A gold mine reports a record profit. But to produce it, the mine used up a river’s water, injured two workers and promised the community a school it has not yet built. Is that a good year? Financial reports alone cannot say.
Integrated reporting tries to tell the whole story: how a company’s strategy, governance, performance and prospects create, preserve or erode value over time, using all the resources it relies on, not only money.
This topic covers why integrated reporting emerged, its definition, the six capitals, the role of the International Integrated Reporting Council (IIRC) and the International Financial Reporting Standards (IFRS) Foundation (the body behind International Financial Reporting Standards, IFRS), the guiding principles and content elements of the <IR> Framework, the statement by those charged with governance, the costs and benefits of introducing it, and how it differs from a sustainability report.
The previous topics covered corporate social responsibility and sustainability reporting. November 2025 Question 7(b) tested the six capitals in an extractive company for 5 marks.
In 30 seconds
An integrated report is a concise communication about how an organisation’s strategy, governance, performance and prospects, in its external environment, lead to value creation in the short, medium and long term. It uses six capitals: financial, manufactured, intellectual, human, natural, and social and relationship.
The <IR> Framework has seven guiding principles (strategic focus and future orientation, connectivity of information, stakeholder relationships, materiality, conciseness, reliability and completeness, consistency and comparability) and content elements set out as eight questions, such as what the organisation does, how governance supports value creation, what the business model is, and what the risks, strategy, performance and outlook are. A statement from those charged with governance is expected.
Introducing integrated reporting can bring costs (systems, staff time, consultants and disclosure of strategy) but also better decisions and trust. The Johannesburg Stock Exchange was the first to require it of listed companies.
Key terms in plain English
| Term | What it means |
|---|---|
| Integrated report | One concise report showing how the organisation creates value from all its resources |
| Capitals | The stocks of value an organisation uses and affects: money, assets, knowledge, people, nature and relationships |
| Value creation | The increase, decrease or transformation of the capitals through the organisation’s activities |
| Business model | How the organisation turns inputs into outputs and outcomes |
| Integrated thinking | Management considering how all the capitals and parts of the business connect when taking decisions |
| Those charged with governance | The people responsible for overseeing the strategy and accountability of the organisation, usually the board |
Syllabus check
This topic covers parts of the following syllabus areas:
- G2(a)(ii) and (iii) multiple capitals and integrated thinking in business reporting;
- E2(a), (c) and E3 the place of integrated reporting among the sustainability frameworks, since the Integrated Reporting Framework now sits with the IFRS Foundation alongside the International Sustainability Standards Board (ISSB);
- D2(d) assessing an entity’s strategy and environment from the information in its annual report.
CAMA 2020 and integrated reporting
The Companies and Allied Matters Act 2020 (CAMA 2020) does not require an integrated report. It sets legal duties that an integrated report builds on.
| Section | What it says | Link to integrated reporting |
|---|---|---|
| s. 385 | The directors’ report covers business performance, governance, and risk management and compliance | These are three of the content elements of an integrated report |
| s. 377(1) | The directors prepare the annual financial statements | The framework asks the board to take responsibility for the integrated report as well |
| s. 404(7) | The audit committee’s functions include reviewing the system of accounting and internal control | Reliable non-financial data needs controls as well |
| s. 405 | The chief executive officer (CEO) and chief financial officer (CFO) of a company that is not a small company certify responsibility for internal controls | Better systems are a main cost and a main safeguard in integrated reporting |
Why integrated reporting emerged
Financial reports look backward and say little about the future potential of a company. Sustainability reports fill part of the gap but are often not linked to strategy or financial performance and say little about value creation. Businesses need a reporting approach that explains how strategy drives performance and creates value over time, which should also make it easier to attract investment.
Large organisations face rising demand to explain how they use the resources they have. Integrated reporting is concerned with a wider message than profit or the statement of financial position.
The International Integrated Reporting Council (IIRC) was a global coalition of regulators, investors, companies, standard setters, the accounting profession and non-governmental organisations. Its aims were to improve the quality of information for providers of financial capital, promote a more cohesive and efficient approach to reporting, strengthen accountability and stewardship, and support integrated thinking and decisions that create value over the short, medium and long term.
Its framework is now held by the IFRS Foundation, which also hosts the ISSB. The Johannesburg Stock Exchange was the first to make integrated reporting a listing requirement for all its listed companies.
The six capitals
| Capital | What it is | Example for a mine |
|---|---|---|
| Financial | Funds available to produce goods or services, from debt, equity, grants or operations | Revenue, profit, investment, return on capital |
| Manufactured | Physical objects made by people, used to produce goods or services | Mines, machinery, processing plants |
| Intellectual | Knowledge-based intangibles | Geological expertise, extraction technology, process innovation |
| Human | People’s competencies, capabilities, experience and motivation to innovate | Safety programmes, training, skills retention |
| Natural | All environmental resources and processes that support the organisation’s prosperity | Land disturbance, water use, emissions, biodiversity, waste |
| Social and relationship | Institutions and relationships within and between communities and stakeholders, and the ability to share information | Community engagement, compensation processes, social licence to operate |
The capitals are linked. Using more water (natural capital) may raise output (financial capital) but harm community trust (social and relationship capital). An integrated report shows these trade-offs. For an extractive company, natural capital is often the most important.
The <IR> Framework
The framework, first published in 2013 and updated in 2021, is principles-based, with requirements set out in bold paragraphs and guidance in the others. Any report that claims to follow it applies all the bold requirements, with two exceptions: where reliable information is not available or a legal ban prevents disclosure, or where disclosure would cause significant competitive harm.
In those cases the report should say what has been left out and why, and for missing data say what is being done to obtain it and how long it will take.
Statement by those charged with governance
An integrated report should include a statement from those charged with governance acknowledging their responsibility for the integrity of the report, that they applied their collective mind to its preparation. Their opinion on whether it follows the framework.
If there is no such statement, the report should explain the role of the board, the steps being taken to include one in future and the timeframe, which should be no later than the organisation’s third integrated report.
Guiding principles
| Principle | What it requires |
|---|---|
| Strategic focus and future orientation | Insight into strategy and how it relates to the ability to create value and to the use of and effect on the capitals |
| Connectivity of information | A holistic picture of how the factors that affect value creation interrelate and depend on each other |
| Stakeholder relationships | Insight into the nature and quality of relationships with key stakeholders, and how their legitimate needs are understood and answered |
| Materiality | Disclosure of matters that substantively affect the ability to create value over the short, medium and long term |
| Conciseness | A report that is concise and to the point |
| Reliability and completeness | All material matters, positive and negative, in a balanced way and without material error |
| Consistency and comparability | Consistent over time and comparable with other organisations to the extent material |
Content: the questions an integrated report answers
- What does the organisation do, and in what circumstances does it operate?
- How does its governance structure support value creation in the short, medium and long term?
- What is its business model?
- What are the specific risks and opportunities, and how is it dealing with them?
- Where does it want to go and how will it get there?
- To what extent has it achieved its strategic objectives, and what are the outcomes for the capitals?
- What challenges and uncertainties is it likely to meet, and what are the implications for its business model and future performance?
- How does it decide what matters for the report, and how are such matters quantified or evaluated?
Costs and benefits of introducing integrated reporting
| Implication | Comment |
|---|---|
| Information technology costs | Significant upgrades are likely to capture data across customers, suppliers, finance and human resources |
| Time and staff costs | Gathering data takes staff time, may reduce morale if added to existing duties and may need extra staff |
| Consultancy costs | First-time reporters often buy specialist advice, which can be costly |
| Disclosure risk | The company may reveal more about plans and key measures than intended, which competitors can use |
Benefits: greater transparency and stakeholder trust, better risk management, better access to capital, a stronger long-term strategy, competitive advantage through integrated thinking, and better decisions and resource allocation.
Integrated report compared with sustainability report
| Feature | Sustainability report | Integrated report |
|---|---|---|
| Main idea | Impacts on economy, environment and society | How value is created across all the capitals over time |
| Audience | All stakeholders | Mainly providers of financial capital, but useful to all |
| Link to strategy | Often weak | Core of the report |
| Length | Often long and detailed | Concise, with links to more detail |
The rules in more depth
Why “integrated” is the key word
The report is not the financial report plus a sustainability report glued together. It shows connections: how strategy, risks, performance and governance affect each capital. The test is whether a reader can see why one decision, such as opening a new plant, affects several capitals.
Why integrated thinking comes first
If management does not think in an integrated way, a report cannot show it. The framework aims to improve decision-making inside the company, and the report is the visible result.
Why conciseness is a principle
Long reports hide the important points. The framework asks the company to be selective, and to point to other documents for detail.
Integrated reporting and the ISSB
The ISSB standards focus on sustainability-related financial disclosures for investors. The integrated report takes a broader view of value creation. The two are meant to fit together, which is one reason the IFRS Foundation took over the framework.
Worked example: applying the capitals to a bottling company
Scenario. Fiwajoye Plc, a bottling company, plans a new plant using ₦5 billion of new funding. The plant will use 30% more water, employ 200 more staff after training and rely on a local community for land access. It wants to show how the plan affects its capitals. The figures are illustrative.
- Financial capital. ₦5 billion of funding in. Report expected return and payback.
- Manufactured capital. New plant, lines and trucks. Report capacity and efficiency.
- Intellectual capital. New process know-how and brand. Report innovations and any patents.
- Human capital. 200 new jobs, training spend and safety record.
- Natural capital. 30% more water used. Report water source, recycling targets and any effect on the local river.
- Social and relationship capital. Land access agreement, community consultation and complaints.
- Connectivity. More water may raise output but could harm community relations. The report explains the trade-off and what the company is doing.
- Content elements. The report answers the eight questions: what the company does, governance, business model, risks (water scarcity, community opposition), strategy, performance, outlook and how it chose these matters.
- CAMA 2020. The directors’ report (s. 385) already covers performance, governance and risk, so the integrated report can build on it.
How to score full marks
- List all six capitals and give one concrete example for the company in the question.
- Name trade-offs between capitals. This shows you understand connectivity.
- For benefits questions, give transparency, trust, risk management, access to capital, long-term strategy, competitive advantage and better decisions.
- For costs, give systems, staff time, consultancy and disclosure risk.
- For the framework, know the seven principles, the eight content questions and the statement by those charged with governance.
- Link to the case. For an extractive company, put natural capital and social licence to operate first.
Common mistakes in the exam
- Naming only four or five capitals.
- Listing capitals without applying them to the company.
- Treating an integrated report as a financial report plus a sustainability report.
- Saying integrated reporting is mandatory in Nigeria. It is voluntary here, though some exchanges require it.
- Giving benefits only, without the costs.
- Confusing the integrated reporting guiding principles with the Global Reporting Initiative (GRI) principles.
Quick revision
- Integrated report: concise, how strategy, governance, performance and prospects create value over short, medium and long term.
- Six capitals: financial, manufactured, intellectual, human, natural, social and relationship.
- Seven principles: strategic focus, connectivity, stakeholders, materiality, conciseness, reliability and completeness, consistency and comparability.
- Eight content questions: organisation, governance, business model, risks and opportunities, strategy, performance, outlook, basis of preparation.
- Statement by those charged with governance.
- Costs: Information technology (IT), staff time, consultants, disclosure risk. Benefits: trust, risk management, capital access, strategy.
- CAMA 2020: ss. 385, 377(1), 404(7), 405.
Practice questions
These are original questions written in the style of the Institute of Chartered Accountants of Nigeria (ICAN) exam. Try each one before you open the answer. Full model answers follow the written questions.
Recall check: multiple choice
The real ICAN paper has no multiple-choice section. These questions are for quick recall. The written questions that follow are closer to the exam.
Question 1. How many capitals are in the Integrated Reporting Framework?
- Three
- Four
- Six
- Ten
Show the answer
C. Financial, manufactured, intellectual, human, natural, and social and relationship.
Question 2. Which capital covers all environmental resources and processes that support an organisation’s prosperity?
- Human capital
- Natural capital
- Manufactured capital
- Financial capital
Show the answer
B. It includes land, water, emissions and biodiversity.
Question 3. Which of the following is a guiding principle of the <IR> Framework?
- Connectivity of information
- Maximising dividends
- Tax planning
- Auditor rotation
Show the answer
A. Others include strategic focus, materiality and conciseness.
Question 4. An integrated report is mainly concerned with:
- The history of the company
- Value creation over the short, medium and long term
- Tax computation
- Only financial performance
Show the answer
B. It links strategy, governance, performance and prospects.
Question 5. The first stock exchange to require integrated reporting of all its listed companies was the:
- Nigerian Exchange
- London Stock Exchange
- Johannesburg Stock Exchange
- New York Stock Exchange
Show the answer
C. It made it a listing requirement.
Question 6. Which of the following is a cost of introducing integrated reporting?
- Significant information technology upgrades
- Lower staff workload
- No need for data
- Free consultancy
Show the answer
A. Staff time and consultancy fees are also costs.
Question 7. A statement from those charged with governance should acknowledge their responsibility for:
- The integrity of the integrated report
- The share price
- The auditor’s fee
- The tax rate
Show the answer
A. It also gives their opinion on compliance with the framework.
Question 8. People’s competencies, capabilities and experience are which capital?
- Human capital
- Intellectual capital
- Social capital
- Financial capital
Show the answer
A. Intellectual capital is knowledge-based intangibles.
Question 9. A main weakness of traditional financial reports that integrated reporting addresses is that they:
- Are too short
- Are historical and say little about future potential
- Are unaudited
- Are free
Show the answer
B. They also say little about value creation.
Question 10. Which section of CAMA 2020 sets the content of the directors’ report as performance, governance, and risk management and compliance?
- Section 385
- Section 394
- Section 400
- Section 413
Show the answer
A. As ICAN teaches it.
Written questions
Question 11 (10 marks). (a) Define an integrated report. (2 marks) (b) State the six capitals with one example of each. (6 marks) (c) State two aims of the IIRC. (2 marks)
Question 12 (20 marks). (a) State and explain the guiding principles of the <IR> Framework. (7 marks) (b) State the questions an integrated report should answer. (5 marks) (c) Explain the implications and costs of introducing integrated reporting. (4 marks) (d) State four benefits for the preparer. (4 marks)
Question 13 (10 marks). Bamboo Plc, an extractive company with significant environmental and social impacts, wants a reporting approach that captures its full impacts and value creation. (a) Explain how it can apply the concept of multiple capitals in its reporting. (5 marks) (b) State the benefits it can expect. (5 marks)
Model answers
Show the model answer to Question 11
(a) Definition (2 marks). An integrated report is a concise communication about how an organisation’s strategy, governance, performance and prospects, in the context of its external environment, lead to the creation of value over the short, medium and long term.
(b) Capitals (6 marks, 1 each). Financial: funds from debt, equity or operations. Manufactured: plant and machinery. Intellectual: knowledge-based intangibles such as technology. Human: competencies and experience of people. Natural: environmental resources such as water and land. Social and relationship: relationships with communities and stakeholders.
(c) Aims (2 marks, any two at 1). Improve the quality of information for providers of financial capital. Promote a more cohesive and efficient approach to reporting. Enhance accountability and stewardship. Support integrated thinking and decisions focused on value creation.
Show the model answer to Question 12
(a) Principles (7 marks, 1 each). Strategic focus and future orientation. Connectivity of information. Stakeholder relationships. Materiality. Conciseness. Reliability and completeness. Consistency and comparability. (Each with a brief explanation.)
(b) Questions (5 marks, any five at 1). What does the organisation do and in what circumstances? How does governance support value creation? What is the business model? What are the risks and opportunities and how are they dealt with? Where does it want to go and how will it get there? To what extent has it achieved its objectives and what are the outcomes for the capitals?
What challenges and uncertainties will it meet? How does it decide what matters for the report?
(c) Implications (4 marks, 1 each). Information technology costs for systems to capture data. Staff time and possible morale effects. Consultancy fees for first-time reports. Disclosure risk, because competitors may use strategy and performance information.
(d) Benefits (4 marks, any four at 1). Greater transparency and stakeholder trust. Better risk management. Better access to capital. Stronger long-term strategy. Competitive advantage. Better decisions and resource allocation.
Show the model answer to Question 13
(a) Multiple capitals (5 marks). Financial capital: report revenue, profitability, reinvestment and return. (1) Manufactured capital: show how mines, machinery and plants contribute to production. (1) Intellectual capital: disclose geological expertise, extraction technology and process innovation. (0.5) Human capital: safety programmes, training, skills retention and welfare. (0.5) Social and relationship capital: community engagement, compensation processes and social licence to operate.
(1) Natural capital, the most important for extractive industries: land disturbance, water use, emissions, biodiversity restoration and waste. (1)
(b) Benefits (5 marks, any five at 1). Better transparency and stakeholder trust. Better risk management of social, environmental and regulatory risks. Better access to capital. A stronger long-term strategy. Competitive advantage and reputation. Improved decision-making and resource allocation.
Pathfinder on integrated reporting and the capitals
These are the ICAN Pathfinder questions that test this topic. ICAN owns the questions and the suggested solutions, so we point you to them and do not copy them. Open your Pathfinder, attempt each question under exam conditions, then check your answer against the notes above.
The marking guide gives 2.5 marks for how the concept of multiple capitals can be applied and 2.5 marks for the benefits. The suggested solution takes each of the six capitals in turn, stresses natural capital for extractive industries, and lists benefits such as transparency, risk management, access to capital and better decisions. The capitals section and practice question 13 follow that answer.
Revise first: The six capitals
The syllabus lists integrated thinking and multiple capitals as employability and technology skills in business reporting, so a question could ask you to apply the capitals to any company. The worked example shows the method: capital by capital, then connectivity.
Revise first: Worked example: applying the capitals to a bottling company
Source: ICAN Pathfinder, Strategic Business Reporting. Diets covered: November Diet, 2025 and May Diet, 2026.
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