Change In Integration Of Financial Performance Disclosure Accounting Essay

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Investment community is understandably preoccupied with determination to bring assured transparency within organization's operations. To get companies more transparent, and to win stakeholder's trust, companies need to communicate their actions and level of commitment to incorporate sustainability into every organizational decision. And companies communicate with their stakeholders through issuing various internal and external reports. This research paper proposes that to bring assured transparency and to win stakeholder trust, companies should integrate financial and non-financial performance reports and thus should produce One Report. The paper presents an annotated literature review which covers conceptual foundations of One Report, drivers, prospective benefits to both stakeholders as well as to companies, and prospective challenges that companies can face in the adoption of One Report. Survey has been conducted to assess important factors that practitioners consider while making judgment about a company, useful metrics to be included in an annual report and prospective benefits on one report. Descriptive statistical techniques are employed and on the basis of findings, it has been discussed that how business schools can incorporate the sustainability topic into the curriculum. A roadmap for adoption of one report has also been suggested. Finally, managerial implications and future research areas have been identified.

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Keywords: Integrated Reporting, One Report, Non-Financial Reporting, Annual Reports, Corporate Reporting, Reporting Initiatives.

Introduction to the Study

The era of global recession is not showing any signs to come to a close. However, some economies are showing the signs of growth. And thus governments, organizations, associations and communities are now trying to find out the reasons of this collapse of financial system and then how to cope with such challenges in the future. Two aspects have emerged from this scenario. One is Measurement of each organizational activity and second is Transparency (Eccles, & Krzus, 2010). Measurement of each activity means justifying every investment or spending with outcome, while transparency inside the organizations includes not only clearness and lucidity but communicating your level and actions of transparency. In short, executive's acceptance of being held accountable and thus communicating every action for sustainable results.

There is a shift from "survival of the fittest" to "survival of the most informed". And four drivers accelerating the pace of this shift are globalization, instant communications, organized civil society and now a crisis in trust. These drivers have changed the rules of the game. Now the world wants something holistic and that's why terms like Green management, Green marketing, Sustainability, and Holistic Business Models have been introduced (KPMG International, 2010). To better inform every stakeholder, several companies have come up with issuing Financial reports, and sustainability reports based on triple bottom line principle which captures an expanded field of values and criteria for measuring organizational (and societal) success: economic, ecological and social. This study seeks to examine the prospects whether managers are willing to adapt or adopt this upcoming trend or not? And if yes then what could be the challenges or benefits associated with this change? In the end, scale of change in organizations about corporate reporting would also be explored.

As integrated report is quite a new and emerging phenomenon, however, sufficient research is not available, so documents from different domains have been reviewed, a review of case studies has been conducted, and survey method, interviews and document reviewing has been adopted for data collection. Following the data collection, the study seeks to identify the possible outcomes and that how they can be used to help accelerate the change process and how can they be utilized by the right minds at the right time.

Background of the Study

With the impressive development of information communication technology (ICT), and the need for increased competitiveness in organizations and desire for differentiation from the rivals, the increased use of computing power has been observed to produce unified reports which combined different views and results of the enterprise units into one place (Robert, 2007). The evolution of integrated reporting over the years has been quite significant. From the starting point of mandatory annual reports, corporate reporting took a further step ahead and started issuing environmental reports. It further adopted a more holistic approach with an initiation of the sustainability reporting which was based on Triple Bottom Line Principle. Triple Bottom-Line Principle actually focuses on the development of three aspects, economic, social and environment, and it was pioneered by many large multinational corporations like Shell in 1992 (Oates, 2009). The latest development in corporate reporting is Integrated Report, which is also referred as One Report.

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Integrated report or one report refers to a document either online or printed that contains the integrated representation of financial or non-financial results of a company's performance (Eccles & Krzus, 2010). In the King Code of Governance for South Africa, 2009 (also known as King III Report), integrated reporting is referred to as: "A key challenge for leadership is to make sustainability issues mainstream. Strategy, risk, performance and sustainability have become inseparable; hence the phrase 'integrated reporting' which is used throughout this Report" (Iodsa, 2009, p. 11).

Companies that have incorporated integrated reports in their system include world's largest chemical company (BASF), one of the largest electronics company (Phillips), Novo Nordisk, United Technologies Corporation (UTC) and American Electric Power (AEP). In 2008, United Technologies Corporation was the first Dow Jones Industrial Average member to produce an integrated report. Denmark was the very first country which made it mandatory for all companies to issue an Integrated Report (Danish Ministry of Trade & Investment, 2006). The prime minister of UK, Mr. Gordon Brown also announced the same order in 2005 but cancelled it later because of cost cutting strategy. However, it has been re-announced in 2009. Johannesburg Stock Exchange (JSE) has also declared integrated Report as a new mandatory requirement for all listed companies ("An Integrated Report" 2009).

Gap identification

In the context of Pakistan, to fill the gap regarding One Report phenomenon, an exploratory research has been conducted to refine the idea and its feasibility. Then quantitative data collection instrument has been used to assess managerial understanding and adaptability to accept or prioritize the subject matter. In the whole process, annual reports of several companies, integrated reports of some companies have been reviewed to further explain the differences between the two formats.

Economy of Pakistan

Pakistan is a developing country and according to World Bank, its economy has been ranked as 25th largest economy on the basis of its purchasing power (The Heritage, 2010). However, the country remained on the breadline because of many domestic problems like market turbulence, lack of trust of governments, internal political disturbances, market turbulence and trifling foreign direct investment, since independence. However, a rising tendency in spending towards development projects has been witnessed in recent years, and thus the country's poverty levels reduced by 10% from the year 2001 to 2007.

The economy grew from 2004 to 2007 because of a shift in GDP from 5 to 8%. This economy growth is attributed towards the growth of industrial and services sector development. However, in 2007, the Pakistani currency depreciated because of political and economic instability. The 2008 global economic recession has also affected the growth of economy. Inflation remains the top concern among the public, which has jumped from 7.7% in 2007 to 20.3% in 2008, but fell to 14.2% in 2009 and has further decreased to 11.17% in the first quarter of 2010 (Federal Bureau of Statistics, 2010). Concluding from all above discussion, economic conditions in Pakistan, now a days, are because of decreasing investors trust, lack of transparency, and market turbulence.

Corporate Reporting Initiatives in Pakistan

In Pakistan, many companies and MNCs are regularly issuing environmental reports. However, these reports typically include only positive impacts and company strategies and do not include the negative ones. Many local companies or firms operating in the surgical instruments manufacturing industry, sporting goods industry and carpet industry are also partnering with NGOs, UN agencies and governmental agencies to promote their economic and social goals and report them periodically. These firms are also providing health-related facilities, protecting bio-diversity, and improving labor standards of many local communities.

Many specialized organizations are now working to propose the concept of corporate social reporting (CSR) to multinational and domestic companies operating in Pakistan (Rafiq, 2009). The organizations encouraging companies to produce social and environmental reports along with financial reports include Global Compact Pakistan, CSR Pakistan, and the Pakistan Center for Philanthropy (PCP), and Responsible Business Initiative (RBI.

In general, there is no doubt about it that MNCs and big national corporations have been reporting so far. But majority of the firms that fall in small and medium enterprises category have never even learnt the corporate social responsibility reporting notion at all, and thus they still need to go a long way towards Integrated Reporting Initiative (Rafiq, 2009).

Purpose and Scope of the Study

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The explicit purpose of this research study is to present a brief literature review on One Report and to assess corporate manager's level of acceptability in adopting the integrated reporting initiative. The main purpose of this research is to offer a complete set of benefits and challenges that corporations will be facing in Pakistan.

As far as the Scope of this study is concerned, KPMG international survey of Corporate responsibility reporting 2008 noted that 79% of the world's biggest 250 companies now produce integrated social reports that is an increase of 52% since 2005 (Oates, 2009, p. 13).

Research Questions

This research study is intended to explore the basic perception and level of acceptability of practitioners regarding integration of financial and non-financial performance reports. So, 3 questions were devised. First question was measuring the judgment style of practitioners regarding any company.

Question 1: What are the most important factors a practitioner take into account when making a judgment about a company?

The second question explored usefulness of certain measures of assurance of transparency which are actually in practice in many other countries and by many multinational companies.

Question 2: What are the most useful measures of assurance of transparency that shall be included into the company's annual report?

The third question was aimed at exploring the benefits which could be obtained by integrating financial and non-financial information? And will they contribute to building shareholder value?

Question 3: What could be the benefits of integrating financial and non-financial information disclosure in an integrated report (one report)? Will they contribute in building shareholder value?

Literature Review

Companies have been publishing annual reports representing their financial strengths or upcoming projects. But the dilemma with such reports has been very visible that they were only showing financial aspects of the organization. On the other side, the business world demanded more than that. The whole business world has been talking about long-term strategies having long-lasting positive impact. But, before going towards a thorough discussion of integrated corporate reporting, we need to discuss corporate reporting in its traditional function.

Objectives of Corporate Reporting

The primary objective of corporate reporting is to inform shareholders about how successful the company has been in generating value and financial returns, and to enable them to assess its prospects for generating future value and returns (Willis, 2007). Corporate reporting also predicts the decision making trends of both existing and potential investors.

Another objective is to enable all stakeholders, whether or not shareholders-to assess the extent to which the company has discharged its responsibilities and to make decisions or action plans or take actions accordingly (Willis, 2007). Corporate reporting can also function to enable all connecting nodes of accountability between stakeholders and the company. However, in case of shareholders, there is a clear accountability vested in Boards of Directors and management for satisfactory stewardship of invested funds and legally enshrined expectations that the directors will be active in the best interests of the corporation (Willis, 2007; Philips, 2003). The availability of financial information is essential to enable all investors to make informed decisions on a level playing field.

Conceptual Foundation of Integration of non-financial and financial information

While integrated reporting is embryonic, non-financial reporting is approaching pre-adolescence (White, 2005, p. 2). More than 2000 companies around the globe are publishing more than 25000 different citizenship, environment, sustainability, social, and financial reports (Oates, 2009), while above 40 % use the framework introduced by GRI (White, 2005). The quality, rigorness, and completeness of corporate reporting has gone through dramatic enhancement relative to just 10 years ago. Who would have expected that an apparel brand like St. Michael or company like Nike would disclose a complete list of its 750+ contract factories in its 2004 corporate social responsibility report or that companies like Nestle, Mobilink, PTCL, Coca Cola, or commercial banks would be participating and then communicating their efforts of helping earthquake or 2010 flood victims of Pakistan. It is a fast-moving, dynamic movement that looks for more like a race to-the-top than a race-to-the-bottom. The former days of reporting for public relations or product and service promotion are quickly coming to a close. By all indications, non-financial reporting is on a trajectory to becoming standard business practice in the early 21st century.

Non-financial information disclosure through corporate reporting goes back to the 1970s, when companies started to include environmental information in the annual reports (Marlin & Marlin, 2003). However, these reports contained little detailed performance information. The trend toward broader reporting started in the 1990s as the concept of sustainable development, introduced by Brundtland commission, quickly gained huge recognition among both business and public sectors (Bruntland, 1987).

SustainAbility Institute introduced the concept of Triple Bottom Line (TBL) in 1994. The concept of Triple bottom line stresses that a company should be responsible in considering the concerns of stakeholders instead of shareholders. In this case, stakeholders refers to all individuals who are influenced, either directly or indirectly, by the actions of the firm. The triple bottom line concept includes three pillars which are "social, economic and environmental". Meanwhile, Kaplan & Norton (1992) introduced the balanced scorecard which contains a set of measures or metrics that adopts a holistic approach and allows for an integrated view of company performance. It was developed largely for internal management and reporting purposes, although it is relevant for external reporting purposes as well (Eccles & Krzus, 2010, p. 80).

Global Reporting Initiative and Price Waters Cooper began their work at about the same time in the late 1990s but each had different focus. The goal of the Global Reporting Initiative (GRI) was to develop a reporting framework for providing stakeholders with applicable information regarding a company's economic, environmental, and social performance. In contrast, the PwC Value Reporting Framework (now called CorporateReporting) was focused on identifying information in which analysts, investors, and chief financial officers were interested for making investment decisions that went beyond the required financial information but with little attention to ESG factors (Eccles & Krzus, 2010, p. 80). It is an approach for measuring and managing corporate performance and structuring communications about the performance. It consists of four categories of Information; Market Overview, Strategy, Value creating activities, and Financial Performance (Eccles & Keegan, 2001).

So far, many frameworks have been proposed on how to integrate non-financial information with financial reporting. Institute of chartered accountants in England and Wales (ICAEW) issued a report in 2003 containing summaries of 11 proposed corporate reporting models dating back more than 10 years.

A complete agenda for integrated reporting was proposed by Allen White in 2005. He presented several drivers and the prospective approaches to integrate non-financial reporting. He proposed six core elements of an integrated reporting approach: Leadership, Benchmarking, execution, engagement, monitoring, and assurance (White, 2005). Vancity (2005) reviewed 12 companies producing integrated reports and discussed different dimensions through exploratory research. Several benefits, opportunities and challenges were proposed. However, the companies that decide to integrate their reports are going to adopt the best way to reflect their Holistic management approach (Vancity, 2005, p. 15).

A major and one of the most prominent corporate reporting model is one which is based on Corporation 20/20 principles of Governance. The corporation 20/20 model suggests integrating financial and non-financial information in one report (Willis, 2007). It envisioned a new corporate reporting framework that serves multiple stakeholders by containing a statement of how wealth has been distributed to those who helped create it (Willis, 2007).

Multinational corporations (MNCs) realized this new transformation wave in corporate reporting and quickly started adopting it and thus 3,400 Corporate Responsibility reports got published during 2008 while 23,000 reports profiled on corporateRegister.com (Scott, 2009). Amount of Integrated reports being published has grown from only 7 to 186 during the timeline of 2005-2009, while uptake of GRI has grown from 8% in 2003 to 38 % in 2009 (CorporateRegister, 2010).

Drivers

Bob Massie, Founding Chair of GRI Steering Committee, once said "We all know that a corporation… was an organization that pulled in resources, transformed them, and emitted products, knowledge, and waste, and that only some of inputs and outputs were captured by the form of measurement we refer to as accounting. As a result, our idea of what it is to create wealth-real, lasting wealth, genuine, enduring capital-is hopelessly primitive and unsophisticated" (as cited in Eccles, & Krzus, 2010).

Certain Forces have been driving this wave of transformation in corporate reporting. These drivers include a range of different competencies, action, and liabilities (Slater & Gilbert, 2004). One of the most important and influential force is growing internal understanding and support for sustainability. Employees, suppliers, partners, competitors, customers, clients, governments, Not-for-Profit organizations, NGOs, and many independent institutions are forcing companies to develop sustainable business policies.

The accountability failures at Enron, WorldCom, and Tyco in United States, and Parmalat and ABB in Europe have accelerated the need to include non-financial information like measurement of the outcomes of each organizational activity or decision, management analysis, strategic orientations and action plans into the annual reports (White, 2005).

For investors, current reporting does not facilitate them with information on the intangible assets that today account for well over half of the market's capitalization. Investors are more interested in key performance indicators (KPIs) both financial and non-financial related while non-financial KPIs are the area where most companies struggle but it is the most important to restore trust (Farris et al., 2010).

The new-style integrated corporate reporting would provide relevant, reliable and concrete information that various stakeholders could use in deciding whether they need to take issue with company regarding something of concern and if so, then what could be most appropriate plan of action (White, 2005).

Prospective Benefits of integrating Non-financial with Financial information

Integrating Financial and Non-financial Information Disclosure possesses the potential to significantly change how companies operate and investors think, shifting the focus of thinking about short-term goals to the development of long-term strategy and a very strong commitment of attaining sustainable Corporate and Societal Vision (Eccles & Krzus, 2010).

Value to Stakeholders

Integrated One or even Dual reports can communicate company's current performance, from positive and negative, and thus can set the stage for the better future because investors, financial analysts, employees, social activists, and most importantly customers have prime interests in it (Vancity, 2005; Eccles & Krzus, 2010). Through Integrated reporting, relationship between financial and Non-financial information becomes more apparent which result in facilitating stakeholders with improved information regarding company's performance and how it has been achieved (White, 2005).

Disclosure of how companies operate can lead to creation of an internal discipline necessary for incorporating sustainable thinking into company's strategy and operations; to better company understanding that governance, strategy, and sustainability are inseparable (Eccles & Krzus, 2010); to acknowledgement that company is responsive to the risk and opportunities created by the need to ensure a sustainable society; and to enhanced corporate disclosure and transparency (Eccles & Krzus, 2010).

Value to the company

By enthusiastically practicing integrated reporting, companies can look forward to several major operational benefits. Utilizing internet as mood of presenting or online publishing the Integrated Report, companies can definitely cut some of the publishing and printing cost (Vancity, 2005). There will be greater clarity about relationships and commitments. As companies will be having a better understanding of financial information through and with the support of non-financial information and through modeling and analysis, and through improvisation in internal systems and measurement methodologies, it can also reevaluate its categories of risk, opportunity and choices (Eccles & Krzus, 2010). And thus much better decisions can be made when concrete data regarding quantitative and qualitative performance metrics is available (Farris et al, 2010). As accountability increases because of enhanced performance measurement criteria, reputational risks decreases which in turn grabs the attention of not only investors but of customers as well (Oates, 2009).

Lastly, deeper engagement, and growing commitment ensures that company's strategy is attuned to customer and societal needs and which in return increases the likelihood that a company is sustainable over the long-run.

Prospective Challenges in adopting Integration of Financial and non-financial information

Many executives and companies consider integrating financial and non-financial information quite difficult, though they realize and admit that it can bring significant change with implications for several business areas like communication, investor relations, finance, sustainability, and stakeholders (Vancity, 2005, p. 8). They are of this opinion because, as they consider, quantifying each organizational activity into a measurable outcome is very difficult and time consuming. However, the problem is fear of accountability and increased responsibility, and commitment. It needs senior management support to succeed in this arena.

Time pressures and data gathering can also make this Integration a bit challenging. Pulling together all the data and converting it into financial and non-financial information through thorough analysis and then putting it into annual reports as par deadlines is a significant challenge. Hewlett Packard and Novo Nordisk overcame this obstacle in stages, by first producing a separate sustainability report that was released at the same time as the annual report. Once the data collection and drafting processes were on the same timetable, combining the reports was not such a stretch (Vancity, 2005; Eccles & Krzus, 2010). PepsiCo provided an overview of data in the printed report and put supporting documentation on an interactive website. The website information is updated throughout the year. This allows PepsiCo to spread its measurement and reporting effort rather than concentrating all the resources on one deadline (Vancity, 2005).

As a lot of financial information is supported by narrative analysis, report size was noted as a challenge by both reporters and other exporters (Scott, 2009). There was concern among the other experts that readership of reports could decline if reports become too large. Users who are interested in just one area, such as traditional financial analysts and some labor and environmental groups may find it harder to locate the information they need (Vancity, 2005; Scott, 2009). Other experts were concerned about the potential loss of information if reporting companies get serious about editing their reports for size (Vancity, 2005). One solution which has been adopted by a lot of companies around the Globe is to post separate section of annual reports so that readers can download the relevant one. Another solution could be the better use of on-line reporting, which will mean interactive formats instead of large PDF downloads.

Integration can also require new set of skills. As no standard guidelines are available regarding the format of One Report. Integrated reporters tussle with how to make their reporting persuasive and relevant to readers, and make available the data they expect, without overwhelming them. Novo Nordisk has selected a magazine format that is arranged thematically instead of the traditional triple bottom lines. That is one of the big reason that Novo Nordisk has again been awarded as Best Integrated Report of 2010 (CorporateRegister, 2010). Data on the website and in summary tables can still be accessed by category for those who are interested in specific issues.

Non-financial information disclosure requires narrative analysis presented after measuring each organizational performance metric like Marketing Productivity metrics, Brand Audit, Customer Equity, Employee satisfaction, organizational efficiency, and other metrics related to Financial performance (Farris, et al., 2010). It is observed that most of the finance and marketing managers have different perceptions regarding marketing performance measurement. Finance managers consider it less important and more difficult to measure marketing productivity, brand equity, and customer equity as compared to marketing managers who consider it of significant importance (Azam & Qamar, 2010). So, managers need to be trained regarding measurement concepts and procedure so that a very concrete analysis can be presented.

Standardization & Formats

There are a total of 142 country standards or laws with some form of sustainability-related and narrative reporting requirements are available, while 65 % of these standards can be classified as mandatory and 35 % can be classified as Voluntary (KPMG, GRI, UNEP, & UCGA, 2010). A total of 16 standards with some form of reporting requirement at the global and regional level; and 14 assurance standards have been introduced so far. But GRI is the most prominent and mostly adopted one (Eccles & Krzus, 2010).

GRI's G3 Guidelines

The Global Reporting Initiative (GRI) produces one of the world's most established standards for sustainability reporting. As of January 2009, more than 1,500 organizations from 60 countries use the Guidelines to produce their sustainability reports (www.globalreporting.org). GRI Guidelines apply to corporate businesses, public agencies, smaller enterprises, NGOs, industry groups and others.

The Global Reporting Initiative (GRI) is working towards a global application of its sustainability reporting framework, which is already widely used and demonstrates continuous improvement through its network-based structure (Global Reporting, 2009). The hallmarks of GRI's framework are bringing reliability and transparency in the sustainability information exchange. The baseline for sustainability reporting implementing GRI techniques are its Guidelines, and possess applicability no matter where, how large or what industry or organization currently engages in (Eccles & Krzus, 2010).

Figure : G3 Reporting Framework.

What Investors Want?

There are two approaches investors employ while evaluating stocks. First approach is fundamental analysis while the second approach is technical analysis. Fundamental stock analysts usually focus on the ability of any company to grow and make it profitable in the future (Philips, 2003; (Reilly & Brown, 1999). Fundamental analysts are more concerned with profitability the company has earned in the past, funds it has borrowed from the market, dividend it has paid out to investors, managerial capabilities, and certain factors affecting the long-term profitability of the business (Reilly & Brown, 1999, p. 262). In considering the capability of its managers, a fundamental analyst might consider the qualifications of a new Chief Executive Officer (CEO). If the new CEO has been appointed from a company which he developed through better strategies and made it more profitable, and he would be equally contributing to the present one. This could be an encouraging point of interest for the fundamental analyst (Reilly & Brown, 1999).

On the other side, technical analysts focus on fluctuations of stock prices and how many company shares are traded daily (http://www.teenvestor.com). technical analysts are concerned with charting the up-and-down movements of stock prices of any particular company. By looking at the pattern of fluctuations, good technical analysts use to forecast to which direction stock prices will move (http://www.teenvestor.com).

The Report Leadership Group, comprising of the Chartered Institute of Management Accountants (CIMA), PricewaterhouseCoopers (PwC), and Radley Yeldar, has suggested certain ways about how companies can simplify and improve their external communications (Eccles & Krzus, 2010, p. 64-65). Table 1 summarizes the group's recommendations regarding improving the structure, navigation, and messaging of business reports, based on research into the needs of investors. Report Leadership (2006) recommended that nonfinancial information on strategy, the company's value creation activities, the business environment, and key performance indicators should be included.

Table : What Investors Want

Structure

Navigation

Messaging

Some form of narrative sequence with a beginning, a middle, and an end

Clear linkage from markets to strategy to key performance indicators to future goals

An integrated structure:

Do not mention one thing as being important and then fail to mention it anywhere else in the report

Do not hide important information away at the back of the report

Do not suddenly introduce a new idea and say it is key to the business halfway through the annual report

Clarity

Messages backed up by an evidence

Plain speaking

Plain English

Balanced discussion of performance

A good table of contents or even an index

Summaries of the information included in each section or even paper or spread

Individual sections clearly delineated

Clear linkage between the narrative section of the annual report and the financial statements

Good navigation aids on each page/spread

Note: From One Report p. 65, by Eccles & Krzus, 2010, New Jersey: Harvard University Press.

Emerging Trends

The Table 1 presents certain challenges that companies face in developing the annual integrated reports. However, companies are adopting certain ways to meet the exceeding expectations of stakeholders. Novo Nordisk has selected a 4-coloured magazine format which is arranged thematically, while data and tables can still be accessed by category on the website.

HP, Novo Nordisk, and Novozymes overcame the challenges of time pressures and data gathering in stages. They produced sustainability reports at the same time as the annual report and then combined them into an integrated one report. Navigation between the data was made easier by uploading the annual reports on websites in both PDF and HTML versions. Chapter-by-chapter modules are also provided for the individuals who require very specific information. Virgin media Inc won the Openness and Honesty award in 2009 through publishing its Responsibility report. This award was for the report which came clean, telling both the good and the bad news, and which convinced the audience that this is a balanced picture of the company (Corporateregister, 2010).

The Brazilian cosmetics, fragrances, and personal hygiene company Natura is a very good example of a company that sees value in a carefully crafted annual One Report. At the same time, it sees this report as simply one piece of its overall approach to integrated reporting, described in the section titled "Natura" (Eccles & Krzus, 2010, p. 15). Annual report of Natura for year 2009 is a slim 91-page four-color publication that makes effective use of photographs, diagrams, and graphics. The company clearly sees the report as an important way of presenting its purpose and view of the role of business in society as it says "Our Reason for being is to create and sell products and services that promote well-being/being well" (Natura, 2009, p. 3). Citing Aristotle, Corbett & Connors (1975) outline three ways in which people are persuaded: "(1) by the appeal to their reason (logos); (2) by the appeal to their emotions (pathos); (3) by the appeal of our personality or character (ethos)" (as cited in Eccles, G., & Krzus, 2010). Natura uses all three of these throughout its annual report. Persuasion of the audience can also be achieved through design of the annual report.

Annual report of Natura (2009) demonstrates the benefits of a physical, thoughtfully designed document that obviously has the reader in mind. Textual and numerical information are presented with a minimalist appeal, presenting Natura as a company whose products are made with simple, natural ingredients (as cited in Eccles et al., 2010, p. 17). The company includes both photographic imagery and abstractive, illustrative designs, making this an excellent example of how One Report can incorporate aesthetic and practical considerations (as cited in Eccles & Krzus, 2010, p. 17).

As annual report of Natura represents, One Report is a document as well as utilizing technology to facilitate dialogue and engagement with all stakeholders. The companies can both involve numbers, words, and images. One Report makes use of many different media formats to present a holistic view of the company to all of its stakeholders.