The development of Integrated Reporting as a Tool for External Communication: A case study of Volvo Group and SKF

Abstract

Background: Integrated Reporting is the initiative to respond to the concerns about annual reports’ relevance for long-term decision-making. This has influenced the discussions about integrating connectivity of ESG issues into information about the Business Model, in order to communicate towards investors and other stakeholders about a company’s sustainable development. Purpose: The purpose is to study the development of Integrated Reporting used as a tool for external communication resulting in an explanation of what possible reasons are behind the companies’ motivations of the characteristics inherent in the development. Method: Empirical findings were generated through an inductive content analysis of annual reports and interviews with Volvo Group and SKF. Results and Conclusions: Integrated Reporting is used for communicating about companies’ activities and value creation process through the Business Model in order to achieve transparency. Information is presented in a narrative way and reduces the information asymmetry for efficient decision making of investors and other stakeholders. Yet, Integrated Reporting has increased the amount of pages due to increased attention towards all stakeholders. Although, it was found that Integrated Reporting mainly takes the role of traditional corporate reporting and focus on the investors.