now actively using the multi-capital approach outlined in the <IR> Framework to make strategic decisions about resource allocation and value creation over time, communicating the trade-offs between the capitals and the outcomes for business and society.
Integrated thinking also has positive ramifications on the quality of dialogue between boards and providers of financial capital, helping to achieve greater accountability, a longer-term focus and more efficient capital flows to drive investment and productivity.
It can be tempting to champion integrated thinking and play down reporting, but to do so would be to misread the purpose and benefits of Integrated Reporting. We urge everyone working to advance the adoption of Integrated Reporting to ensure it is clear that integrated thinking is firmly at the core of Integrated Reporting. Handbooks such as this, with practical ideas, insights and action plans are crucial to building this understanding.
The IIRC believes the benefits of Integrated Reporting are strong enough to contribute to the financial stability and sustainable development agendas worldwide. We look forward to working with likeminded and forward thinking individuals, such as those that contributed to this Handbook, to achieve this. In this respect, we warmly thank the NIBR for its continuing collaboration and work in this area.
NEIL STEVENSONManaging Director, Global ImplementationInternational Integrated Reporting Council
5
THE PURPOSE OF THIS HANDBOOK
There are 6 forms of capitals, which characterizethe stocks of value that are changed through the activities and outputs of organizations. They are financial, manufactured, social and relationship, natural, human and intellectual. Today analysts attribute 80% of the value of stocks to the last four (the intangibles) compared to 20% of the value of stocks 40 years ago (source, Ocean Tomo various years). Unfortunately, the decision-making process in companies is still mostly focused on the tangible components of value (20%). Thus, the potential value creation of decisions, behaviors, actions and strategies is not being maximized. Many publications describe the relevance and importance of Integrated Reporting <IR> in making organizations consider all forms of value creation in their disclosure and reports. For example, the Framework published by IIRC sets out a means of reporting on value creation over time. International research reports and case studies are supporting its implementation.
To make integrated thinking concrete and ”usable”, the NIBR multistakeholder Working Group decided to produce a simplified Handbook: clear and brief.Our previous research and the recommendations of IIRC suggested considering Integrated Reporting <IR> and connected integrated thinking as a Change Journey: a cultural change management process. We drew inspiration from a five-step change management model (Methodos, Harvard Business Review Italy, July-August 2014). The table on next page describes the circular, dynamic, adaptive model of the Change Journey towards Integrated Reporting <IR> for the integration of thinking and reporting with all forms of value creation. It consists of five stages; four of them determine the Journey of integrated thinking. They are strongly linked and constantly and dynamically complementary, and they are influenced by the fifth stage, that of the integrated report.
“We are asking that every CEO lay out for shareholders each year
a strategic framework for long-term value creation”
Laurence FinkCEO Black Rock, 2016
6
Integrated Reporting <IR>Focus on integrated thinking: the Change Journey
7
INTEGRATED THINKINGIdentifying relevant
Issues and Stakeholders for the Journey
Identifying and engaging the leadersof the Journey
Setting upan integrated report
on all forms of value creation
Defining and Implementinga Change Action Plan
for the Journey
Identifying KPIsand the Dashboardof the Journey
A GLOBAL APPROACH
In the journey of integrated thinking, the Working Group decided to focus primarily on two areas of change, specifically for listed companies: the Board governance (strategy, processes and culture), on one side; the organization infrastructure (strategy, processes and culture) on the other. So, when we decided to launch our multi-stakeholder Working Group we thought that our first step should be to research existing international initiatives on integrated thinking and governance and to connect with the groups that were responsible for these initiatives, in order to activate synergies and capitalize the experience.
Leigh Roberts of IRC South Africa and Graham Terry who, on behalf of SAICA had coordinated the first ever Exploratory Survey on integrated thinking. SAICA kindly shared the questionnaire that we used for the Handbook case studies.
Devesh Rapartiwar, Region Lead, India for IIRC and Vrushali Gaud, who coordinates the ITC Centre of Excellence of Sustainable Development of the Confederation of Indian Industry that has set up an <IR> Lab India to introduce Integrated Reporting in India (see chapter 7 of this Handbook).
Stathis Gould of IFAC (the International Federation of Accountants) who recently published ”Creating value with integrated thinking - the role of Professional Accountants”.
Paola Schwizer, President of Nedcommunity, the Italian communityof non-executive and independent directors that recently launched a Reflection Group on ”New Leadership Models for Board Members”. With them we explored synergies in the area of Integrated Governance (see chapter 4 of this Handbook).
Ian Jameson, Region Lead, Africa for IIRC with whom we explored synergiesin the area of governance.
WE CONNECTED WITH
01CHAP
TER
8
We did this at a global level, with the valuable support of Neil Stevenson, International Integrated Reporting Coucil (IIRC) Global Implementation Director; Michael Nugent, IIRC Technical Director; Laura Girella, Italy Lead for IIRC.
NIBR-the Italian Network on Business Reporting (www.nibr.it), whose Secretary General is Stefano Zambon (PhD), is the Italian Association representing World Intellectual Capital/Asset Initiative (WICI-www.wici-global.com), whose goal is to raise awareness in Italy on the importance of intangibles in business reporting and contribute to its advances. NIBR promoted the creation of a multistakeholder Working Group named “Integrated Thinking and Reporting: impacts on governance, processes, culture”, whose governance and member composition is described on next page.
Members of the Working Group volunteered their time. Their backgrounds vary: from accountancy to management control, stakeholder engagement and communication, investor relations, governance, change management, sustainability, quality, regulatory and institutional affairs, reporting, risk management and financial analysis. The member organizations are listed and
non-listed, consultancy, asset management companies and associations that contributed by donating the Working time of the Group members. Some of these also supported editorial and publishing costs.The Group has, since July 2015 for twelve months, organized itself in four task forces to focus on the four stages related to integrated thinking in the Change Journey for Integrated Reporting <IR>.
Every other month, a coordination meeting was held in which the research conducted by the four work streams was shared, the work plan was updated and seminars with international guests were held to share experiences on integrated thinking. The task forces met also on their own and coordinators met more frequently and in longer workshop sessions to collect and connect inputs and draft the Handbook. To boost synergies and collaboration, a NIBR Yammer Community was created to share ideas, comments, bibliographical references and documents.
We plan to keep it active, so anyonewho is interested can ask us to join
www.integratedthinking.it
METHODOLOGY 02CHAPTER
9
THINKING I N T E G R A T E D
NIBR MULTISTAKEHOLDER WORKING GROUP:Integrated thinking and reporting: impacts on governance processes, culture
PUBLICATION:
INTEGRATED REPORTING <IR>: FOCUS ON INTEGRATED THINKINGA HANDBOOK FOR THE CHANGE JOURNEY
STRATEGY, GOVERNANCE, CULTURE, ORGANIZATION
TASK FORCE 1Identifying relevant
issues and stakeholdersfor the Journey
COORDINATORSStefania LallaiCosta CrociereSusanna Galli
Novamont
MEMBERS Fabio Bianconi and Andrea di Segni
Morrow SodaliMatteo Colombi
Publiacqua
TASK FORCE 2Identifying and engagingthe leaders of the Journey
COORDINATORRoberta De Natale
Methodos
MEMBERS Simona Bondanza,Costa EdutainmentGlauco Degli Abbati
Telecom ItaliaVittorio Santacroce
Ic2
TASK FORCE 3Identifying KPIs and the
Dashboard of the Journey
COORDINATORCarlo Vasile
Vivida & Partners
MEMBERSStefano Bolcati
AmplifonLiliana Cavatorta
Gruppo Unipol Andrea Gasperini
Aiaf(Association of Italian Financial Analysts)
TASK FORCE 4Defining and Implementing
a Change Action Planfor the Journey
COORDINATORMarcello Colla
Etica SGR
MEMBERSIsabella Cristina
MixuraDomenico Lenzi
PubliacquaAndrea RagazziniStafer and PLEF
(Planet Life Economy Foundation)
Editing and graphics coordination Elisabetta Peracino and Laura Galanti (Methodos)
Scientific Coordination: Livia Piermattei, Tommaso Venturini (Methodos)
10
How to start the integrated thinking Journey?
IDENTIFYING RELEVANT ISSUES AND STAKEHOLDERS
03CHAPTER
Identifying relevant Issues and Stakeholders for the JourneyTASK FORCE 1
Focus is on sustainable and long-term business approach, governance,
strategy, organizational set-up and development, culture.
Our research has identified the following main issues to manage In
the integrated thinking Journey:
A. Identify organization leaders to act as sponsors for the Journey
B. Define the Management by Objectives (MBO) based on the integrated
thinking long-term perspective
C. Re-focus the decision-making processes based on the multi-capital
value creation model
Stakeholder research must be carried out
The Integrated Thinking Journey starts with defining its foundation through 3 key steps:
1. Map the relevant issues, opportunities, risks, areas of resistance for the Journey;
2. Map internal and external stakeholders that will help or resist the journey for each of the identified issues;
3. Capitalize on the stakeholder listening and feedback tools (qualitative and quantitative surveys, interviews, etc.) that are currently used to map issues and stakeholders within the organization.
1. The issue mapping process for the Journey is key to strengthen awareness of and commitment to the Journey and consists of identifying challenges, topics, risks and opportunities on which to work to achieve the expected change, considering both the organization’s and its stakeholders’ perspectives.
11
The solutions to many of the decision-making challenges we have
identified can be achieved through more integrated thinking - cutting
silos to connect the relevant people and information from across
the organization
(72% of 300 C-suite executives at major organisations around the world admits to at least one strategic initiative failing in the last three years because of flaws in their decision
making process) CGMA
Joining the Dots
D. Use a ”focus on the issue” rather than a ”silo” approach promoting cross-functional and cross-hierarchical collaboration
E. Map the change readiness level of the organization, considering strategy, governance, organizational set-up and development, culture
F. Map areas of resistance to change
G. Promote active and transparent communication integration between internal and external communications
H. Approach business reporting with the aim to integrate information through the disclosure of all the relevant or material factors of value creation, as described in the <IR> Framework
I. Consider that this transformation has a horizontal impact throughout the entire organization.
2. Many stakeholders in the organization can contribute to accelerating the transformation or generating resistance to change. Stakeholder mapping should be performed considering stakeholders that are both inside and outside the organization.
Stakeholder research must be carried out for each of the critical issues highlighted through the issue mapping process in three main stakeholder clusters:
A. Cross-functional: ambassadors and change agents, people engaged at various levels
B. Cross-hierarchical: leaders and most reputed and credible employees
C. Across the company: internal and external employees but also investors, analysts, regulators, local communities, etc...
3. The issue and stakeholder mapping process can use a number of supporting tools: traditional desk and/or Big Data sourced analysis, pulse surveys, interviews, focus groups, workshops, best practice and peer analysis, regulator analysis, reputation analysis, engagement surveys, organizational and social network analysis.
Many of these are already in use in different areas of the organization; their outcomes can be read in a synergistic perspective, in order to create strong foundations for the integrated thinking Journey through a systematic and organic approach, and to save on additional investments.
12
AREA
SIS
SUES
DECI
SION
M
AKER
OWNE
RSHI
PIN
TERN
AL
STAK
EHOL
DER
EXTE
RNAL
ST
AKEH
OLDE
RAC
TION
S TO
BE
IMPL
EMEN
TED
ALL F
ORM
S OF
VAL
UE O
UTCO
MES
: SO
ME
EXAM
PLES
SUST
AINA
BLE
AND
LONG
-TER
M B
USIN
ESS
APPR
OACH
Man
agem
ent B
y Ob
ject
ive
(MBO
) lo
ng-t
erm
ves
ting
perio
d
vs. s
hort
-ter
m fo
r C-S
uite
s,
key
lead
ers,
sale
s fo
rce
Boa
rd o
f Dire
ctor
s Bo
ard
of D
irect
ors
Rem
uner
atio
n Co
mm
ittee
, HR
CEO,
Lea
ders
hip
Team
,Sa
les
Forc
eIn
stitu
tiona
l inv
esto
rs,
trad
e un
ions
, ana
lyst
s
Exte
rnal
fact
ors
such
as
socia
l, cu
ltura
l, tec
hnol
ogica
l, env
ironm
enta
l an
d po
litica
l cha
nges
affe
ct th
e or
gani
zatio
n’s
abili
ty to
crea
te v
alue
in
the
shor
t, m
ediu
m o
r lon
g-te
rm,
lead
ing
to in
crea
sed
busi
ness
co
ntex
t com
plex
ity; h
ighe
r and
fast
er
degr
ee o
f cha
nge
need
ed.
Boar
d of
Dire
ctor
s,CE
O Le
ader
ship
Tea
m
Str
ateg
ic Pl
anni
ng,
Ente
rpris
e Ri
sk M
anag
emen
t,Re
sear
ch &
Dev
elop
men
tSu
stai
nabi
lity
Offic
er
Rele
vant
sta
keho
lers
ba
sed
on s
take
hold
er
map
ping
, con
sulta
nts
and
EESG
, Big
Dat
a an
alys
ts
and
scie
ntis
ts
Uniq
ue S
ellin
g Va
lue
Prop
ositi
on
(USV
P): f
rom
reas
on to
buy
to re
ason
to
bel
ieve
Lead
ersh
ip T
eam
M
KTG
Sale
s, M
arke
ting
& C
omm
unica
tion
dpts
, Su
stai
nabi
lity
Offic
er
Cust
omer
s, cli
ents
, op
inio
n le
ader
s, in
vest
ors,
loca
l com
mun
ities
, co
nsul
tant
s,
surv
ey p
rovi
ders
, su
pply
chai
n
GOVE
RNAN
CEIn
tegr
ated
gov
erna
nce
com
pete
ncie
s an
d pr
oced
ures
Boar
d of
Dire
ctor
sGe
nera
l Cou
nsel
CEO,
Inve
stor
Rel
atio
ns,
Ente
rpris
e Ri
sk M
anag
emen
t
Best
pra
ctice
s,ind
ustr
y re
pres
enta
tives
and
as
socia
tions
, inve
stor
s, an
alys
ts, c
onsu
ltant
s
STRA
TEGY
To re
view
and
inte
grat
e th
e st
rate
gic
or in
dust
rial p
lan
to in
crea
se a
ll fo
rms
of v
alue
crea
tion
(six
capi
tals
); em
bed
all f
orm
s of
val
ue cr
eatio
n (s
ix
capi
tals
) int
o th
e bu
sine
ss m
odel
; ef
fect
ive
stra
tegy
casc
adin
g
CEO
Lead
ersh
ip T
eam
Stra
tegi
c Pla
nnin
gCh
ief F
inan
cial O
ffice
r, In
vest
or R
elat
ions
, alre
ady
exis
ting
inte
grat
ed th
inki
ng
best
pra
ctice
s, En
terp
rise
Risk
Man
agem
ent,
with
ap
prov
al fr
om th
e Bo
ard
of
Dire
ctor
s
Best
pra
ctice
s in
in
tegr
ated
thin
king
, in
vest
ors,
finan
cial
anal
ysts
, con
sulta
nts
ORGA
NIZA
TION
AL
SET-
UP A
ND
DEVE
LOPM
ENT
From
a s
ilos
to a
n in
tegr
ated
ap
proa
ch; d
evel
op co
nnec
tivity
th
roug
hout
the
orga
niza
tion,
am
ong
all f
orm
s of
val
ue cr
eatio
n (s
ix
capi
tals
), acr
oss
orga
niza
tion
bord
ers
(invo
lvin
g in
tern
al a
nd e
xter
nal
stak
ehol
ders
)
CEO
Lead
ersh
ip T
eam
ICT,
Rese
arch
& D
evel
opm
ent,
HR,
Busi
ness
Div
isio
ns
Best
pra
ctice
s, cu
lture
and
or
gani
zatio
n co
nsul
tant
s
Orga
nic a
ppro
ach
to ch
ange
go
vern
ance
mon
itorin
g an
d le
adin
g th
e ch
ange
pro
cess
; key
lead
ers
appo
inte
d in
the
chan
ge s
teer
ing
com
mitt
ee; c
hang
e co
mpe
tenc
ies
in
the
team
to fa
cilita
te th
e in
tegr
ated
th
inki
ng Jo
urne
y
Lead
ersh
ip T
eam
Mul
ti-st
akeh
olde
r Ch
ange
Ste
erin
g Co
mm
ittee
CFO,
HR
, Bu
sine
ss L
eade
rs,
Sust
aina
bilit
y Of
ficer
, ot
her c
olla
bora
ting
func
tions
Inve
stor
s,
finan
cial a
naly
sts,
cons
ulta
nts
ESG
regu
latio
ns in
crea
sed
8x in
the
last
two
year
s (s
ourc
e: eR
eval
ue/
Data
mar
an 2
015)
; incu
mbe
nt E
U Di
rect
ive
on n
on-f
inan
cial a
nd
dive
rsity
info
rmat
ion
for l
arge
an
d lis
ted
com
pani
es; t
hink
ahe
ad
and
deve
lop
forw
ard
thin
king
to
boos
t com
petit
iven
ess:
”bey
ond
com
plia
nce”
Boar
d of
Dire
ctor
sCh
ief F
inan
cial O
ffice
r an
d Le
gal O
ffice
Inte
rnal
Aud
it,
Com
plia
nce,
Su
stai
nabi
lity
Offic
er
Regu
lato
rs, a
udito
rs,
supp
liers
, indu
stry
re
pres
enta
tives
and
as
socia
tions
Give
evi
denc
e an
d te
ll th
e st
ory
of
all f
orm
s of
the
valu
e cr
eatio
n (s
ix
capi
tals
) pro
cess
in re
al ti
me,
in a
tr
ansp
aren
t man
ner,
with
feed
s an
d in
tera
ctio
ns w
ith s
take
hold
ers
CEO
Chie
f Fin
ancia
l Offi
cer
Busi
ness
Lea
ders
an
d st
aff f
unct
ions
Inve
stor
s, fin
ancia
l an
alys
ts, B
ig D
ata
scie
ntis
ts a
nd a
naly
sts,
assu
ranc
e pr
ovid
ers,
cons
ulta
nts
COM
PANY
'S CU
LTUR
E
Long
-Ter
m V
isio
n Bo
ard
of D
irect
ors
Gene
ral C
ouns
elIn
vest
or R
elat
ions
, Hu
man
Res
ourc
es
Best
case
s, in
vest
ors,
cons
ulta
nts
Shar
ed g
ener
atio
n of
Sus
tain
able
Bu
sine
ss cu
lture
CEO
Lead
ersh
ip T
eam
Chie
f Fin
ancia
l Offi
cer,
Gene
ral C
ouns
el,
Hum
an R
esou
rces
, Em
ploy
ees
(with
app
rova
l fr
om th
e Bo
ard
of D
irect
ors)
Sust
aina
bilit
y Of
ficer
Inve
stor
s, an
alys
ts,
supp
liers
, con
sulta
nts
Wal
k th
e Ta
lk a
nd a
ddre
ss re
sist
ance
to
chan
ge in
Lea
ders
hip
Team
CEO
Lead
ersh
ip T
eam
Inve
stor
Rel
atio
ns,
Hum
an R
esou
rces
Best
case
s, in
vest
ors,
cons
ulta
nts
Inte
grat
ed th
inki
ng ch
ange
read
ines
s an
d en
gage
men
t of e
xten
ded
empl
oyee
pop
ulat
ions
to m
ap le
vels
of
mat
urity
and
resi
stan
ce
HRHR
, Sus
tain
abili
ty O
ffice
rM
anag
ers,
Empl
oyee
sIn
vest
ors,
anal
ysts
, co
nsul
tant
s
Tran
spar
ency
and
Coh
eren
ce
betw
een
inte
rnal
and
ext
erna
l co
mm
unica
tions
COM
MS
COM
MS
Inve
stor
Rel
atio
ns,
Gene
ral C
ouns
el
Shar
ehol
ders
, inve
stor
s, lo
cal c
omm
uniti
es
and
othe
r rel
evan
t st
akeh
olde
rs
In the first stage of the integrated thinking Journey,the areas and issues of change are mapped. For each of these, internal and external stakeholders are identified: decision-makers and owners of the process, internal and external stakeholders who could facilitate or resist the change.
IDENTIFYING AND ENGAGING LEADERS04CHAP
TER
The 3 groups of key leaders of the integrated thinking Journey are:
1. The Board of Directors, with a «fundamental role» to activate their companies towards long term sustainable business
2. The Leadership team, with a specific focus on CEO and CFO
3. A Steering committee for change with the responsibility to design and implement the change program.
A strong requirement for the integrated thinking Journey is that the leaders of the organization are committed and involved from the very beginning of its set-up.
Who should lead the integrated thinking Journey in the organization? Both hierarchical and non-hierarchical leaders should be considered.
1. The Board of Directors and the integrated thinking Journey: ”The Board has a fundamental role to orient its organization towards long-term sustainable
business, promoting integrated governance through changes in Board composition, processes and Directors’ culture”*. - Board composition • Diversity of gender, race, demography • Robust skills and expertise covering also crises and turnaround, new and cross market, digital and media - Processes • Stakeholder Governance and disclosure, ERM-Integrated Risk Management, Long-term vesting periods for MBO’s, Board evaluation, inductions and off-site meetings for strategy envisioning, succession planning, integrated reporting and Board Materiality Statement, affiliations, committees working together and integrating long-term perspective - Directors’ culture • Change toward a strategic, global and long-term mindset • Openness and transparency, collaboration, teamwork, trust, support and mutual respect • Informal relationships • Independent thinking.
* (source: Nedcommunity, the Italian Association of Non-Executive and Independent Directors)Iden
tifyi
ng a
nd e
ngag
ing
the
lead
ers
of th
e Jo
urne
yTA
SK F
ORCE
2
14
“The whole organization was involved in the integrated thinking transformation process… Some internal
stakeholders were skeptical and afraid of disclosing some
data, fearing competitive disadvantage”
Guna
2. The Leadership team, empowered by the Board, inspires and sponsors the change. The Leadership team’s role is to ”walk the talk” of the integrated thinking decision-making process, becoming its ”Champion” and weakening resistance to change and to give clear direction to the change steering committee. Key leaders in the change are the CEO and CFO who can connect the integrated thinking Journey with business reporting; they should develop a clear understanding of what Integrated Reporting <IR> is and why they are doing it.
3. The Steering Committee for Change: multifunctional and non-hierarchical, identified by the Leadership Team. Its key responsibilities are to design, lead, monitor the implementation of the Journey and assure its re-direction where needed (also through the Change Dashboard, see chapter 5). Members can be drawn from existing financial, annual, sustainability and internal reporting teams and need to be integrated with expertise related to HR, strategy, stakeholder governance. All members should be key individuals with a comprehensive knowledge of the business.
The Steering Committee for Change leads the whole Integrated Reporting <IR> Change Journey: the four stages related to integrated thinking and the integrated report.
WAYS TO ENGAGE LEADERS: • Elevator pitch on the opportunity to refocus
the decision-making process so it gives appropriate consideration to the intangible value components and both outputs (results) and outcomes (on stakeholders)
• Integrated thinking off-site meetings to explore
investors’ demands, regulatory requirements, Big Data sourced case studies, peers and best practices, public expectations on long-term activities
• Integrated thinking leadership coaching sessions to review strategic planning with long-term perspective.
15
AREA
SIS
SUES
DECI
SION
M
AKER
OWNE
RSHI
PIN
TERN
AL
STAK
EHOL
DER
EXTE
RNAL
ST
AKEH
OLDE
RAC
TION
S TO
BE
IMPL
EMEN
TED
ALL F
ORM
S OF
VAL
UE O
UTCO
MES
: SO
ME
EXAM
PLES
SUST
AINA
BLE
AND
LONG
-TER
M B
USIN
ESS
APPR
OACH
Man
agem
ent B
y Ob
ject
ive
(MBO
) lo
ng-t
erm
ves
ting
perio
d
vs. s
hort
-ter
m fo
r C-S
uite
s,
key
lead
ers,
sale
s fo
rce
Boa
rd o
f Dire
ctor
s Bo
ard
of D
irect
ors
Rem
uner
atio
n Co
mm
ittee
, HR
CEO,
Lea
ders
hip
Team
,Sa
les
Forc
eIn
stitu
tiona
l inv
esto
rs,
trad
e un
ions
, ana
lyst
s
• HR
man
agem
ent a
nd th
e in
tegr
atio
n of
al
l fac
tors
of v
alue
crea
tion
• Le
ad a
gap
ana
lysi
s be
twee
n pr
esen
t HR
man
agem
ent a
nd s
ix ca
pita
ls a
ppro
ach
inte
grat
ion
• Sc
hedu
ling
of th
e ne
w re
quire
men
ts,
decis
ion-
mak
ing,
proc
ess
and
KPIs
, ESO
P (E
mpl
oyee
Sto
ck O
wne
rshi
p Pl
an), M
BO
long
- ter
m v
estin
g pe
riod
Fina
ncia
l:•
Impa
cts
on e
xpec
tatio
ns to
war
ds s
tock
pric
ing
in fi
nanc
ial a
naly
sts
pers
pect
ive
• In
vest
or p
ersp
ectiv
e of
pot
entia
l ris
k m
itiga
tion
over
the
long
-ter
m•
Stro
nger
link
of s
ales
forc
e an
d ex
ecut
ive
sala
ries
to v
alue
crea
tion
for
the
com
pany
Socia
l and
rela
tions
hip:
•
Posi
tive
impa
cts
on co
mpa
ny re
puta
tion
Hum
an:
• Le
ss tu
rnov
er a
nd m
ore
enga
gem
ent o
f sal
es fo
rce
and
com
pany
ex
ecut
ives
Natu
ral:
• Be
tter
man
agem
ent o
f the
nat
ural
reso
urce
s an
d be
tter
inte
ract
ion
betw
een
the
orga
niza
tion
and
its e
nviro
nmen
t In
telle
ctua
l:•
Mor
e ex
tend
ed co
nsid
erat
ion
for l
ong-
term
inno
vatio
n
Exte
rnal
fact
ors
such
as
socia
l, cu
ltura
l, tec
hnol
ogica
l, env
ironm
enta
l an
d po
litica
l cha
nges
affe
ct th
e or
gani
zatio
n’s
abili
ty to
crea
te v
alue
in
the
shor
t, m
ediu
m o
r lon
g-te
rm,
lead
ing
to in
crea
sed
busi
ness
co
ntex
t com
plex
ity; h
ighe
r and
fast
er
degr
ee o
f cha
nge
need
ed.
Boar
d of
Dire
ctor
s,CE
O Le
ader
ship
Tea
m
Str
ateg
ic Pl
anni
ng,
Ente
rpris
e Ri
sk M
anag
emen
t,Re
sear
ch &
Dev
elop
men
tSu
stai
nabi
lity
Offic
er
Rele
vant
sta
keho
lers
ba
sed
on s
take
hold
er
map
ping
, con
sulta
nts
and
EESG
, Big
Dat
a an
alys
ts
and
scie
ntis
ts
• In
tegr
ated
Big
Dat
a so
urce
d an
d sy
stem
ic an
alys
is o
f the
inpu
ts co
min
g fr
om th
e co
mpa
ny s
take
hold
ers
(pee
rs,
best
pra
ctice
s, re
gula
tors
, med
ia, o
ther
st
akeh
olde
rs) t
o id
entif
y in
adv
ance
risk
s an
d op
port
uniti
es a
nd p
rovi
de co
nsta
ntly
up
date
d is
sue
map
ping
(eg:
Boa
rd
Mat
eria
lity
Stat
emen
t)
Fina
ncia
l:•
High
er q
ualit
y ris
ks a
nd o
ppor
tuni
ties
anal
ysis
• Be
tter
val
ue cr
eatio
n ov
er th
e lo
ng-t
erm
Socia
l and
rela
tions
hip:
• Al
ignm
ent b
etw
een
orga
niza
tion
stra
tegy
and
sta
keho
lder
exp
ecta
tions
in
med
ium
and
long
-ter
m•
Repu
tatio
n as
an
orga
niza
tion
that
”lea
ds th
e ch
ange
”Na
tura
l: •
Bett
er m
anag
emen
t of t
he n
atur
al re
sour
ces
and
bett
er in
tera
ctio
n be
twee
n th
e or
gani
zatio
n an
d its
env
ironm
ent
Uniq
ue S
ellin
g Va
lue
Prop
ositi
on
(USV
P): f
rom
reas
on to
buy
to re
ason
to
bel
ieve
Lead
ersh
ip T
eam
M
KTG
Sale
s, M
arke
ting
& C
omm
unica
tion
dpts
, Su
stai
nabi
lity
Offic
er
Cust
omer
s, cli
ents
, op
inio
n le
ader
s, in
vest
ors,
loca
l com
mun
ities
, co
nsul
tant
s,
surv
ey p
rovi
ders
, su
pply
chai
n
• Qu
alita
tive
and
quan
titat
ive
surv
eys
on
stak
ehol
der p
erce
ptio
n ev
olut
ion
from
re
ason
to b
uy to
reas
on to
bel
ieve
• Be
st p
ract
ice s
harin
g (in
tern
al a
nd
exte
rnal
) •
Selli
ng p
ropo
sitio
n re
view
in o
rder
to
mak
e it
mor
e st
akeh
olde
r cen
tere
d•
Actio
n pl
an to
incr
ease
sal
es a
war
enes
s an
d co
mpe
tenc
y in
all
form
s of
val
ue
crea
tion
(six
capi
tals
) and
rela
ted
beha
vior
s
Fina
ncia
l: •
Enha
nced
val
ue cr
eatio
n ca
pabi
lity
thro
ugh
the
enga
gem
ent p
roce
ss
Socia
l and
rela
tions
hip:
•
Enha
nced
loya
lty a
nd e
ngag
emen
t and
repu
tatio
n of
sta
keho
lder
s Hu
man
:•
Enga
gem
ent
GOVE
RNAN
CEIn
tegr
ated
gov
erna
nce
com
pete
ncie
s an
d pr
oced
ures
Boar
d of
Dire
ctor
sGe
nera
l Cou
nsel
CEO,
Inve
stor
Rel
atio
ns,
Ente
rpris
e Ri
sk M
anag
emen
t
Best
pra
ctice
s,ind
ustr
y re
pres
enta
tives
and
as
socia
tions
, inve
stor
s, an
alys
ts, c
onsu
ltant
s
• As
sess
men
t, re
view
and
inte
grat
ion
of
the
gove
rnan
ce st
ruct
ure
base
d on
the
six
capi
tals
appr
oach
• In
trodu
ctio
n of
spec
ific m
onito
ring
tool
s ba
sed
on th
e sa
me
appr
oach
• In
tegr
ated
thin
king
chan
ge re
adin
ess
anal
ysis
of B
oard
of D
irect
ors
Fina
ncia
l:•
Bett
er v
alue
crea
tion
over
the
long
- ter
m•
Impa
cts
on e
xpec
tatio
ns to
war
d st
ock
prici
ng in
fina
ncia
l ana
lyst
s pe
rspe
ctiv
es
• In
vest
or p
ersp
ectiv
e of
pot
entia
l ris
k m
itiga
tion
over
the
long
-ter
mSo
cial a
nd re
latio
nshi
p:•
Orga
niza
tion
repu
tatio
n Hu
man
:•
Deve
lopm
ent o
f spe
cific
sust
aina
ble
busi
ness
kno
w-h
ow b
y th
e m
anag
emen
t and
a b
ette
r und
erst
andi
ng o
f the
org
aniz
atio
n’s
valu
e cr
eatio
n pr
oces
s Na
tura
l:•
Bett
er m
anag
emen
t of t
he n
atur
al re
sour
ces
and
a be
tter
inte
ract
ion
betw
een
the
orga
niza
tion
and
its e
nviro
nmen
t
STRA
TEGY
To re
view
and
inte
grat
e th
e st
rate
gic
or in
dust
rial p
lan
to in
crea
se a
ll fo
rms
of v
alue
crea
tion
(six
capi
tals
); em
bed
all f
orm
s of
val
ue cr
eatio
n (s
ix
capi
tals
) int
o th
e bu
sine
ss m
odel
; ef
fect
ive
stra
tegy
casc
adin
g
CEO
Lead
ersh
ip T
eam
Stra
tegi
c Pla
nnin
gCh
ief F
inan
cial O
ffice
r, In
vest
or R
elat
ions
, alre
ady
exis
ting
inte
grat
ed th
inki
ng
best
pra
ctice
s, En
terp
rise
Risk
Man
agem
ent,
with
ap
prov
al fr
om th
e Bo
ard
of
Dire
ctor
s
Best
pra
ctice
s in
in
tegr
ated
thin
king
, in
vest
ors,
finan
cial
anal
ysts
, con
sulta
nts
• An
alyz
e in
tegr
ated
thin
king
bes
t pr
actic
es a
nd re
late
d bu
sine
ss
perf
orm
ance
• In
tegr
ate
stra
tegi
c or i
ndus
tria
l pla
n an
d bu
sine
ss m
odel
with
all
form
s of
val
ue
crea
tion
(six
capi
tals
)•
Asse
ss a
lread
y-ex
istin
g in
tegr
ated
th
inki
ng in
itiat
ives
in o
rder
to m
inim
ize
chan
ge re
sist
ance
and
effo
rts
Fina
ncia
l:•
Bett
er v
alue
crea
tion
over
the
long
-ter
m
• M
axim
izat
ion
of b
enef
it w
ith m
inim
ized
fina
ncia
l effo
rt•
Impa
cts
on e
xpec
tatio
ns to
war
ds s
tock
pric
ing
in fi
nanc
ial a
naly
sts
pers
pect
ive
• In
vest
or p
ersp
ectiv
e of
pot
entia
l ris
k m
itiga
tion
over
the
long
-ter
mSo
cial a
nd re
latio
nshi
p:•
Orga
niza
tion
repu
tatio
nHu
man
:•
Deve
lopm
ent o
f spe
cific
know
-how
by
the
man
agem
ent a
nd a
bet
ter
unde
rsta
ndin
g of
the
com
pany
’s va
lue
crea
tion
proc
ess
• De
velo
pmen
t of a
”sen
se o
f bel
ongi
ng” t
o th
e or
gani
zatio
n an
d en
gage
men
t at a
ll le
vels
Natu
ral:
• Be
tter
man
agem
ent o
f the
nat
ural
reso
urce
s an
d a
bett
er in
tera
ctio
n be
twee
n th
e or
gani
zatio
n an
d its
env
ironm
ent
ORGA
NIZA
TION
AL
SET-
UP A
ND
DEVE
LOPM
ENT
From
a s
ilos
to a
n in
tegr
ated
ap
proa
ch; d
evel
op co
nnec
tivity
th
roug
hout
the
orga
niza
tion,
am
ong
all f
orm
s of
val
ue cr
eatio
n (s
ix
capi
tals
), acr
oss
orga
niza
tion
bord
ers
(invo
lvin
g in
tern
al a
nd e
xter
nal
stak
ehol
ders
)
CEO
Lead
ersh
ip T
eam
ICT,
Rese
arch
& D
evel
opm
ent,
HR,
Busi
ness
Div
isio
ns
Best
pra
ctice
s, cu
lture
and
or
gani
zatio
n co
nsul
tant
s
• In
crea
se in
clusi
vene
ss a
nd m
ulti-
func
tiona
lity
in w
orki
ng te
ams
• Pi
lot t
he n
ew o
rgan
izat
ion
to ca
pita
lize
on th
e ex
istin
g an
d fil
l in
the
gaps
• Re
thin
k re
sear
ch a
nd d
evel
opm
ent
appr
oach
, fro
m fu
nctio
n to
kno
wle
dge
shar
ing
• Le
vera
ge IC
T to
facil
itate
colla
bora
tion
and
shar
ing
acro
ss fu
nctio
ns,
hier
arch
ies,
grou
ps, c
ompa
ny b
orde
rs (e
g.
intr
oduc
tion
or e
nhan
cem
ent o
f sm
art
wor
king
)
Fina
ncia
l:•
Bett
er e
fficie
ncy
thro
ugh
few
er jo
urne
ys•
Incr
ease
d va
lue
crea
tion
thro
ugh
bett
er-in
form
ed te
ams
Hum
an:
• De
velo
pmen
t of b
ette
r out
-of-
the-
box
thin
king
capa
bilit
y So
cial a
nd re
latio
nshi
p:•
Bett
er u
nder
stan
ding
of t
he cu
stom
ers’
need
s In
telle
ctua
l:•
Deve
lopm
ent o
f inn
ovat
ion
capa
bilit
y at
eve
ry le
vel o
f the
org
aniz
atio
n
Orga
nic a
ppro
ach
to ch
ange
go
vern
ance
mon
itorin
g an
d le
adin
g th
e ch
ange
pro
cess
; key
lead
ers
appo
inte
d in
the
chan
ge s
teer
ing
com
mitt
ee; c
hang
e co
mpe
tenc
ies
in
the
team
to fa
cilita
te th
e in
tegr
ated
th
inki
ng Jo
urne
y
Lead
ersh
ip T
eam
Mul
ti-st
akeh
olde
r Ch
ange
Ste
erin
g Co
mm
ittee
CFO,
HR
, Bu
sine
ss L
eade
rs,
Sust
aina
bilit
y Of
ficer
, ot
her c
olla
bora
ting
func
tions
Inve
stor
s,
finan
cial a
naly
sts,
cons
ulta
nts
• Id
entif
y a
stee
ring
com
mitt
ee o
r sim
ilar
body
to m
onito
r and
facil
itate
the
jour
ney
• Se
t up
an o
rgan
ic ch
ange
pro
gram
• Le
ad a
n as
sess
men
t of c
hang
e co
mpe
tenc
ies
and
inte
grat
e th
em if
ne
cess
ary
thro
ugh
trai
ning
• Se
t up
a da
shbo
ard
for c
hang
e w
ith
rele
vant
lead
ing
and
lagg
ing
KPIs
• El
evat
or p
itch
for C
EO/C
hairm
an
Fina
ncia
l:•
Inve
stm
ent i
n ch
ange
man
agem
ent c
ould
gen
erat
e co
sts
in th
e sh
ort-
term
• Po
tent
ial p
ositi
ve lo
ng-t
erm
impa
ct fo
r a m
ore
effic
ient
and
effe
ctiv
e (re
port
ing)
org
aniz
atio
n. T
his
mig
ht in
clude
reor
gani
zatio
n w
here
a
bene
fit is
iden
tifie
d.•
Pote
ntia
l ris
k m
itiga
tion
over
the
long
-ter
m
Socia
l and
rela
tions
hip:
• Or
gani
zatio
n re
puta
tion
Hum
an:
• En
gage
men
t
COM
PANY
'S CU
LTUR
E
Long
-Ter
m V
isio
n Bo
ard
of D
irect
ors
Gene
ral C
ouns
elIn
vest
or R
elat
ions
, Hu
man
Res
ourc
es
Best
case
s, in
vest
ors,
cons
ulta
nts
• De
dica
ted
off-
site
mee
tings
to d
efin
e lo
ng-t
erm
vis
ion
for t
he co
mpa
ny
Socia
l and
rela
tions
hip:
• Or
gani
zatio
n re
puta
tion
Hum
an:
• En
gage
men
t
Shar
ed g
ener
atio
n of
Sus
tain
able
Bu
sine
ss cu
lture
CEO
Lead
ersh
ip T
eam
Chie
f Fin
ancia
l Offi
cer,
Gene
ral C
ouns
el,
Hum
an R
esou
rces
, Em
ploy
ees
(with
app
rova
l fr
om th
e Bo
ard
of D
irect
ors)
Sust
aina
bilit
y Of
ficer
Inve
stor
s, an
alys
ts,
supp
liers
, con
sulta
nts
• Of
f-si
te m
eetin
gs d
edica
ted
to re
thin
king
th
e m
issi
on s
tate
men
t and
code
of e
thics
of
the
orga
niza
tion
to in
tegr
ate
all f
orm
s of
val
ue cr
eatio
n (s
ix ca
pita
ls)
• Se
t-up
of a
n or
gani
c and
com
preh
ensi
ve
cultu
ral c
hang
e pl
an
Fina
ncia
l: •
Litig
atio
n ris
ks m
itiga
tion
Socia
l and
rela
tions
hip:
• Co
mpa
ny R
eput
atio
n Na
tura
l:•
Supp
ly ch
ain
(bet
ter m
onito
ring
of e
xter
nalit
ies)
Hu
man
:•
Enga
gem
ent d
ue to
the
crea
tion
of a
link
bet
wee
n em
ploy
ee v
alue
s an
d th
e ta
rget
s an
d go
als
of th
e or
gani
zatio
n
In the second stage of the
integrated thinking Journey,
the leaders of the Change are
identified and engaged: Board
of Directors, Leadership Team,
Steering Committee for Change.
The 3 key success factors to steer the Change Action Plan for the integrated thinking Journey are:
1. Material Outcomes: if goals are clear in terms of outcomes on all forms of value creation (six capitals), it is easier to identify the right KPIs of change
2. The Dashboard: the ”at-a-glance” view of KPIs
3. Leading and Lagging KPIs: drive the pervasiveness and monitor the progress of the Journey.
Considering the areas of change and the relevant issues along with the key stakeholders identified and leaders involved, we designed a
”dashboard” to monitor and lead the change process, based on two sections, strictly connected in a circular process. The KPIs of the integrated thinking dashboard are part of Integrated Reporting <IR> KPIs.
FIRST SECTION > QUALITATIVE KPIsIts purpose is to monitor the level of maturity of any organization in relation to the integrated thinking Journey. This section allows for a first ”maturity assessment” at the beginning of the Journey, the ”GAP analysis” based on qualitative KPIs that measure outcomes on all forms of value creation (six capitals). Qualitative KPIs are also used at the end of the journey in order to run a ”maturity re-assessment”.
The grade of maturity can be made evident, for each critical aspect, through three colors: green, orange, red that respectively stand for: mature, in progress, not started.
SECOND SECTION > LEADING & LAGGING KPIsWhen the organization finalizes the first GAP analysis, a first set of information is available in order to design, plan and execute actions for each relevant issue.It is important that leading and lagging KPIs are designed for each key area of change and each related issue. Only this approach can lead the Change Steering Committee to develop the framework of the dashboard.Leading and lagging KPIs measure the
What are the most relevant indicators to monitor and lead the effectiveness of an integrated thinking Journey? How can we develop the Dashboard to manage such indicators?
IDENTIFYING KPIS AND THE DASHBOARD OF THE JOURNEY
05CHAPTER
Identifying KPIs and the Dashboard of the JourneyTASK FORCE 3
17
”pervasiveness” and the ”progress” of the integrated thinking Journey and, at the end, provide the organization’s Steering Committee for Change and leaders with a clear picture of how actions determine the Change in all forms of value creation.
Pervasiveness is measured through leading KPIs (how do we reach our goal?), designed to monitor what actions have been planned and implemented in order to reach expected goals. Leading KPIs are measured according to a scale defined by the organization, with the purpose of evaluating the pervasiveness reached by eachaction and the commitment level obtained.Once the organization has started to carry out its change actions, it is in a position to measure the progress of the Journey through lagging KPIs (how do we measure our results?). These are designed to measure how each action affects one or more capitals (their outcomes).
THE JOURNEY HAS NOT STARTED
THE DASHBORD: OVERALL PICTUREAREAS
FIRST ASSESSMENT A QUALITY GAP ANALYSIS
CRITICAL ISSUES ACTIONS MATERIAL OUTCOMES (SIX CAPITALS)
Sustainable and long term business approach
wGovernance
Strategy
Company’s culture [...] [...] [...]
[...] [...] [...]
[...] [...] [...]
[...] [...] [...]
[...][...]
[...][...]
[...][...]
Organizational set-up anddevelopment
THE JOURNEY IS MATURE
THE JOURNEY IS IN PROGRESS
LEADING KPIs ACTIONS
«HOW DO WEREACH OUR
GOALS?»
LAGGING KPIs OUTCOMES
«HOW DO WEMEASURE OUR
RESULTS?»
The following example shows how leading and lagging KPIs can work in terms of material outcomes on different forms of capital:• Organization purpose (the goal we aim to reach): reduce the energy consumption.• Leading KPIs: related to training and communication initiatives addressed to the Organization as a whole,
including top management, in order to increase awareness on the benefits deriving from a careful use of the energy resources and to increase proactivity. Metrics: target percentage for number of people/levels involved in each department.
• Lagging KPIs: they measure the progress of the Journey in terms of outcomes. On next page you can find a few examples of the interaction between leading and lagging KPIs on some forms of material outcomes. Measures will be introduced only where there are material outcomes against relevant capitals.
“We (…) created a dashboard analytics solution in which all data
can get accessed”SAP (continues on page 19)
18
This matrix allows the organization to understand how the relevant forms of value creation are affected by and affect the integrated thinking transformation Journey and to re-assess the first GAP analysis performed at the beginning of the Journey.
PERV
ASIV
ENES
S (Le
adin
g)
PROGRESS (Lagging)
5
4
3
2
1
1 2 3 4 5
NATURAL
HUMANINTELLECTUAL
FINANCIAL
MANUFACTURED
SOCIAL & RELATIONSHIP
6 CAPITALS OUTCOMES OF THE INTEGRATED THINKING JOURNEY
(continued from page 18)
1. Financial capital: energy costs decrease. Metrics: monthly energy costs compared before and after the training and awareness initiatives have taken place.
2. Manufactured capital: re-engineering of some manufacturing processes in order to improve the reduction of energy consumption. Metrics: energy consumed vs. each piece of production before and after.
3. Intellectual capital: awareness, training and re-engineering initiatives also improve the organization know-how. Metrics: number of new projects that affect energy consumption developed by the R&D department after the program.
4. Human capital: increased awareness about the benefits resulting from careful energy consumption behaviors (inside and outside the organization). Metrics: energy consumed vs. each headcount before and after.
5. Social and relationship capital: increased stakeholder awareness about the Organization’s effort in order to reach a sustainable energy consumption policy. Metrics: results from surveys, number of new customers, focus group to determine local reputation of the organization.
6. Natural capital: reduction of greenhouse gases emissions from generation and use of electricity, heat or steam. Metrics: Tons/MWh before and after the program.
Marking on a matrix, as shown in the picture below, the pervasiveness and the progress of each action in terms of ”outcomes”, the organization is able to identify its positioning along the integrated thinking Journey.
This matrix allows the organization to understand how the relevant forms of value creation are affected by and affect the integrated thinking transformation Journey and to re-assess the first GAP analysis performed at the beginning of the Journey.
Leading and lagging KPIsmeasure the “pervasiveness
and progress” of the integrated thinking Journey
19
AREA
SIS
SUES
DECI
SION
M
AKER
OWNE
RSHI
PIN
TERN
AL
STAK
EHOL
DER
EXTE
RNAL
ST
AKEH
OLDE
RAC
TION
S TO
BE
IMPL
EMEN
TED
ALL F
ORM
S OF
VAL
UE O
UTCO
MES
: SO
ME
EXAM
PLES
SUST
AINA
BLE
AND
LONG
-TER
M B
USIN
ESS
APPR
OACH
Fina
ncia
l:•
Impa
cts
on e
xpec
tatio
ns to
war
ds s
tock
pric
ing
in fi
nanc
ial a
naly
sts
pers
pect
ive
• In
vest
or p
ersp
ectiv
e of
pot
entia
l ris
k m
itiga
tion
over
the
long
-ter
m•
Stro
nger
link
of s
ales
forc
e an
d ex
ecut
ive
sala
ries
to v
alue
crea
tion
for
the
com
pany
Socia
l and
rela
tions
hip:
•
Posi
tive
impa
cts
on co
mpa
ny re
puta
tion
Hum
an:
• Le
ss tu
rnov
er a
nd m
ore
enga
gem
ent o
f sal
es fo
rce
and
com
pany
ex
ecut
ives
Natu
ral:
• Be
tter
man
agem
ent o
f the
nat
ural
reso
urce
s an
d be
tter
inte
ract
ion
betw
een
the
orga
niza
tion
and
its e
nviro
nmen
t In
telle
ctua
l:•
Mor
e ex
tend
ed co
nsid
erat
ion
for l
ong-
term
inno
vatio
n
Fina
ncia
l:•
High
er q
ualit
y ris
ks a
nd o
ppor
tuni
ties
anal
ysis
• Be
tter
val
ue cr
eatio
n ov
er th
e lo
ng-t
erm
Socia
l and
rela
tions
hip:
• Al
ignm
ent b
etw
een
orga
niza
tion
stra
tegy
and
sta
keho
lder
exp
ecta
tions
in
med
ium
and
long
-ter
m•
Repu
tatio
n as
an
orga
niza
tion
that
”lea
ds th
e ch
ange
”Na
tura
l: •
Bett
er m
anag
emen
t of t
he n
atur
al re
sour
ces
and
bett
er in
tera
ctio
n be
twee
n th
e or
gani
zatio
n an
d its
env
ironm
ent
Fina
ncia
l: •
Enha
nced
val
ue cr
eatio
n ca
pabi
lity
thro
ugh
the
enga
gem
ent p
roce
ss
Socia
l and
rela
tions
hip:
•
Enha
nced
loya
lty a
nd e
ngag
emen
t and
repu
tatio
n of
sta
keho
lder
s Hu
man
:•
Enga
gem
ent
GOVE
RNAN
CE
Fina
ncia
l:•
Bett
er v
alue
crea
tion
over
the
long
- ter
m•
Impa
cts
on e
xpec
tatio
ns to
war
d st
ock
prici
ng in
fina
ncia
l ana
lyst
s pe
rspe
ctiv
es
• In
vest
or p
ersp
ectiv
e of
pot
entia
l ris
k m
itiga
tion
over
the
long
-ter
mSo
cial a
nd re
latio
nshi
p:•
Orga
niza
tion
repu
tatio
n Hu
man
:•
Deve
lopm
ent o
f spe
cific
sust
aina
ble
busi
ness
kno
w-h
ow b
y th
e m
anag
emen
t and
a b
ette
r und
erst
andi
ng o
f the
org
aniz
atio
n’s
valu
e cr
eatio
n pr
oces
s Na
tura
l:•
Bett
er m
anag
emen
t of t
he n
atur
al re
sour
ces
and
a be
tter
inte
ract
ion
betw
een
the
orga
niza
tion
and
its e
nviro
nmen
t
STRA
TEGY
Fina
ncia
l:•
Bett
er v
alue
crea
tion
over
the
long
-ter
m
• M
axim
izat
ion
of b
enef
it w
ith m
inim
ized
fina
ncia
l effo
rt•
Impa
cts
on e
xpec
tatio
ns to
war
ds s
tock
pric
ing
in fi
nanc
ial a
naly
sts
pers
pect
ive
• In
vest
or p
ersp
ectiv
e of
pot
entia
l ris
k m
itiga
tion
over
the
long
-ter
mSo
cial a
nd re
latio
nshi
p:•
Orga
niza
tion
repu
tatio
nHu
man
:•
Deve
lopm
ent o
f spe
cific
know
-how
by
the
man
agem
ent a
nd a
bet
ter
unde
rsta
ndin
g of
the
com
pany
’s va
lue
crea
tion
proc
ess
• De
velo
pmen
t of a
”sen
se o
f bel
ongi
ng” t
o th
e or
gani
zatio
n an
d en
gage
men
t at a
ll le
vels
Natu
ral:
• Be
tter
man
agem
ent o
f the
nat
ural
reso
urce
s an
d a
bett
er in
tera
ctio
n be
twee
n th
e or
gani
zatio
n an
d its
env
ironm
ent
ORGA
NIZA
TION
AL
SET-
UP A
ND
DEVE
LOPM
ENT
Fina
ncia
l:•
Bett
er e
fficie
ncy
thro
ugh
few
er jo
urne
ys•
Incr
ease
d va
lue
crea
tion
thro
ugh
bett
er-in
form
ed te
ams
Hum
an:
• De
velo
pmen
t of b
ette
r out
-of-
the-
box
thin
king
capa
bilit
y So
cial a
nd re
latio
nshi
p:•
Bett
er u
nder
stan
ding
of t
he cu
stom
ers’
need
s In
telle
ctua
l:•
Deve
lopm
ent o
f inn
ovat
ion
capa
bilit
y at
eve
ry le
vel o
f the
org
aniz
atio
n
Fina
ncia
l:•
Inve
stm
ent i
n ch
ange
man
agem
ent c
ould
gen
erat
e co
sts
in th
e sh
ort-
term
• Po
tent
ial p
ositi
ve lo
ng-t
erm
impa
ct fo
r a m
ore
effic
ient
and
effe
ctiv
e (re
port
ing)
org
aniz
atio
n. T
his
mig
ht in
clude
reor
gani
zatio
n w
here
a
bene
fit is
iden
tifie
d.•
Pote
ntia
l ris
k m
itiga
tion
over
the
long
-ter
m
Socia
l and
rela
tions
hip:
• Or
gani
zatio
n re
puta
tion
Hum
an:
• En
gage
men
t
Fina
ncia
l:•
Redu
ced
risks
of l
itiga
tion
and
fines
So
cial a
nd re
latio
nshi
p:•
Repu
tatio
n as
a co
mpa
ny th
at g
oes
"bey
ond
com
plia
nce”
• Be
tter
rela
tions
with
regu
lato
rs
Socia
l and
rela
tions
hip:
• In
vest
ors:
bett
er a
ble
to e
valu
ate
the
orga
niza
tion
real
val
ue a
nd it
s im
pact
on
stoc
k va
lue
Hum
an:
• Be
tter
conn
ectio
n of
info
rmat
ion
and
colla
bora
tion
amon
g th
e fu
nctio
ns
of th
e or
gani
zatio
n•
Bett
er co
nnec
tion
of in
form
atio
n an
d as
suc
h of
the
depa
rtm
ents
Al
l cap
itals
:•
Bett
er m
anag
emen
t of t
he o
utco
mes
COM
PANY
'S CU
LTUR
E
Socia
l and
rela
tions
hip:
• Or
gani
zatio
n re
puta
tion
Hum
an:
• En
gage
men
t
Fina
ncia
l: •
Litig
atio
n ris
ks m
itiga
tion
Socia
l and
rela
tions
hip:
• Co
mpa
ny R
eput
atio
n Na
tura
l:•
Supp
ly ch
ain
(bet
ter m
onito
ring
of e
xter
nalit
ies)
Hu
man
:•
Enga
gem
ent d
ue to
the
crea
tion
of a
link
bet
wee
n em
ploy
ee v
alue
s an
d th
e ta
rget
s an
d go
als
of th
e or
gani
zatio
n
Socia
l and
rela
tions
hip:
• Or
gani
zatio
n re
puta
tion
Hum
an:
• En
gage
men
t
Socia
l and
rela
tions
hip:
• Re
puta
tion
and
incr
ease
d st
akeh
olde
r eng
agem
ent
Hum
an:
• En
gage
men
t
Fina
ncia
l:•
Enha
nced
val
ue cr
eatio
n ca
pabi
lity
thro
ugh
the
enga
gem
ent p
roce
ss
Socia
l and
Rel
atio
nshi
p:•
Repu
tatio
n an
d co
nsis
tenc
yHu
man
:•
Enga
gem
ent
In this stage of the integrated thinking Journey,
the outcomes on all forms of value creation (6 capitals)
of the different actions that are part of the change
program are outlined. This allows the KPIs of change
that will be part of the integrated thinking Journey
Dashboard to be easily defined.
06CHAPTER
TASK FORCE 4
The 5 key success factors of a change action plan for integrated thinking are:
1. An organic and comprehensive action plan engaging internal and external stakeholders
2. Comprehensive cultural changes do not happen overnight; it takes time to go from awareness, to capability, to full engagement on integrated thinking and reporting
3. Multifunctional Steering Committee for Change
4. Specific and measurable targets and KPIs to monitor and lead the change
5. Capitalization of existing tools and initiatives.
5 GUIDELINES FOR THE CHANGE ACTION PLAN
A. From silos to system: increase cross-functional and
cross-hierarchical collaboration in order to share
knowledge, also through the enhancement of
digital collaborative tools
B. Restart from values: rethink the company’s
mission statement and connected behavior in
light of Integrated thinking and outcomes on all
forms of value creation (6 capitals)
C. Systems thinking approach: focus on how the
different components of the change interact
with each other.
DEFINING AND IMPLEMENTING A CHANGE ACTION PLAN FOR THE JOURNEY
What kind of actions should be part of the organization change plan to engage relevant stakeholders and enable the introduction of integrated thinking and Integrated Reporting <IR>?
D. Go beyond compliance: strengthen organization awareness of ESG regulations and other stakeholders’ requirements. To create value in the long term, in fact, it is necessary to go ”beyond compliance”, being always one (or two) steps ahead of present requirements, whenever possible contributing to shape future regulations
E. Introduce Integrated Report: lead the organization to report on performance in an innovative way, through an integrated report that takes into account outcomes on all material forms of capitals.
Defining and implem
enting a Change Action Plan for the Journey
21
CHAN
GE P
ILLA
RS Internal and externalstakeholders
HR for change
Training for change
Task forces
Leadership
5 PILLARS FOR THE CHANGE ACTION PLAN
1. Create and promote an integrated thinking leadership model throughout the company (see chapter 04).
2. Internal and external stakeholders: integrated
thinking should orient each communications tool: listening tools, ambassador programs, newsletters, roadshows, internal and external meetings. It might not be necessary to develop new tools, but
rather to integrate and reorient the existing ones. It could also be important to make people constantly aware about change, by narrating the progress of the change roadmap (on and off-line) based on the Change Dashboard
3. Training for change: use existing and innovative training to orient people towards integrated thinking, use staff exchange as a training tool, design specific, cross-functional training programs, promote digitalization and sustainable innovation to support integrated thinking
4. HR for change: use HR tools to drive the organization towards a more systemic and integrated mindset, developing MBO’s and rewarding programs to promote the centrality of all forms of value creation (6 capitals), cross-functional teams, integrated project management. Locate and shake the hidden energies in the organization through the launch of collaborative platforms for innovation
5. Change task forces: promote cross functional and hierarchical collaboration and data sharing also through specific task forces and case studies, such as internal/functional pilot integrated reports.
“Internal processes have been impacted as well. One example is
our internal integrated report. It is a kind of “atom“
of our integrated report: a single department tells its story about how it helps in creating value.
We have a department mission, its positioning inside the Generali organization, its strategic targets
linked to the general strategy. All this information is available to every business partner and becomes part of our scorecard.
Our unit started it, but since 2015 other units have been working
on their own internal integrated reports. Not only is this an
innovative organizational tool, useful with stakeholders both
internal and external, but it is also an effective way
of cascading integrated thinking and strategy
into the organization”Generali
22
AREA
SIS
SUES
DECI
SION
M
AKER
OWNE
RSHI
PIN
TERN
AL
STAK
EHOL
DER
EXTE
RNAL
ST
AKEH
OLDE
RAC
TION
S TO
BE
IMPL
EMEN
TED
ALL F
ORM
S OF
VAL
UE O
UTCO
MES
: SO
ME
EXAM
PLES
SUST
AINA
BLE
AND
LONG
-TER
M B
USIN
ESS
APPR
OACH
• HR
man
agem
ent a
nd th
e in
tegr
atio
n of
al
l fac
tors
of v
alue
crea
tion
• Le
ad a
gap
ana
lysi
s be
twee
n pr
esen
t HR
man
agem
ent a
nd s
ix ca
pita
ls a
ppro
ach
inte
grat
ion
• Sc
hedu
ling
of th
e ne
w re
quire
men
ts,
decis
ion-
mak
ing,
proc
ess
and
KPIs
, ESO
P (E
mpl
oyee
Sto
ck O
wne
rshi
p Pl
an), M
BO
long
- ter
m v
estin
g pe
riod
• In
tegr
ated
Big
Dat
a so
urce
d an
d sy
stem
ic an
alys
is o
f the
inpu
ts co
min
g fr
om th
e co
mpa
ny s
take
hold
ers
(pee
rs,
best
pra
ctice
s, re
gula
tors
, med
ia, o
ther
st
akeh
olde
rs) t
o id
entif
y in
adv
ance
risk
s an
d op
port
uniti
es a
nd p
rovi
de co
nsta
ntly
up
date
d is
sue
map
ping
(eg:
Boa
rd
Mat
eria
lity
Stat
emen
t)
• Qu
alita
tive
and
quan
titat
ive
surv
eys
on
stak
ehol
der p
erce
ptio
n ev
olut
ion
from
re
ason
to b
uy to
reas
on to
bel
ieve
• Be
st p
ract
ice s
harin
g (in
tern
al a
nd
exte
rnal
) •
Selli
ng p
ropo
sitio
n re
view
in o
rder
to
mak
e it
mor
e st
akeh
olde
r cen
tere
d•
Actio
n pl
an to
incr
ease
sal
es a
war
enes
s an
d co
mpe
tenc
y in
all
form
s of
val
ue
crea
tion
(six
capi
tals
) and
rela
ted
beha
vior
s
GOVE
RNAN
CE
• As
sess
men
t, re
view
and
inte
grat
ion
of
the
gove
rnan
ce st
ruct
ure
base
d on
the
six
capi
tals
appr
oach
• In
trodu
ctio
n of
spec
ific m
onito
ring
tool
s ba
sed
on th
e sa
me
appr
oach
• In
tegr
ated
thin
king
chan
ge re
adin
ess
anal
ysis
of B
oard
of D
irect
ors
STRA
TEGY
• An
alyz
e in
tegr
ated
thin
king
bes
t pr
actic
es a
nd re
late
d bu
sine
ss
perf
orm
ance
• In
tegr
ate
stra
tegi
c or i
ndus
tria
l pla
n an
d bu
sine
ss m
odel
with
all
form
s of
val
ue
crea
tion
(six
capi
tals
)•
Asse
ss a
lread
y-ex
istin
g in
tegr
ated
th
inki
ng in
itiat
ives
in o
rder
to m
inim
ize
chan
ge re
sist
ance
and
effo
rts
ORGA
NIZA
TION
AL
SET-
UP A
ND
DEVE
LOPM
ENT
• In
crea
se in
clusi
vene
ss a
nd m
ulti-
func
tiona
lity
in w
orki
ng te
ams
• Pi
lot t
he n
ew o
rgan
izat
ion
to ca
pita
lize
on th
e ex
istin
g an
d fil
l in
the
gaps
• Re
thin
k re
sear
ch a
nd d
evel
opm
ent
appr
oach
, fro
m fu
nctio
n to
kno
wle
dge
shar
ing
• Le
vera
ge IC
T to
facil
itate
colla
bora
tion
and
shar
ing
acro
ss fu
nctio
ns,
hier
arch
ies,
grou
ps, c
ompa
ny b
orde
rs (e
g.
intr
oduc
tion
or e
nhan
cem
ent o
f sm
art
wor
king
)
• Id
entif
y a
stee
ring
com
mitt
ee o
r sim
ilar
body
to m
onito
r and
facil
itate
the
jour
ney
• Se
t up
an o
rgan
ic ch
ange
pro
gram
• Le
ad a
n as
sess
men
t of c
hang
e co
mpe
tenc
ies
and
inte
grat
e th
em if
ne
cess
ary
thro
ugh
trai
ning
• Se
t up
a da
shbo
ard
for c
hang
e w
ith
rele
vant
lead
ing
and
lagg
ing
KPIs
• El
evat
or p
itch
for C
EO/C
hairm
an
• De
velo
pmen
t of h
ard
and
soft
EES
G re
gula
tions
mon
itorin
g, ne
twor
king
and
ad
voca
cy
• Ev
olut
ion
from
sep
arat
e re
port
ing
to
inte
grat
ed re
port
ing
• De
finiti
on o
f pro
cedu
res
in o
rder
to
iden
tify,
acqu
ire a
nd m
anag
e re
leva
nt
data
and
KPI
s an
d to
repo
rt in
a
tran
spar
ent m
anne
r with
real
-tim
e up
date
s
COM
PANY
'S CU
LTUR
E
• De
dica
ted
off-
site
mee
tings
to d
efin
e lo
ng-t
erm
vis
ion
for t
he co
mpa
ny
• Of
f-si
te m
eetin
gs d
edica
ted
to re
thin
king
th
e m
issi
on s
tate
men
t and
code
of e
thics
of
the
orga
niza
tion
to in
tegr
ate
all f
orm
s of
val
ue cr
eatio
n (s
ix ca
pita
ls)
• Se
t-up
of a
n or
gani
c and
com
preh
ensi
ve
cultu
ral c
hang
e pl
an
• In
tegr
ated
thin
king
chan
ge re
adin
ess
anal
ysis
of L
eade
rshi
p Te
am•
Inte
grat
ed le
ader
ship
coac
hing
ses
sion
s on
all
form
s of
val
ue cr
eatio
n an
d co
nnec
ted
beha
vior
s (W
alk
the
Talk
)”
• In
tegr
ated
thin
king
chan
ge re
adin
ess
asse
ssm
ent o
f ext
ende
d em
ploy
ee
popu
latio
ns (l
iste
ning
tool
s, ON
A, e
tc)
• Co
mm
unica
tions
tool
s an
d pr
oces
ses
(inte
rnal
and
ext
erna
l) •
Trai
ning
on
all f
orm
s of
val
ue cr
eatio
n (s
ix ca
pita
ls) a
nd in
tegr
ated
beh
avio
rs
embe
dded
in a
ll co
mpa
ny tr
aini
ng a
nd
indu
ctio
ns•
Inte
grat
ed th
inki
ng A
mba
ssad
ors
Net
wor
k, in
tern
al ch
ampi
ons
• Be
st p
ract
ices
(oth
er co
mpa
nies
) sha
ring
• Is
sue
and
stak
ehol
der m
appi
ng,
inte
grat
ed th
inki
ng e
ngag
emen
t pla
n,
iden
tifica
tion
of K
PIs
of d
iffer
ent
enga
gem
ent i
nitia
tives
In the fourth section of the integrated thinking Journey,
the actions that can be carried out for each of the critical
issues are identified. Actions are part of a Change Action
Plan that has to be organic and systemic.
NIBRNetwork Italiano
Business Reporting
THE INTEGRATED THINKING JOURNEY TABLE This table is designed to provide detailed and handy information that illustrates the Integrated Thinking Journey. It describes the main areas of change in the organization, the most critical issues and the internal and external stakeholders to consider in the change action plan, the plan’s actions and initiatives and its outcomes. Scientific Coordination Livia Piermattei and Tommaso Venturini • Methodos, the Change Management Company
YOUR OPINION IS IMPORTANT: Please feel free to email the Scientific Coordinators at [email protected] or to connect to www.integratedthinking.it to share your feedback, suggestions, comments or to ask for further information.
AREAS ISSUES DECISION MAKER OWNERSHIP INTERNAL
STAKEHOLDEREXTERNAL
STAKEHOLDERACTIONS TO BE IMPLEMENTED
ALL FORMS OF VALUE OUTCOMES: SOME EXAMPLES
SUSTAINABLE AND LONG-TERM BUSINESS
APPROACH
Management By Objective (MBO) long-term vesting period
vs. short-term for C-Suites, key leaders, sales force
Board of Directors Board of Directors
Remuneration Committee, HR
CEO, Leadership Team,Sales Force
Institutional investors, trade unions, analysts
• HR management and the integration of all factors of value creation
• Lead a gap analysis between present HR management and six capitals approach integration
• Scheduling of the new requirements, decision-making, process and KPIs, ESOP (Employee Stock Ownership Plan), MBO long- term vesting period
Financial:• Impacts on expectations towards stock pricing in financial analysts
perspective • Investor perspective of potential risk mitigation over the long-term• Stronger link of sales force and executive salaries to value creation for
the companySocial and relationship: • Positive impacts on company reputationHuman: • Less turnover and more engagement of sales force and company
executivesNatural:• Better management of the natural resources and better interaction
between the organization and its environment Intellectual:• More extended consideration for long-term innovation
External factors such as social, cultural, technological, environmental
and political changes affect the organization’s ability to create value in the short, medium or long-term,
leading to increased business context complexity; higher and faster
degree of change needed.
Board of Directors,CEO Leadership Team
Strategic Planning,Enterprise Risk Management,
Research & DevelopmentSustainability Officer
Relevant stakeholers based on stakeholder
mapping, consultants and EESG, Big Data analysts
and scientists
• Integrated Big Data sourced and systemic analysis of the inputs coming from the company stakeholders (peers, best practices, regulators, media, other stakeholders) to identify in advance risks and opportunities and provide constantly updated issue mapping (eg: Board Materiality Statement)
Financial:• Higher quality risks and opportunities analysis• Better value creation over the long-termSocial and relationship:• Alignment between organization strategy and stakeholder expectations
in medium and long -term• Reputation as an organization that ”leads the change”Natural: • Better management of the natural resources and better interaction
between the organization and its environment
Unique Selling Value Proposition (USVP): from reason to buy to reason
to believeLeadership Team MKTG
Sales, Marketing
& Communication dpts, Sustainability Officer
Customers, clients, opinion leaders, investors,
local communities, consultants,
survey providers, supply chain
• Qualitative and quantitative surveys on stakeholder perception evolution from reason to buy to reason to believe
• Best practice sharing (internal and external)
• Selling proposition review in order to make it more stakeholder centered
• Action plan to increase sales awareness and competency in all forms of value creation (six capitals) and related behaviors
Financial: • Enhanced value creation capability through the engagement process Social and relationship: • Enhanced loyalty and engagement and reputation of stakeholders Human:• Engagement
GOVERNANCE Integrated governance competencies and procedures Board of Directors General Counsel CEO, Investor Relations,
Enterprise Risk Management
Best practices,industry representatives and
associations, investors, analysts, consultants
• Assessment, review and integration of the governance structure based on the six capitals approach
• Introduction of specific monitoring tools based on the same approach
• Integrated thinking change readiness analysis of Board of Directors
Financial:• Better value creation over the long- term• Impacts on expectations toward stock pricing in financial analysts
perspectives • Investor perspective of potential risk mitigation over the long-termSocial and relationship:• Organization reputation Human:• Development of specific sustainable business know-how by the
management and a better understanding of the organization’s value creation process
Natural:• Better management of the natural resources and a better interaction
between the organization and its environment
STRATEGY
To review and integrate the strategic or industrial plan to increase all
forms of value creation (six capitals); embed all forms of value creation (six
capitals) into the business model; effective strategy cascading
CEO Leadership Team
Strategic PlanningChief Financial Officer,
Investor Relations, already existing integrated thinking
best practices, Enterprise Risk Management, with
approval from the Board of Directors
Best practices in integrated thinking, investors, financial
analysts, consultants
• Analyze integrated thinking best practices and related business performance
• Integrate strategic or industrial plan and business model with all forms of value creation (six capitals)
• Assess already-existing integrated thinking initiatives in order to minimize change resistance and efforts
Financial:• Better value creation over the long-term • Maximization of benefit with minimized financial effort• Impacts on expectations towards stock pricing in financial analysts
perspective • Investor perspective of potential risk mitigation over the long-termSocial and relationship:• Organization reputationHuman:• Development of specific know-how by the management and a better
understanding of the company’s value creation process • Development of a ”sense of belonging” to the organization and
engagement at all levelsNatural:• Better management of the natural resources and a better interaction
between the organization and its environment
ORGANIZATIONAL SET-UP AND
DEVELOPMENT
From a silos to an integrated approach; develop connectivity
throughout the organization, among all forms of value creation (six
capitals), across organization borders (involving internal and external
stakeholders)
CEO Leadership Team
ICT, Research & Development,
HR, Business Divisions
Best practices, culture and organization consultants
• Increase inclusiveness and multi-functionality in working teams
• Pilot the new organization to capitalize on the existing and fill in the gaps
• Rethink research and development approach, from function to knowledge sharing
• Leverage ICT to facilitate collaboration and sharing across functions, hierarchies, groups, company borders (eg. introduction or enhancement of smart working)
Financial:• Better efficiency through fewer journeys• Increased value creation through better-informed teamsHuman:• Development of better out-of-the-box thinking capability Social and relationship:• Better understanding of the customers’ needs Intellectual:• Development of innovation capability at every level of the organization
Organic approach to change governance monitoring and leading
the change process; key leaders appointed in the change steering
committee; change competencies in the team to facilitate the integrated
thinking Journey
Leadership TeamMulti-stakeholder Change Steering
Committee
CFO, HR,
Business Leaders, Sustainability Officer,
other collaborating functions
Investors, financial analysts,
consultants
• Identify a steering committee or similar body to monitor and facilitate the journey
• Set up an organic change program• Lead an assessment of change
competencies and integrate them if necessary through training
• Set up a dashboard for change with relevant leading and lagging KPIs
• Elevator pitch for CEO/Chairman
Financial:• Investment in change management could generate costs in the short-
term• Potential positive long-term impact for a more efficient and effective
(reporting) organization. This might include reorganization where a benefit is identified.
• Potential risk mitigation over the long-term Social and relationship:• Organization reputation Human:• Engagement
ESG regulations increased 8x in the last two years (source: eRevalue/Datamaran 2015); incumbent EU
Directive on non-financial and diversity information for large
and listed companies; think ahead and develop forward thinking to boost competitiveness: ”beyond
compliance”
Board of Directors Chief Financial Officer and Legal Office
Internal Audit, Compliance,
Sustainability Officer
Regulators, auditors, suppliers, industry
representatives and associations
• Development of hard and soft EESG regulations monitoring, networking and advocacy
Financial:• Reduced risks of litigation and fines Social and relationship:• Reputation as a company that goes "beyond compliance”• Better relations with regulators
Give evidence and tell the story of all forms of the value creation (six capitals) process in real time, in a
transparent manner, with feeds and interactions with stakeholders
CEO Chief Financial Officer Business Leaders and staff functions
Investors, financial analysts, Big Data
scientists and analysts, assurance providers,
consultants
• Evolution from separate reporting to integrated reporting
• Definition of procedures in order to identify, acquire and manage relevant data and KPIs and to report in a transparent manner with real-time updates
Social and relationship:• Investors: better able to evaluate the organization real value and its
impact on stock valueHuman:• Better connection of information and collaboration among the functions
of the organization• Better connection of information and as such of the departments All capitals:• Better management of the outcomes
COMPANY'S CULTURE
Long-Term Vision Board of Directors General Counsel Investor Relations, Human Resources
Best cases, investors, consultants
• Dedicated off-site meetings to define long-term vision for the company
Social and relationship:• Organization reputationHuman:• Engagement
Shared generation of Sustainable Business culture CEO Leadership Team
Chief Financial Officer, General Counsel,
Human Resources, Employees (with approval
from the Board of Directors)Sustainability Officer
Investors, analysts, suppliers, consultants
• Off-site meetings dedicated to rethinking the mission statement and code of ethics of the organization to integrate all forms of value creation (six capitals)
• Set-up of an organic and comprehensive cultural change plan
Financial: • Litigation risks mitigation Social and relationship:• Company Reputation Natural:• Supply chain (better monitoring of externalities) Human:• Engagement due to the creation of a link between employee values and
the targets and goals of the organization
Walk the Talk and address resistance to change in Leadership Team CEO Leadership Team Investor Relations,
Human ResourcesBest cases, investors,
consultants
• Integrated thinking change readiness analysis of Leadership Team
• Integrated leadership coaching sessions on all forms of value creation and connected behaviors (Walk the Talk)”
Social and relationship:• Organization reputation Human:• Engagement
Integrated thinking change readiness and engagement of extended
employee populations to map levels of maturity and resistance
HR HR, Sustainability Officer Managers, Employees Investors, analysts, consultants
• Integrated thinking change readiness assessment of extended employee populations (listening tools, ONA, etc)
• Communications tools and processes (internal and external)
• Training on all forms of value creation (six capitals) and integrated behaviors embedded in all company training and inductions
• Integrated thinking Ambassadors Network, internal champions
• Best practices (other companies) sharing
Social and relationship:• Reputation and increased stakeholder engagement Human:• Engagement
Transparency and Coherence between internal and external
communicationsCOMMS COMMS Investor Relations,
General Counsel
Shareholders, investors, local communities and other relevant
stakeholders
• Issue and stakeholder mapping, integrated thinking engagement plan, identification of KPIs of different engagement initiatives
Financial:• Enhanced value creation capability through the engagement process Social and Relationship:• Reputation and consistencyHuman:• Engagement
NIBRNetwork Italiano
Business Reporting
THE INTEGRATED THINKING JOURNEY TABLE This table is designed to provide detailed and handy information that illustrates the Integrated Thinking Journey. It describes the main areas of change in the organization, the most critical issues and the internal and external stakeholders to consider in the change action plan, the plan’s actions and initiatives and its outcomes. Scientific Coordination Livia Piermattei and Tommaso Venturini • Methodos, the Change Management Company
YOUR OPINION IS IMPORTANT: Please feel free to email the Scientific Coordinators at [email protected] or to connect to www.integratedthinking.it to share your feedback, suggestions, comments or to ask for further information.
AREAS ISSUES DECISION MAKER OWNERSHIP INTERNAL
STAKEHOLDEREXTERNAL
STAKEHOLDERACTIONS TO BE IMPLEMENTED
ALL FORMS OF VALUE OUTCOMES: SOME EXAMPLES
SUSTAINABLE AND LONG-TERM BUSINESS
APPROACH
Management By Objective (MBO) long-term vesting period
vs. short-term for C-Suites, key leaders, sales force
Board of Directors Board of Directors
Remuneration Committee, HR
CEO, Leadership Team,Sales Force
Institutional investors, trade unions, analysts
• HR management and the integration of all factors of value creation
• Lead a gap analysis between present HR management and six capitals approach integration
• Scheduling of the new requirements, decision-making, process and KPIs, ESOP (Employee Stock Ownership Plan), MBO long- term vesting period
Financial:• Impacts on expectations towards stock pricing in financial analysts
perspective • Investor perspective of potential risk mitigation over the long-term• Stronger link of sales force and executive salaries to value creation for
the companySocial and relationship: • Positive impacts on company reputationHuman: • Less turnover and more engagement of sales force and company
executivesNatural:• Better management of the natural resources and better interaction
between the organization and its environment Intellectual:• More extended consideration for long-term innovation
External factors such as social, cultural, technological, environmental
and political changes affect the organization’s ability to create value in the short, medium or long-term,
leading to increased business context complexity; higher and faster
degree of change needed.
Board of Directors,CEO Leadership Team
Strategic Planning,Enterprise Risk Management,
Research & DevelopmentSustainability Officer
Relevant stakeholers based on stakeholder
mapping, consultants and EESG, Big Data analysts
and scientists
• Integrated Big Data sourced and systemic analysis of the inputs coming from the company stakeholders (peers, best practices, regulators, media, other stakeholders) to identify in advance risks and opportunities and provide constantly updated issue mapping (eg: Board Materiality Statement)
Financial:• Higher quality risks and opportunities analysis• Better value creation over the long-termSocial and relationship:• Alignment between organization strategy and stakeholder expectations
in medium and long -term• Reputation as an organization that ”leads the change”Natural: • Better management of the natural resources and better interaction
between the organization and its environment
Unique Selling Value Proposition (USVP): from reason to buy to reason
to believeLeadership Team MKTG
Sales, Marketing
& Communication dpts, Sustainability Officer
Customers, clients, opinion leaders, investors,
local communities, consultants,
survey providers, supply chain
• Qualitative and quantitative surveys on stakeholder perception evolution from reason to buy to reason to believe
• Best practice sharing (internal and external)
• Selling proposition review in order to make it more stakeholder centered
• Action plan to increase sales awareness and competency in all forms of value creation (six capitals) and related behaviors
Financial: • Enhanced value creation capability through the engagement process Social and relationship: • Enhanced loyalty and engagement and reputation of stakeholders Human:• Engagement
GOVERNANCE Integrated governance competencies and procedures Board of Directors General Counsel CEO, Investor Relations,
Enterprise Risk Management
Best practices,industry representatives and
associations, investors, analysts, consultants
• Assessment, review and integration of the governance structure based on the six capitals approach
• Introduction of specific monitoring tools based on the same approach
• Integrated thinking change readiness analysis of Board of Directors
Financial:• Better value creation over the long- term• Impacts on expectations toward stock pricing in financial analysts
perspectives • Investor perspective of potential risk mitigation over the long-termSocial and relationship:• Organization reputation Human:• Development of specific sustainable business know-how by the
management and a better understanding of the organization’s value creation process
Natural:• Better management of the natural resources and a better interaction
between the organization and its environment
STRATEGY
To review and integrate the strategic or industrial plan to increase all
forms of value creation (six capitals); embed all forms of value creation (six
capitals) into the business model; effective strategy cascading
CEO Leadership Team
Strategic PlanningChief Financial Officer,
Investor Relations, already existing integrated thinking
best practices, Enterprise Risk Management, with
approval from the Board of Directors
Best practices in integrated thinking, investors, financial
analysts, consultants
• Analyze integrated thinking best practices and related business performance
• Integrate strategic or industrial plan and business model with all forms of value creation (six capitals)
• Assess already-existing integrated thinking initiatives in order to minimize change resistance and efforts
Financial:• Better value creation over the long-term • Maximization of benefit with minimized financial effort• Impacts on expectations towards stock pricing in financial analysts
perspective • Investor perspective of potential risk mitigation over the long-termSocial and relationship:• Organization reputationHuman:• Development of specific know-how by the management and a better
understanding of the company’s value creation process • Development of a ”sense of belonging” to the organization and
engagement at all levelsNatural:• Better management of the natural resources and a better interaction
between the organization and its environment
ORGANIZATIONAL SET-UP AND
DEVELOPMENT
From a silos to an integrated approach; develop connectivity
throughout the organization, among all forms of value creation (six
capitals), across organization borders (involving internal and external
stakeholders)
CEO Leadership Team
ICT, Research & Development,
HR, Business Divisions
Best practices, culture and organization consultants
• Increase inclusiveness and multi-functionality in working teams
• Pilot the new organization to capitalize on the existing and fill in the gaps
• Rethink research and development approach, from function to knowledge sharing
• Leverage ICT to facilitate collaboration and sharing across functions, hierarchies, groups, company borders (eg. introduction or enhancement of smart working)
Financial:• Better efficiency through fewer journeys• Increased value creation through better-informed teamsHuman:• Development of better out-of-the-box thinking capability Social and relationship:• Better understanding of the customers’ needs Intellectual:• Development of innovation capability at every level of the organization
Organic approach to change governance monitoring and leading
the change process; key leaders appointed in the change steering
committee; change competencies in the team to facilitate the integrated
thinking Journey
Leadership TeamMulti-stakeholder Change Steering
Committee
CFO, HR,
Business Leaders, Sustainability Officer,
other collaborating functions
Investors, financial analysts,
consultants
• Identify a steering committee or similar body to monitor and facilitate the journey
• Set up an organic change program• Lead an assessment of change
competencies and integrate them if necessary through training
• Set up a dashboard for change with relevant leading and lagging KPIs
• Elevator pitch for CEO/Chairman
Financial:• Investment in change management could generate costs in the short-
term• Potential positive long-term impact for a more efficient and effective
(reporting) organization. This might include reorganization where a benefit is identified.
• Potential risk mitigation over the long-term Social and relationship:• Organization reputation Human:• Engagement
ESG regulations increased 8x in the last two years (source: eRevalue/Datamaran 2015); incumbent EU
Directive on non-financial and diversity information for large
and listed companies; think ahead and develop forward thinking to boost competitiveness: ”beyond
compliance”
Board of Directors Chief Financial Officer and Legal Office
Internal Audit, Compliance,
Sustainability Officer
Regulators, auditors, suppliers, industry
representatives and associations
• Development of hard and soft EESG regulations monitoring, networking and advocacy
Financial:• Reduced risks of litigation and fines Social and relationship:• Reputation as a company that goes "beyond compliance”• Better relations with regulators
Give evidence and tell the story of all forms of the value creation (six capitals) process in real time, in a
transparent manner, with feeds and interactions with stakeholders
CEO Chief Financial Officer Business Leaders and staff functions
Investors, financial analysts, Big Data
scientists and analysts, assurance providers,
consultants
• Evolution from separate reporting to integrated reporting
• Definition of procedures in order to identify, acquire and manage relevant data and KPIs and to report in a transparent manner with real-time updates
Social and relationship:• Investors: better able to evaluate the organization real value and its
impact on stock valueHuman:• Better connection of information and collaboration among the functions
of the organization• Better connection of information and as such of the departments All capitals:• Better management of the outcomes
COMPANY'S CULTURE
Long-Term Vision Board of Directors General Counsel Investor Relations, Human Resources
Best cases, investors, consultants
• Dedicated off-site meetings to define long-term vision for the company
Social and relationship:• Organization reputationHuman:• Engagement
Shared generation of Sustainable Business culture CEO Leadership Team
Chief Financial Officer, General Counsel,
Human Resources, Employees (with approval
from the Board of Directors)Sustainability Officer
Investors, analysts, suppliers, consultants
• Off-site meetings dedicated to rethinking the mission statement and code of ethics of the organization to integrate all forms of value creation (six capitals)
• Set-up of an organic and comprehensive cultural change plan
Financial: • Litigation risks mitigation Social and relationship:• Company Reputation Natural:• Supply chain (better monitoring of externalities) Human:• Engagement due to the creation of a link between employee values and
the targets and goals of the organization
Walk the Talk and address resistance to change in Leadership Team CEO Leadership Team Investor Relations,
Human ResourcesBest cases, investors,
consultants
• Integrated thinking change readiness analysis of Leadership Team
• Integrated leadership coaching sessions on all forms of value creation and connected behaviors (Walk the Talk)”
Social and relationship:• Organization reputation Human:• Engagement
Integrated thinking change readiness and engagement of extended
employee populations to map levels of maturity and resistance
HR HR, Sustainability Officer Managers, Employees Investors, analysts, consultants
• Integrated thinking change readiness assessment of extended employee populations (listening tools, ONA, etc)
• Communications tools and processes (internal and external)
• Training on all forms of value creation (six capitals) and integrated behaviors embedded in all company training and inductions
• Integrated thinking Ambassadors Network, internal champions
• Best practices (other companies) sharing
Social and relationship:• Reputation and increased stakeholder engagement Human:• Engagement
Transparency and Coherence between internal and external
communicationsCOMMS COMMS Investor Relations,
General Counsel
Shareholders, investors, local communities and other relevant
stakeholders
• Issue and stakeholder mapping, integrated thinking engagement plan, identification of KPIs of different engagement initiatives
Financial:• Enhanced value creation capability through the engagement process Social and Relationship:• Reputation and consistencyHuman:• Engagement
INTEGRATED REPORT07CHAP
TER
This Handbook is focused on the integrated thinking Journey as a key component of the Change Journey towards Integrated Reporting <IR>. In this perspective, the four stages of integrated thinking and the fifth of integrated report are like the two faces of Janus: both are needed to make-up the circular, dynamic, adaptive model of the Change Journey towards Integrated Reporting <IR> in order for the organization to integrate all forms of value creation in strategy, governance, culture and processes. In fact, if the integrated thinking change Journey is aligned with the reporting process; it will naturally lead to an effective approach to produce the integrated report. At the same time, by doing the integrated report organizations can become aware of the need to achieve integrated thinking and increasingly become engaged with this need.
In the international networking research that this multistakeholder Group carried out, the work of <IR> Lab India appeared particularly interesting and complementary to the goal of this Handbook. We in fact had decided to focus mainly on the stages of integrated thinking in the Change Journey; they focused instead on developing and producing the integrated report. We therefore thought it could be important to reference their soon-to-be-published guidance document for Integrated Reporting <IR> , which will include further practical guidance for practitioners to get started.
The Confederation of Indian Industry set up <IR> Lab India in collaboration with the IIRC, to introduce Integrated Reporting to India. <IR> Lab is developing a guidance document that has definitive steps, examples and key principles on implementing <IR> in India. With a strong focus on the practical aspects of the integrated report, including a methodology and examples, the intent is to get practitioners started on the <IR> Framework established by the IIRC. This guide will have universal applicability and relevance.
www.sustainabledevelopment.in
What is the relationship between integrated thinking and integrated report? How connected are they in the Integrated Reporting <IR> Change Journey?
“We felt that the focus of financial reporting did not
allow the organization to fully explain its values and approach to business, particularly the link between strategy, performance
and business”
Dellas
26
KEY TERMS REFERENCES• EESG: all the factors of value creation: Economic, Environmental, Social, Governance.
• Integrated governance: the recent evolution in the governance practice, processes and culture in order to take into consideration all the factors of value creation. (UNEP-FI, A new model of Governance for Sustainability).
• Integrated Report: a concise communication to illustrate strategy, governance, performance and prospects of an organization that is about how they create value in the short, medium and long-term. An Integrated Report can form part of a Business Report. Refer to the International <IR> Framework for formal definitions.
• International Integrated Reporting Framework: principles and international guidelines on Integrated Reporting published in December 2013 by the International Integrated Reporting Council (IIRC).
• Integrated thinking: the integration within Integrated Reporting of the all forms of value creation and their connections into the decision-making process of leaders in companies, so as to limit risks of detracting value and to enhance opportunities for creating additional value.
• Multicapital outcomes: results and consequences (positive and negative), internal and external, on different forms of capital, generated by the organization.
• Outputs: products and services that the organization produces and sells.
• Materiality analysis: analysis to identify areas where the organization can generate the most value or potentially risks the strongest loss of value.
• Stakeholders: different clusters of people with interest in an organization or in whom the organization is interested (employees, customers, suppliers, banks and investors, institutions, public administrations, local communities, environment).
• Value creation process: process that allows an organization to use its capitals (inputs) to generate value (output and outcomes) for different stakeholder categories.
Accounting for Sustainability,http://www.accountingforsustainability.org/integrated-thinking/10-main-elements-to-embed-sustainability (last visit: April 1, 2016)
Chartered Global Management Accountant, Integrated thinking. The next step on Integrated Reporting, 2014.http://www.erevalue.com/blog/ (last visit: April 1, 2016)
Robert G. Eccles, Beiting Cheng, Daniela Saltzman (ed.), The landscape of Integrated Reporting. Reflections and next steps, contribution by Livia Piermattei, Harvard Business School, 2010
IFAC-International Federation of Accountants, Creating Value with integrated thinking. The role of professional accountants, 2015
IFAC-Stathis Gould, A Vision for Integrated Thinking and the Role of Finance Professionals, February 1, 2016. Published on:https://www.ifac.org/global-knowledge-gateway/business-reporting/discussion/vision-integrated-thinking-and-role-finance (last visit: April 1, 2016)
IFAC-Stathis Gould, Corporate Governance and Transparency-The Chicken or the Egg of Sustainable Development?, November 30, 2015. Published on:https://www.ifac.org/global-knowledge-gateway/governance/discussion/corporate-governance-and-transparency-chicken-or-egg (last visit April 1, 2016)
IIRC-The International Integrated Reporting Council/Black Sun, Realizing the benefits. The Impact of Integrated Reporting, 2014
IIRC-The International Integrated Reporting Council, The Integrated Reporting Framework,http://integratedreporting.org/resource/international-ir-framework/ (last visit April 1, 2016)
International Corporate Governance Network, ICGN Guidance on Integrated Business Reporting, 2015
Methodos, Change Management. Time to change, Harvard Business Review Italy (special issue nr. 7-8), 2014,http://www.methodos.com/en/change-management-time-to-change/ (last visit April 1, 2016)
Toni Muzi Falconi, James E. Grunig, Emilio Galli Zugaro, Joao Duarte, Global Stakeholder Relationships Governance. An Infrastructure, Palgrave Macmillan, 2014
The South African Institute of Chartered Accountants, Integrated thinking. An exploratory survey, 2015.
Top Legal with scientific coordination of Methodos, Nedcommunity, Morrow Sodali: Integrated Governance Index, first edition:http://igi.toplegal.it/home-english-version/(last visit June 28th, 2016).
UNEP-FI, A new model of Governance for Sustainability, a report by the Asset Management Working Group of the United Nations Environment Programme Finance Initiative June 2014
27
The Italian Network for Business Reporting (Network Italiano Business Reporting - NIBR - www.nibr.it)who set up a multistakeholder Working Group and promoted the publication of this Handbook, represents the official Italian jurisdiction of both the ”World Intellectual Capital/Assets Initiative” (WICI) Global Network, (www.wici-global.com) and the ”World Intellectual Capital
Initiative Network for Europe” (WICI Europe). The NIBR intends to be the reference point in Italy for companies and all types of organizations
that aim to undertake a managerial and cultural growth in their Businessand Integrated Reporting, with particular reference to the measurement and representation
of their intangibles and their unique value creation mechanisms.In this respect, NIBR has also actively participated in the preparation of the “WICI Intangibles Reporting Framework”
which has been released by WICI in September 2016 (freely available on www.wici-global.com).
We would like to take this opportunity to thank all the companies and the people who were so kind to share their experiences with us in the interviews we held during the research phase for this Handbook.
Lessons learned fromAuchan, DeA Capital, Dellas, Gruppo Generali, Guna, Sap, Gruppo UniCredit
NIBRNetwork Italiano
Business Reporting
