TOWARDS INTEGRATED REPORTING Communicating ... - The IIRC

TOWARDS INTEGRATED REPORTINGCommunicating Value in the 21st Century

ContentsAbout this Discussion Paper 1Summary 2What is Integrated Reporting?Why do We Need Integrated Reporting?An International FrameworkFuture DirectionYour Comments RequestedThe World has Changed – Reporting Must Too 4Towards Integrated Reporting 6Integrated Reporting DefinedBuilding on Developments to DateAn International Integrated Reporting Framework 8How is Integrated Reporting Different?Business Model and Value CreationThe Building BlocksGuiding PrinciplesContent ElementsTowards Integrated Reporting – Innovation in ActionWhat will Integrated Reporting Mean for Me? 20Benefits, Challenges and ResponsesReporting Organization PerspectiveInvestor PerspectivePolicy-maker, Regulator and Standard-setter PerspectiveOther PerspectivesFuture Direction 25Summary of Consultation Questions 26Acknowledgements and Endnotes 28MANAGEMENT COMMENTARYGOVERNANCE AND REMUNERATION REPORTINGwww.theiirc.orgFINANCIAL STATEMENTSSUSTAINABILITY REPORTING

ABOUT THIS DISCUSSION PAPERThe International Integrated Reporting Committee (IIRC) hasbrought together world leaders from the corporate, investment,accounting, securities, regulatory, academic, civil society andstandard-setting sectors to develop a new approach to reporting.This approach, Integrated Reporting, will meet the needs of the21st century. It builds on the foundations of financial, managementcommentary, governance and remuneration, and sustainabilityreporting in a way that reflects their interdependence.The IIRC aims to forge a global consensus on the direction in whichreporting needs to evolve, creating a framework for reportingthat is better able to accommodate complexity, and, in so doing,brings together the different strands of reporting into a coherent,integrated whole.This Discussion Paper considers the rationale behind the movetowards Integrated Reporting, offers initial proposals for thedevelopment of an International Integrated Reporting Frameworkand outlines the next steps towards its creation and adoption,including the publication of an Exposure Draft in 2012. Itspurpose is to prompt input from all those with a stake inimproved reporting, including both producers and users of reports.Your answers to the Consultation Questions in this Discussion Paper, and anyother comments you would like to make, will be important to us in refining theseproposals. They should be submitted to dpresponses@theiirc.org or online atwww.theiirc.org. Please identify in your response the organization to whichyou belong and where it is located. All comments received will be considereda matter of public record and will be posted on www.theiirc.org.Comments should be submitted by Wednesday 14th December 2011.You can register at www.theiirc.org to be notified when additional informationis published, when regional roundtables or webinars are held or for informationabout the IIRC Pilot Programme.Copyright © September 2011 by the International Integrated Reporting Committee. All rights reserved. Permission is granted to make copies of this work to achievemaximum exposure and feedback provided that each copy bears the following credit line: Copyright © September 2011 by the International Integrated ReportingCommittee. All rights reserved. Used with permission of the International Integrated Reporting Committee. Permission is granted to make copies of this work toachieve maximum exposure and feedback.Towards Integrated Reporting 1

The initial focus is on reporting by larger companies and onthe needs of their investors. The Framework will help to elicitconsistent reporting by organizations, provide broad parametersfor policy-makers and regulators and provide a focus forharmonizing reporting standards.The building blocksFive Guiding Principles underpin the preparation of anIntegrated Report.• Strategic focus• Connectivity of information• Future orientation• Responsiveness and stakeholder inclusiveness• Conciseness, reliability and materialityThese Principles should be applied in determining the contentof an Integrated Report, based on the key Content Elementssummarized below. The presentation of the Elements shouldmake the interconnections between them apparent.• Organizational overview and business model• Operating context, including risks and opportunities• Strategic objectives and strategies to achieve thoseobjectives• Governance and remuneration• Performance• Future outlookWho is the IIRC?The International Integrated Reporting Committee (IIRC) isan international cross-section of leaders from the corporate,investment, accounting, securities, regulatory, academic, civilsociety and standard-setting sectors. See page 28 for a listof members.Future DirectionThe development of Integrated Reporting is designed to enhanceand consolidate existing reporting practices and, throughcollaboration, consultation and experimentation, to movetowards a reporting framework that provides the informationneeded to assess organizational value in the 21st century.The next steps that the IIRC will take in this direction arelisted below.• Undertake a Pilot Programme to encourage experimentationand innovation among companies and investors.• Develop an International Integrated Reporting FrameworkExposure Draft, reflecting responses received to thisDiscussion Paper and the experience gained from the firstyear of the Pilot Programme.• Work with others to support the development of emergingmeasurement and reporting practices relevant toIntegrated Reporting.• Raise awareness among investors and other stakeholdersand encourage organizations to adopt and contribute tothe evolution of Integrated Reporting.• Explore opportunities for harmonizing reportingrequirements within and across jurisdictions.• Develop institutional arrangements for the ongoinggovernance of Integrated Reporting.Your Comments RequestedPlease join us in this unique effort to develop an overarchingInternational Integrated Reporting Framework by providingfeedback on this Discussion Paper. Your answers to theConsultation Questions in this Discussion Paper, and any othercomments you would like to make, should be submitted todpresponses@theiirc.org or online at www.theiirc.org. For thepurpose of analysis, you are asked to identify the organizationto which you belong and where it is located. All commentsreceived will be considered a matter of public record and willbe posted on www.theiirc.org.Comments should be submitted by Wednesday 14thDecember 2011.Towards Integrated Reporting 3

THE WORLD HAS CHANGED –REPORTING MUST TOOWhile the architecture necessary to support changing information needs is developing,many currently perceive a reporting landscape of confusion, clutter and fragmentation.The world has changed due to globalization and resultinginterdependencies in economies and supply chains, advancesin technology, rapid population growth and increasing globalconsumption. This has had a significant impact on the quality,availability and price of resources, including water, food andenergy. It also puts increasing pressure on ecosystems that areessential to the economy and society.This has political, social and commercial implications. Businessesare being forced to react to these changes in order to remainsuccessful and, in many cases, are developing new businessmodels that recognize the need to innovate and do more with less.The need for a broader information set is clearly demonstratedby the small percentage of market value now explained byphysical and financial assets – down to only 19% in 2009 from83% in 1975. The remainder represents intangible factors, someof which are explained within financial statements, but many ofwhich are not. 1Reporting needs to keep pace. The traditional reportingmodel was developed for an industrial world. Although itcontinues to play a valuable role with respect to stewardship offinancial capital, it nonetheless focuses on a relatively narrowaccount of historical financial performance and of the valuecreationprocess.As business has become more complex and gaps in traditionalreporting have become prominent, new reporting requirementshave been added through a patchwork of laws, regulations,standards, codes, guidance and stock exchange listingrequirements. This has led to an increase in the informationprovided through:• longer and more complex financial reports andmanagement commentaries; 2• increased reporting on governance and remuneration; and• standalone sustainability reporting 3 which has also evolvedrapidly over the past decade.Components of S&P 500 market value10083 68 32806820801981These developments, led by policy-makers, companies andother reporting organizations, investors and civil society, arewelcome reactions designed to elicit the information needed ina changing world. However, while the architecture necessaryto support changing information needs is developing, manycurrently perceive a reporting landscape of confusion, clutterand fragmentation. Much of the information now provided isdisconnected and key disclosure gaps remain.6040322017As a result, although there is evidence that investors recognizethe materiality of non-financial factors, they do not feel thatthe information they have available is adequate for decisionmaking.4 For example, while there is management recognitionthat sustainability issues should be fully integrated into thestrategy and operations of a company (with 96% of CEOs fromthe world’s largest companies expressing this opinion 5 ), only21% of listed companies report any sustainability informationbased on Bloomberg research. 6Physical and financial assetsOther factors1975 1985 1995 2005 2009The percentage of market value represented by physical and financial assets versusintangible factors, some of which are explained within financial statements, but manyof which are not. 1It is not enough to keep on adding more information– the connections need to be made clear and theclutter needs to be removed. Corporate reports arealready long and, in many cases, they are getting longer. Lengthand excessive detail can obscure critical information rather thanaid understanding. 7 Only the most material information shouldbe included in the Integrated Report.4 www.theiirc.org

Key points in this section• The world has changed. Reporting needs to keep pace.• While reporting has expanded and evolved, it has also become increasingly complex.Critical interdependencies are not brought to light and disclosure gaps remain.• It is not enough to keep on adding more information. The connections need to be made clearand the clutter needs to be removed. Only the most material information should be included inthe Integrated Report.• Coordinated, international action is needed now.• The IIRC has brought together key organizations in response.For many organizations, reporting is seen as a legal complianceprocess, rather than as a process for communicating what matters.Furthermore, different strands of reporting have tended to evolveseparately, with additional requirements and information requestsbeing bolted on to the existing model, rather than being integratedinto it. The pressure to keep adding more continues to grow.This has created a complex and overlapping set of disconnecteddisclosures. As a result, critical interdependencies that exist arenot made clear, for example, between:• strategy and risk,• financial and non-financial performance,• governance and performance, and• the organization’s own performance and that of others inits value chain.Coordinated, international action is needed now.The information available to management, investors andother stakeholders, and the way in which it is presented,have a fundamental impact on decision-making. The time hascome to step back and rethink what information is needed toprovide a clear, concise picture of performance, impacts andinterdependencies. Such a picture must:• drive innovation,• be focused on communication and not just compliance, and• support resource allocation decisions that are consistent withsustained value creation and with long-term economic stability.In an increasingly global marketplace, comparability isimportant. Reporting requirements have evolved separately,and differently, in various jurisdictions. This has increased thereporting and administrative burden for the growing numberof organizations that report in more than one jurisdiction. Ithas also resulted in diverging disclosure practices that inhibitinvestors and others from understanding and comparing theinformation they need for decision-making.In the context of financial reporting, international convergencehas been recognized as important, and progress has beenmade towards international standards, for example, throughthe current work on the convergence of International FinancialReporting Standards (IFRS) and U.S. Generally AcceptedAccounting Principles (U.S. GAAP). Nevertheless, many otheraspects of reporting continue to be governed by nationalor regional laws, regulations and stock exchange listingrequirements, and by a mixture of mandatory and voluntarystandards, codes and guidance.The IIRC has brought together key organizations inresponse. The IIRC was established in 2010 in recognition ofthe need to move towards an International Integrated ReportingFramework that is fit-for-purpose for the 21st century.The IIRC seeks to build upon, enhance and support the work thathas been done to date, and is ongoing, to achieve a reportingframework that:• communicates the organization’s strategy, business model,performance and plans against the background of thecontext in which it operates;• provides a coherent framework within which market andregulatory driven reporting requirements can be integrated;• is internationally agreed, so as to encourage convergenceof approach and hence more ready understanding ofinformation presented;• reflects the use of and effect on all of the resources andrelationships or “capitals” (human, natural and social aswell as financial, manufactured and intellectual) on whichthe organization and society depend for prosperity; and• reflects and communicates the interdependencies betweenthe success of the organization and the value it creates forinvestors, employees, customers and, more broadly, society.Q1. (a) Do you believe that action is needed to help improve how organizations representtheir value-creation process? Why/why not?(b) Do you agree that this action should be international in scope? Why/why not?Towards Integrated Reporting 5

TOWARDS INTEGRATED REPORTINGIntegrated Reporting brings together the material information about an organization’sstrategy, governance, performance and prospects in a way that reflects the commercial,social and environmental context within which it operates. It provides a clear andconcise representation of how an organization creates value, now and in the future.Integrated Reporting DefinedIntegrated Reporting brings together the material informationabout an organization’s strategy, governance, performanceand prospects in a way that reflects the commercial, socialand environmental context within which it operates. It providesa clear and concise representation of how an organizationdemonstrates stewardship and how it creates value, now andin the future. Integrated Reporting combines the most materialelements of information currently reported in separate reportingstrands (financial, management commentary, governance andremuneration, and sustainability) in a coherent whole, andimportantly:• shows the connectivity between them; and• explains how they affect the ability of an organization tocreate and sustain value in the short, medium and long term.Integrated Reporting reflects what can be called “integratedthinking” – application of the collective mind of those chargedwith governance (the board of directors or equivalent), and theability of management, to monitor, manage and communicatethe full complexity of the value-creation process, and how thiscontributes to success over time. It will increasingly be throughthis process of “integrated thinking” that organizations areable to create and sustain value. The effective communicationof this process can help investors, and other stakeholders,to understand not only an organization’s past and currentperformance, but also its future resilience.The main output of Integrated Reporting is an IntegratedReport: a single report that the IIRC anticipates will become anorganization’s primary report, replacing rather than addingto existing requirements. Such a report enables evolvingreporting requirements, both market-driven and regulatory, tobe organized into a coherent narrative. An Integrated Reportprovides a clear reference point for other communications,including any specific compliance information, such as investorpresentations, detailed financial information, operational dataand sustainability information. Much of this information mightmove to an online environment, reducing clutter in the primaryreport, which will focus only on the matters that the organizationconsiders most material to long-term success.The evolution of corporate reporting1960 1980FinancialStatementsFinancialStatementsManagementCommentaryEnvironmentalReportingGovernanceandRemunerationQ2. Do you agree with the above definition of Integrated Reporting? Why/why not?6 www.theiirc.org

AN INTERNATIONAL INTEGRATEDREPORTING FRAMEWORKThe Framework will provide high-level guidance to organizations that prepare IntegratedReports, helping to provide consistency of content and approach in a way that demonstratesthe extent to which integrated thinking is occurring within the organization.Key points in this section• The IIRC is developing a Framework to support the future development of reporting.• The Framework will help ensure consistent reporting by organizations, will provide broad parametersfor policy-makers and regulators, and will be a focus for harmonizing reporting standards.• The initial focus is on reporting by larger companies and on the needs of their investors.• An organization’s business model and its ability to create and sustain value in the short, medium andlong term are central themes of the Framework, which includes Guiding Principles and Content Elements.• Integrated Reporting results in a broader explanation of performance than traditional reporting.• It makes visible how the organization uses different capitals (financial, manufactured, human, intellectual,natural and social), its impact on them, and their interdependence.The aim of the International Integrated Reporting Framework is tosupport the development of reporting over the coming decades,centred on how an organization creates and sustains value.This section outlines initial proposals for the development of theFramework, setting out concepts, principles and key elementsaround which it can be built. These proposals offer a startingpoint for discussion, rather than a complete Framework. AnExposure Draft of the Framework is planned for release in 2012.During the comment period for this Discussion Paper, interimguidance material will be made available on the IIRC website.This material will be built upon as further experience is obtainedthrough the IIRC Pilot Programme (see page 24).The Framework will provide high-level guidance to organizationsthat prepare Integrated Reports, helping to provide consistencyof content and approach in a way that demonstrates the extentto which integrated thinking is occurring within the organization.It will also provide policy-makers and regulators with broadparameters within which consistent regulatory reporting regimescan be developed across different jurisdictions. The Frameworkwill be a focal point for the harmonization of current standards.The initial focus is on reporting by larger companies. However,the IIRC expects that the concepts underlying IntegratedReporting will be equally applicable to small- and medium-sizedenterprises, the public sector and not-for-profit organizations.Integrated Reports will meet the needs of a broad range ofstakeholders. Initially, however, the IIRC intends to focus thedevelopment of the Framework on the needs of investors(providers of debt and equity), consistent with the current dutiesof those charged with governance in many jurisdictions.The following pages include:• a summary of the key differences between IntegratedReporting and traditional reporting;• a discussion of the central importance of an organization’sbusiness model and of value creation;• guiding principles for developing an Integrated Report; and• content elements that describe the core information to beincluded in an Integrated Report.Q3. Do you support the development of an International Integrated ReportingFramework? Why/ why not?Q4. (a) Do you agree that the initial focus of Integrated Reporting should be on reportingby larger companies and on the needs of their investors? Why/why not?(b) Do you agree that the concepts underlying Integrated Reporting will beequally applicable to small and medium enterprises, the public sector andnot-for-profit organizations?8 www.theiirc.org

How is Integrated Reporting Different?Thinking Isolated IntegratedBecause traditional reporting occurs in silos, it encourages thinking in silos. Integrated Reporting,on the other hand, reflects, and supports, integrated thinking – monitoring, managing andcommunicating the full complexity of the value creation process and how this contributes to successover time. Integrated Reporting demonstrates the extent to which integrated thinking is occurringwithin the organization.Stewardship Financial capitalAll forms of capitalAn Integrated Report displays an organization’s stewardship not only of financial capital, but alsoof the other “capitals” (manufactured, human, intellectual, natural and social), their interdependenceand how they contribute to success. This broader perspective requires consideration of resourceusage and risks and opportunities along the organization’s full value chain.Focus Past, financialPast and future, connected, strategicAnnual reporting at present is largely focused on past financial performance and financial risks.Other reports and communications may cover other resources and relationships, but they areseldom presented in a connected way, or linked to the organization’s strategic objectives and itsability to create and sustain value in the future.Timeframe Short termShort, medium and long termMuch of the media and regulatory attention in response to the global financial crisis has focusedon “short-termism” as one contributory factor. Although short-term considerations are important inmany ways, placing them in context is also essential. Integrated Reporting specifically factors inshort-, medium- and long-term considerations.Trust Narrow disclosuresGreater transparencyFinancial reporting focuses primarily on a narrow series of mandated disclosures. Although anincreasing number of organizations are improving their transparency, for example, throughvoluntary sustainability reporting, in absolute terms that number is still low. By emphasizingtransparency, for example, covering a broader range of issues and disclosing the positivewith the negative, Integrated Reporting helps to build trust.Adaptive Rule boundResponsive to individual circumstancesToday’s reporting is often said to be too compliance orientated, reducing the scope fororganizations to exercise an appropriate amount of judgement. While a certain level ofcompliance orientation is necessary to ensure consistency and enable comparison, IntegratedReporting offers a principles-based approach that drives greater focus on factors that are materialto particular sectors and organizations. It permits an organization to disclose its unique situationin clear and understandable language.Concise Long and complexConcise and materialLong and complex reports are often impenetrable for many readers. A key objective for IntegratedReporting is to de-clutter the primary report so that it covers, concisely, only the most materialinformation.Technology enabled Paper basedTechnology enabledWhile the internet and XBRL are introducing elements of technological innovation, many corporatereports are still presented as if they were entirely paper based. Integrated Reporting takesadvantage of new and emerging technologies to link information within the primary reportand to facilitate access to further detail online where that is appropriate.Towards Integrated Reporting 9

An International Integrated Reporting Framework (continued)Business Model and Value CreationCentral to Integrated Reporting is the organization’s businessmodel. There is no single, generally accepted definition of theterm “business model”. However, it is often seen as the processby which an organization seeks to create and sustain value.An organization determines its business model through choicesthat typically recognize that value is not created by or withinthe organization alone, but is:• influenced by external factors (including economicconditions, societal issues and technological change) thatpresent risks and opportunities, which create the contextwithin which the organization operates,• co-created through relationships with others (includingemployees, partners, networks, suppliers and customers), and• dependent on the availability, affordability, quality andmanagement of various resources, or “capitals” (financial,manufactured, human, intellectual, natural and social).By describing, and measuring where it is practicable, thematerial components of value creation and, importantly, therelationships between them, Integrated Reporting results in abroader explanation of performance than traditional reporting.In particular, it makes visible all the relevant capitals on whichperformance (past, present and future) depends, how theorganization uses those capitals, and its impact on them, asillustrated by the diagram below. This information is criticalto the effective allocation of scarce resources. It will providea meaningful presentation of the organization’s prospects forlong term resilience and success, and facilitate the informationalneeds of, and assessments by, investors and other stakeholders.Importantly, a reporting framework centred around anorganization’s business model provides a better basis formanagement to explain what really matters, bringing reportingcloser to the way the business is run.Integrated Reporting therefore aims to provide insights about:• significant external factors that affect an organization,• the resources and relationships used and affected bythe organization, and• how the organization’s business model interacts withexternal factors and resources and relationships tocreate and sustain value over time.FinancialManufacturedExternal factorsFinancialManufacturedHumanHumanBusiness modelHow the organization createsand sustains value in the short,medium and long termIntellectualIntellectualNaturalSocialExternal factorsNaturalSocial10 www.theiirc.org

Resources and relationships or “capitals”All organizations depend on a variety of resourcesand relationships for their success. The extent to whichorganizations are running them down or building them uphas an important impact on the availability of the resourcesand the strength of the relationships that support the longtermviability of those organizations. These resources andrelationships can be conceived as different forms of “capital”.The purpose of the following categorization and descriptions,based on various sources and established models, 8 is to helpreaders understand the concepts underlying this DiscussionPaper; it is not intended to be the only way the capitals canbe categorized or described. The extent to which differentorganizations use or impact each of these capitals varies: not allcapitals are equally relevant or applicable to all organizations.Financial capital: The pool of funds that is:• available to the organization for use in the productionof goods or the provision of services, and• obtained through financing, such as debt, equity orgrants, or generated through operations or investments.Manufactured capital: Manufactured physical objects(as distinct from natural physical objects) that are availableto the organization for use in the production of goods or theprovision of services, including:• buildings,• equipment, and• infrastructure (such as roads, ports, bridges and wasteand water treatment plants).Human capital: People’s skills and experience, and theirmotivations to innovate, including their:• ability to understand and implement an organization’sstrategies, and• loyalties and motivations for improving processes,goods and services, including their ability to leadand to collaborate.Intellectual capital: Intangibles that provide competitiveadvantage, including:• intellectual property, such as patents, copyrights,software and organizational systems, proceduresand protocols, and• the intangibles that are associated with the brandand reputation that an organization has developed.Natural capital: Natural capital is an input to theproduction of goods or the provision of services. Anorganization’s activities also impact, positively or negatively,on natural capital. It includes:• water, land, minerals and forests, and• biodiversity and eco-system health.Social capital: The institutions and relationships establishedwithin and between each community, group of stakeholdersand other networks to enhance individual and collective wellbeing.Social capital includes:• common values and behaviours,• key relationships, and the trust and loyalty that anorganization has developed and strives to buildand protect with customers, suppliers and businesspartners, and• an organization’s social licence to operate.• alignment with and support of the organization’sgovernance framework and ethical values such asits recognition of human rights,Q5. Are: (a) the organization’s business model, and (b) its ability to create and sustainvalue in the short, medium and long term, appropriate as central themes for thefuture direction of reporting? Why/why not?Q6. Do you find the concept of multiple capitals helpful in explaining how an organizationcreates and sustains value? Why/why not?Towards Integrated Reporting 11

An International Integrated Reporting Framework (continued)The Building BlocksGuiding Principles – Five guiding principles underpin thepreparation of an Integrated Report (see page 13).• Strategic focus• Connectivity of information• Future orientation• Responsiveness and stakeholder inclusiveness• Conciseness, reliability and materialityContent Elements – The principles should be applied indetermining the content of an Integrated Report, based on thekey elements summarized below. The presentation of the elementsshould make the interconnections between them apparent(see page 14 – 15).• Organizational overview and business model• Operating context, including risks and opportunities• Strategic objectives and strategies to achievethose objectives• Governance and remuneration• Performance• Future outlookConnectivity of informationStrategic focusOperating context,including risks andopportunitiesFuture outlookStrategic objectivesConciseness, reliability and materialityOrganizationaloverview andbusiness modelFuture orientationPerformanceGovernance andremunerationResponsiveness and stakeholder inclusivenessQ7. Do the Guiding Principles identified in the Discussion Paper provide a sound foundation for preparingan Integrated Report – are they collectively appropriate; is each individually appropriate; and are thereother Guiding Principles that should be added? Why/why not?12 www.theiirc.org

Guiding PrinciplesThe following guiding principles underpin the preparation of an Integrated Report, informing the content of the report and howinformation is presented.Strategic focus: An Integrated Report provides insight into theorganization’s strategic objectives, and how those objectivesrelate to its ability to create and sustain value over time and theresources and relationships on which the organization depends.An Integrated Report communicates what is important to theorganization from a strategic perspective. It outlines:• the organization’s strategic objectives;• the strategies it has in place, or plans to implement, in orderto achieve them; and• how they relate to other components of its business model.This may include, for example, highlighting significant newopportunities, risks and dependencies that flow from theorganization’s market position, strategies and business model.It also clearly articulates how the organization uses resources andrelationships. This includes reporting on financial, manufactured,human, intellectual, natural and social capital to the extent eachcontributes materially to the organization’s ability to create andsustain value.Connectivity of information: An Integrated Report showsthe connections between the different components of theorganization’s business model, external factors that affect theorganization, and the various resources and relationships onwhich the organization and its performance depend.Connectivity is central to ensuring that an Integrated Report:• illuminates the changing nature of business decision-making,and the critical linkages in business thinking and activity; and• helps to break down established silos in the wayinformation is reported, and the traditional focus primarilyon financial matters.Examples of connectivity include:• information about how changes in the market environmentimpact strategy;• links between the different elements in the organization’s marketanalysis and its assessment and explanation of risk; and• how strategies link to key performance indicators (KPIs), keyrisk indicators (KRIs) and remuneration.Importantly, an Integrated Report clearly presents the linkagebetween financial performance and the organization’s use of,and impact on, the significant resources and relationships uponwhich it depends.Future orientation: An Integrated Report includesmanagement’s expectations about the future, as well as otherinformation to help report users understand and assess theorganization’s prospects and the uncertainties it faces.Future orientation includes:• how the organization balances short- and long-terminterests;• where the organization expects it will go over time;• how it plans to get there; and• what the critical enablers, challenges and barriers may bealong the way.This involves analyzing:• how sustainable the organization’s business model is;• the relationship between past and future performance; and• the factors that may change that relationship, for example,whether the organization will be able to access theresources it needs at a price it can afford.An Integrated Report may include targets, forecasts, projections,estimates and sensitivity analyses.Responsiveness and stakeholder inclusiveness: An IntegratedReport provides insight into the organization’s relationships withits key stakeholders and how and to what extent the organizationunderstands, takes into account and responds to their needs.Integrated Reporting emphasizes the importance of relationshipswith the organization’s stakeholders.Stakeholders provide useful insights about matters that areimportant to them, including economic, environmental and socialissues. This assists the organization to:• identify material issues;• develop and evaluate strategies; and• manage activities, including strategic and accountableresponses to material issues.An Integrated Report enhances transparency and accountability,which are essential in building trust and resilience, by disclosing:• the nature and quality of the organization’s relationshipswith key stakeholders, such as customers, suppliers,employees and local communities; and• how their issues are understood, taken into account andresponded to.Conciseness, reliability and materiality: An Integrated Reportprovides concise, reliable information that is material to assessingthe organization’s ability to create and sustain value in the short,medium and long term.Senior management and those charged with governance mustexercise judgement in:• distinguishing between information that is material andshould therefore be included in the Integrated Report,and other information that may be relatively static or onlyrelevant to some report users; conciseness is enhancedwhen the latter is included separately on the organization’swebsite or in other forms of communication; and• deciding whether information is sufficiently reliable to beincluded in an Integrated Report.While reliable information needs to be complete, neutral andfree from error, it is recognized that this is seldom, if ever,achievable in every respect, so the objective is to maximizethese qualities to the extent practicable, for example, by ensuringthat any negative issues are as faithfully reported as positiveones. Reliability also encompasses the need for information to becomparable between organizations and consistent for the sameorganization over time. Reliability is enhanced by mechanismssuch as robust stakeholder engagement and independent,external assurance.Towards Integrated Reporting 13

An International Integrated Reporting Framework (continued)Content ElementsAn Integrated Report includes the following Content Elements, answering the respective question posed for each. These elementsare fundamentally linked to each other and are presented in the Integrated Report in a way that makes the interconnections betweenthem apparent, rather than as isolated, standalone sections. Explanations of material changes since prior reporting periods areparticularly important.Organizational overview and business model: What does the organization do and how does it createand sustain value in the short, medium and long term?The Integrated Report provides essential contextby identifying:• the organization’s mission, principal activities,markets, products and services;• its business model, value drivers and criticalstakeholder dependencies; and• its attitude to risk.Operating context, including risks and opportunities: What are the circumstances under which theorganization operates, including the key resources and relationships on which it depends and the key risksand opportunities that it faces?To provide context, an Integrated Report identifies:• the commercial, social and environmentalcontext within which the organization operates,including significant laws and regulationsthat affect the organization’s ability to createand sustain value in the short, medium andlong term;• the resources and relationships that are keyto the organization’s success, including keystakeholders, their legitimate needs, interestsand expectations, and their importance to theorganization; and• the organization’s key risks and opportunities,including those that relate to its relationships andto its impact on, and the continued availability,quality and affordability of, relevant resources.This Content Element builds on the high-leveloverview of the organization and includes:• a more in-depth description of material issues;• the organization’s process for determining whichissues it considers material; and• how the material issues affect the organization’sability to create and sustain value over time(e.g., how the organization integrates keyemerging or escalating risks and opportunitiesinto its strategies).Strategic objectives and strategies to achieve those objectives: Where does the organization want to goand how is it going to get there?An Integrated Report describes the organization’sstrategic objectives and its strategies to achievethose objectives. It sets out how the organization willmeasure achievement and target outcomes for theshort, medium and long term.This discussion builds on the description of theorganizational overview and operating context toprovide report users with an understanding of whatdrives and protects the value of the organization.It identifies:• risk management arrangements related to keyresources and relationships;• the linkage between strategies and other ContentElements; and• what makes the organization unique and ableto realize value in the future, such as the extentto which sustainability considerations havebeen embedded into its strategy to give it acompetitive advantage.14 www.theiirc.org

Governance and remuneration: What is the organization’s governance structure, and how doesgovernance support the strategic objectives of the organization and relate to the organization’s approachto remuneration?An Integrated Report provides insight about theorganization’s oversight and tone at the top. It includes:• an explanation of the organization’s leadershipand strategic decision-making processes,including the skill set of those charged withgovernance;• what actions those charged with governance havetaken to influence the strategic direction of theorganization, including its culture, ethical valuesand relationships with key stakeholders; and• how the remuneration of executives andthose charged with governance is linkedto performance in the short, medium andlong term, including how it is linked to theorganization’s use of and impact on theresources and relationships on whichit depends.Performance: How has the organization performed against its strategic objectives and related strategies?An Integrated Report includes qualitative andquantitative information, including:• KPIs and KRIs regarding the organization’sperformance against its strategic objectivesand related strategies;• the organization’s impacts (both positive andnegative) on the resources and relationshipson which it depends;• the significant external factors impactingperformance; and• how the organization fared against its targets.Information regarding financial performance isintegrated with information regarding performancewith respect to the other capitals. The discussion alsoencompasses how innovation affects the ability of theorganization to create and sustain value.Performance information includes a description of theorganization’s view of its major external economic,environmental and social impacts and risks up anddown the value chain, along with material quantitativeinformation to the extent practicable.While other reports and communications (such asfinancial statements, a sustainability report or detailedwebsite disclosures) may be referenced or linkedfor those report users who want additional detail onvarious aspects of performance, the performancediscussion in an Integrated Report is considerablymore concise and connected. The linkages betweenpast and current performance and between currentperformance and future outlook should be made clear.Future outlook: What opportunities, challenges and uncertainties is the organization likely to encounterin achieving its strategic objectives and what are the resulting implications for its strategies and futureperformance?Future outlook builds on other Content Elements tohighlight anticipated changes over time. It providesinformation, built on sound and transparent analysis,about:• how the organization is currently equipped torespond to the operating context that it is likelyto face in the future,• how the organization balances short- andlong-term interests,• potential repercussions of where theorganization expects it will go in the short,medium and long term,• the actions needed to get there, and• the associated uncertainties.The Integrated Report should identify any realrisks that could have extreme consequences, eventhough the probability of their occurrence might beconsidered quite small.Q8. Do the Content Elements identified in the Discussion Paper provide a sound foundationfor preparing an Integrated Report – are they collectively appropriate; is eachindividually appropriate; and are there other Content Elements that should be added?Why/why not?Towards Integrated Reporting 15

North AmericaLatin AmericaMature EuropeEmerging EuropeRest of the worldAsia Pacific2007200720092008200820092009201020102010Towards Integrated Reporting – Innovation in ActionMany organizations are taking innovative approaches toaspects of reporting that are often consistent with the conceptof Integrated Reporting. Few organizations, if any, however,could claim to have achieved the ideal of Integrated Reporting.Presented on pages 16 – 19 is a small selection of examples ofcurrent innovation. These might not be “perfect” illustrations of allaspects of the Framework in this document and are not intendedto provide definitive guidance; rather, they are presented hereto illustrate reporting innovation in the particular circumstancesof an organization that might be regarded as “good practice”at present. The IIRC Pilot Programme will provide furtheropportunity for experimentation to inform the development of theFramework, and the IIRC also encourages contributions by otherorganizations of innovative examples of good practice.AkzoNobel Report 2010 pp 52 – 53http://www.akzonobel.com/news/reports/2010/annual_report_2010.aspxssrthelfs,ell asGlobal market drivers and developments Concise overview of external context Eco-premium portfolio Recent initiatives:and home sales professional paint2010 interior decoration Decorative paints market overviewprofessional trimpaint Key developments 2010 Our Decorative Paints business are served through a variety of outlets ranging from big box Key figures in € millionsEmployees by region at year-endchains such as The Home Depot, Walmart, B&Q and Leroy DDC(DuluxDecorator Centers) Paint Can Recycling –supplies a full range of interiorSigned a deal with Walmart to become the retailer’s2009 20102009 2010Merlin (serving mainly homeowners) to independent dealers professional paint waste management systemsprimary paint supplier in the US and exterior decoration and(serving both homeowners and professionals) and companyownedstores focused on serving professionals. wall paint. Dulux Trade won contract to paint the London 2012Revenue 4,573 4,968 US and Canada 5,100 5,100protection products for both thesuperior properties for the professional painter.Olympic Games siteEBITDA 487 548 Latin America 1,700 1,800 Key figures in € millionsEmployees by region at year-endEBITDA margin (in %) 10.6 11.0 China 1,200 1,500professional and do-it-yourself Global market drivers and developments Leading coatings supplier for the CommonwealthEBIT 298 343 Other Asian countries 2,000 2,200 Eco-premium portfolioGames in India(DIY) markets, including paints,EBIT margin (in %) 6.5 6.9 The Netherlands 1,000 1,100 Recent Key initiatives: raw materialsPrice driverslacquers and varnishes, as well as and home sales Signed a landmark agreement with the ForestOperating income 133 275 Germany 1,600 1,300 professional paintStewardship CouncilMoving average ROI (in %) 4.7 5.2 Sweden 600 600products for surface preparation 2009 20102009 2010UK 2,200 2,200interior decoration Let’s Color campaign continued to gather momentumOther European countries 5,400 5,100(pre-deco products). professional trimpaintDrivers for buying decision material Presence in China pricesincreased to more than 600 citiesOther regions 1,100 1,100Revenue breakdown by business unit Total 21,900 22,000in %Retailers Market and business characteristics wall paint. The size of the global market for decorative paints is around Revenue 4,573 4,968 US and Canada 5,100 5,100€30 billion. Key raw materialsPrice driversC Product: Eco-premium solutions % of revenueArchitectural coatingsDrivers for buying decision material prices Interior and exterior wall paints and trim paints (lacquers) for RetailersEBITDA 487 548 Latin America 1,700291,800consumers and professionals. A22 B15 15 Woodcare and specialty products EBITDAMarket Market leadershipmarginpositions leadership (in %) positions 10.6 11.0 China 1,200 1,500 and decorationTrade customersEuropeGeo-mix revenue by destination 1st Continental Europeother critical building materials. Key value chains with carbonTrade customersEBITEurope298 343 Other Asian countries 2,000 2,200Northern and Eastern EuropeA Decorative Paints Europe 52 footprint assessmentUK, Ireland and South AfricaB Decorative Paints Americas 31Pre-deco products Fillers, wall treatments, sealants and putties for consumersEBITC Decorative Paints Asia 17Americasmargin 1st (in Continental %) Europe 6.5 6.9 The Netherlands 1,000 1,100and professionals.Innovations20%1st Canada1087%42%17% Consumer market2nd United StatesBuilding adhesives 32Operating Latin Americaincome Northern and Eastern Europe133 275 Germany 1,600 1,300 paint with energy-saving properties used in the building and renovation industry AsiaUK, Ireland and South Africa the air to create a safer home environment1st South East Asia and PacificTotal reportable rate of injuries parquet layers, interior decorators and painters Moving average ROI (in %) 4.7 5.2 Sweden 600 6002nd India and South Asia3%per million hours China and North Asiaspecialized retailers.11%5.7Support professional painters with tailor-made AmericasUK 2,200 4.9 4.74.02,200Customersproducts and servicesInnovations Our end-users can broadly be segmented into homeowners(either DIY or BIY – buy it yourself), professional paint-programs for painters 1st CanadaConsumerers servingmarkethomeowners and commercial contractors. TheyOther European countries 5,400 5,1002nd United States 52 AkzoNobel Decorative Paints | Business performance | AkzoNobel Report 2010AkzoNobel Report 2010 | Business performance | AkzoNobel Decorative Paints 53Latin AmericaOther regions 1,100 1,100paint with energy-saving propertiesRevenue breakdown by business unit Total 21,900 22,000 Asiathe air to create a safer home environment in %Key developments 1st 2010 South East Asia and Pacific 2nd India and South Asiaionretailer’sis arounddon 2012cquers) forwealthrestmomentumonsumers600 citieshomeownonalpainttors.Theyel Report 20107%Emerging EuropeThese pages provide a concise overview of the business,including how it creates value, key market and businesscharacteristics, external factors that affect value creation andthe role of innovation. They describe key developments duringrket overvieware served through a variety of outlets ranging from big boxchains such as The Home Depot, Walmart, B&Q and LeroyMerlin (serving mainly homeowners) to independent dealers(serving both homeowners and professionals) and companyownedstores focused on serving professionals.the period and provide a range of financial andnon-financial performance indicators, seeking to demonstratefinancial value generated through responses to globalmarket drivers. DDC (Dulux Decorator Centers) Paint Can Recycling –professional paint waste management systems superior properties for the professional painter.China and North AsiaCSupport professional painters with tailor-madeProduct: Eco-premium solutionsKey figures in € millionsEmployees by region at yproducts and servicesSigned a deal with Walmart to become the retailer’s% of revenue 2009 20102programs for painters primary paint supplier in the US29 Dulux Trade won contract to paint the London 2012Revenue 4,573 4,968 US and CanadaA22Olympic Games siteEBITDA 487 548 Latin AmericaBEBITDA margin 15(in %) 15 10.6 11.0 China Leading coatings supplier for the CommonwealthEBIT 298 343 Other Asian countriesGames in IndiaEBIT margin (in 2007 %) 2008 6.5 20096.9The 2010 Netherlands Signed a landmark agreement with the ForestOperating income 133 275 GermanyStewardship CouncilMoving average ROI (in %) 4.7 5.2 SwedenUK Let’s Color campaign continued to gather momentumA Decorative Paints Europe 52 Key value chains with carbon Other European countries Presence in China increased to more than 600 citiesfootprint assessmentOther regionsB Decorative Paints Americas 31Revenue breakdown by business unit TotalSuccinct summary of key developments C Decorative Paints Asiain %17Link between revenue generation andresponse to market drivers highlighted108C17%Product: Eco-premium s% of revenueAsia Pacific16 www.theiirc.org322009A20102B15 15

eholders’ expectationsand to exceed targeted rates of return in a sustainable manner.As an integrated energy and chemicals company Sasol aims to meet stakeholders’ expectationsand to exceoSasol Annual Review and SummarizedInnovationResearchAs an integrated Financial energy and chemicals Information company pp Sasol 4 – aims 5 to meet stakeholders’ expectations http://www.sasol.com/sasol_internet/downloads/sasol_review_2010_1288356157307.pdfIn downstream chemical process technology, we have developedBesides the research and development and new-producand to exceed targeted rates of return a sustainable manner.several proprietary processes for recovering and processing a rangeformulation and testing work we do at Sasolburg througg activities,of solvents, waxes and phenolics for the world market, as wellTechnology’s fuel research group, we conduct further fumarket.our integratedThesebusinesspagesmodelprovide an easy to follow Exploration description and and production as 1-pentene, future 1-hexene, value 1-heptene, such 1-octene as innovation and higher alpha and research, as at the well Sasol as Advanced steps Fuels Laboratory (SAFL)ets.graphical representation of the company’s olefins, the last of which we convert into Safol H(C12,13) alcohols.collaboration the University of Cape Town, and theSasol obtains business its raw materials model, through its coal-mining to activities, respond to the changing business environment with someWe have developed and patented several Innovationbase-metal catalystsApplication Centre Research (SFAC). SFAC enables us to conductlinking together key inputs, activities oil and gas outcomes, exploration, and drivers purchases from of the open market.In downstream chemical process technology, we have developedBesides the research and development and new-productExploration and productionfor our FT synthesis quantification processes. in financial and non-financial engine terms. and fuel research and tests in line with internatioSome raw materials are sold directly to external markets.several proprietary processes for recovering and processing a rangeSasol obtains its raw materials through its coal-mining activities,of solvents, waxes and phenolics for the world market, as wellWe have also been innovative in coal exploration and mining, whereoil and gas exploration, and purchases from the open market.as 1-pentene, 1-hexene, 1-heptene, 1-octene and higher alphaSome raw materials are sold directly to external markets.Sasol Mining (sometimes in partnership with olefins, technology the last of which suppliers)we convert into Safol H(C12,13) alcohols.We have developed and patented several base-metal catalystshas developed high-extraction mining methods, advancedfor our FT synthesis processes.directional drilling techniques, roof-bolting systems, continuousminersystems and a virtual-reality training Sasol system Mining (sometimes for continuous-partnership with technology suppliers)We have also been innovative in coal exploration and mining, whereminer operators, among other cost-savinghasinnovations.developed high-extraction mining methods, advancedOur proprietary Fischer-Tropschtechnology4our integrated business modeloGreenhouse gas (GHG) emissionsThrough Sasol PetroleumInternational (SPI) and Sasol Gas,we obtain natural gas throughthe cross-border pipeline linkingthe Pande and Temane fields inMozambique to our Secundacomplex. We use this gas as oursole hydrocarbon feedstock atSasolburg and as a supplementaryfeedstock to coal at Secunda.4emissions of GHG, which have been independently verified,oThrough Sasol PetroleumSasol Mining supplies most of theol Mining supplies most of theInternational (SPI) and Sasol Gas,feedstock coal we need for our Sasoldstock coal we obtain we natural need gas for through our Sasolpetrochemical plants.the cross-border pipeline linkingrochemical plants. Through Sasol Petroleumthe Pande and Temane fields inMozambique to our Secunda International (SPI) andAsSasolan integratedGas,energy and chemicals company Sasol aims to meet stakeholders’ expectationscomplex. We use this gas as ourwe obtain natural gas throughsole hydrocarbon feedstock atour integrated business modelSasolburg and as a supplementary the cross-border pipeline linkingfeedstock to coal at Secunda.the Pande and Temane fields inExploration and productionSasol obtains its raw materials through its coal-mining activities,oil and gas exploration, and purchases from the open market.Mozambique to our SecundaSome raw materials are sold directly to external markets.complex. We use this gas as oursole hydrocarbon feedstock atSasolburg and as a supplementaryfeedstock to coal at Secunda.Our proprietary Fischer-TropschtechnologyoClear description of business model seeking to link inputs and outputsSasol Mining supplies most of thefeedstock coal we need for our Sasolpetrochemical plants.Coal is an important part of the world’s energy mix, and Sasol will continue toproduce transportation fuels from coal and gas. However, we are committedto substantially reducing our carbon emissions by, among others, developing equivalent per ton of production) in 2010. This compares with 3,24 inmore efficient production processes and investigating carbon capture and 2009 and 3,02 (restated) in 2008. The improved overall GHG intensitystorage (CSS) solutions. We have set several targets to reduce our greenhouse is a result of the inclusion of Oryx GTL, and Sasol Polymers and Sasolgas emissions intensity by 15% (on the 2005 baseline) in all our operations by Synfuels significantly increasing production volumes, which offset2020, and we have spent R100 million (US$11,1 million) in Greenhouse 2009 on energy gas (GHG) emissionsOur global emissions of GHG, which have been independently verified,the emissions increase. The targets we have set for all our operationsincreased from 71,3 million tons (Mt) in 2009 to 75,8 Mt in 2010,efficiency-related projects, which should achieve a reduction Coal of is an around important part of the world’s energy reflect mix, and not Sasol only will continue our desire to mainly to be due a to the responsible inclusion of Oryx company, GTL emissions but data. However, also ourproduce transportation fuels from coal and gas. However, we are committed emissions intensity improved to 3,05 (measured as carbon dioxide760 000 tons of GHG emissions a year.to substantially reducing our carbon emissions our by, awareness among others, developing that a strong equivalent business per ton of case production) exists in 2010. for This sustainablecompares with 3,24 inmore efficient production processes and investigating carbon capture and 2009 and 3,02 (restated) in 2008. The improved overall GHG intensitydevelopment.storage (CSS) solutions. We have set several targets to reduce our greenhouse is a result of the inclusion of Oryx GTL, and Sasol Polymers and Sasolgas emissions intensity by 15% (on the 2005 baseline) in all our operations by Synfuels significantly increasing production volumes, which offset2020, and we have spent R100 million (US$11,1 million) in 2009 on energy the emissions increase. The targets we have set for all our operationsefficiency-related projects, which should achieve a reduction of aroundreflect not only our desire to be a responsible company, but also760 000 tons of GHG emissions a year.our awareness that a strong business case exists for sustainabledevelopment.Our proprietary Fischer-TropschtechnologyooOur global emissions of GHG, which have been independently verified,increased from 71,3 million tons (Mt) in 2009 to 75,8 Mt in 2010,mainly due to the inclusion of Oryx GTL emissions data. However, ouremissions intensity improved to 3,05 (measured as carbon dioxideWateroWaterInnovationIn downstream chemical process technology, we have developedseveral proprietary processes for recovering and processing a rangeof solvents, waxes and phenolics for the world market, as wellas 1-pentene, 1-hexene, 1-heptene, 1-octene and higher alphaolefins, the last of which we convert into Safol H(C12,13) alcohols.We have developed and patented several base-metal catalystsfor our FT synthesis processes.We have also been innovative in coal exploration and mining, whereSasol Mining (sometimes in partnership with technology suppliers)has developed high-extraction mining methods, advanceddirectional drilling techniques, roof-bolting systems, continuousminersystems and a virtual-reality training system for continuousmineroperators, among other cost-saving innovations.Various technological advancements in effluentrecycling, cooling, pre-treatment of waterfor steam generation and solids handling arepaving the way for significantly improvedzero liquid effluent discharge designs, whichare being developed irrespective of wateravailability or pricing.directional drilling techniques, roof-bolting systems, continuousminersystems and a virtual-reality training system for continuousmineroperators, among other cost-saving innovations.Our GTL diesel has a higher quality than diesels derived fromcrude oil. GTL diesel has a high cetane number (70+ versusthe conventional 45 – 55), low sulphur (less than five partsper million), low aromatics (less than 1%) and excellentcold-flow characteristics. Our GTL diesel, therefore, is idealas a low-emissions, premium grade fuel and as a blend stockfor upgrading conventional diesels.WateroResearchBesides the research and development and new-productformulation and testing work we do at Sasolburg through SasolTechnology’s fuel research group, we conduct further fundamentalresearch at the Sasol Advanced Fuels Laboratory (SAFL), incollaboration with the University of Cape Town, and the Sasol FuelsApplication Centre (SFAC). SFAC enables us to conduct sea-levelengine and fuel research and tests in line with international trends.MarketsVarious technological advancements in effluentrecycling, cooling, pre-treatment of waterfor steam generation and solids handling arepaving the way for significantly improvedzero liquid effluent discharge designs, whichare being developed irrespective of wateravailability or New pricing. energyOur GTL diesel has a higher quality than diesels derived fromcrude oil. GTL diesel has a high cetane number (70+ versusthe conventional 45 – 55), low sulphur (less than five partsper million), low aromatics (less than 1%) and excellentcold-flow characteristics. Our GTL diesel, therefore, is idealas a low-emissions, premium grade fuel and as a blend stockfor upgrading conventional diesels.Our GTL diesel has a higher quality than diesels derived fromSasol Mining supplies crude oil. most GTL of diesel the has a high cetane number (70+ versusfeedstock and to coal exceedthe we targeted need conventionalrates of for return our in a sustainable Sasol 45 –manner.55), low sulphur (less than five partspetrochemical per plants. million), low aromatics (less than 1%) and excellentcold-flow characteristics. Our GTL diesel, therefore, is idealas a low-emissions, premium grade fuel and as a blend stockfor upgrading conventional diesels.oSasol markets products directlyto the consumer, as well as tocommercial and industrial customers,thereby integrating its upstreamand downstream activities.Sasol New Energy Holdings (SNE) was created to focus on newtechnologies that can be integrated with our core technologiesto reduce our GHG footprint. As part of our commitment to reduceproduction of carbon dioxide in our operations and integrate newtechnology into our FT processes, SNE will look into renewableand lower-carbon energy options such as solar, biofuels and biomass,as well as nuclear, hydro and natural gas.New energyoannual review 2010 • our business • our integrated business modelNew energy5formulation and testing work we do at Sasolburg through SaTechnology’s fuel research group, we conduct further fundamresearch at the Sasol Advanced Fuels Laboratory (SAFL), incollaboration with the University of Cape Town, and the SasoApplication Centre (SFAC). SFAC enables us to conduct seaengineand fuel research and tests in line with international tMarketsMarketsSasol markets products directlyto the consumer, as well as tocommercial and industrial custthereby integrating its upstreamand downstream activities.Sasol markets products dirto the consumer, as well ascommercial and industrialthereby integrating its upstand downstream activitiesSasol New Energy Holdings (SNE) was created to focus on newtechnologies that can be integrated with our core technologiesto reduce our GHG footprint. As part of our commitment to reduceproduction of carbon dioxide in our operations and integrate newtechnology into our FT processes, SNE will look into renewableand lower-carbon energy options such as solar, biofuels and biomass,as well as nuclear, hydro and natural gas.annual review 2010 • our business • our integrated busom 71,3 million tons (Mt) in 2009 to 75,8 Mt in 2010,to the inclusion of Oryx GTL emissions data. However, ourVarious technological advancements in effluent Sasol New Energy Holdings (SNE) was created to focus on newtensity improved to 3,05 (measured Greenhouse as carbon gas dioxide (GHG) emissionsOur global emissions of GHG, which have been independentlyrecycling, cooling, pre-treatment of watertechnologiesverified,that can be integrated with our core technologies Watincreased from 71,3 million tons (Mt) in 2009 to 75,8per ton of production) in 2010. This compares with 3,24 infor steam generation and solids handling aretoMtreducein 2010,our GHG footprint. As part of our commitment to reduceCoal an important part of the world’s energy mix, and Sasol will continue to mainly due to the inclusion of Oryx GTL emissions data.,02 (restated) in 2008. The improved overall GHG intensitypaving the way for significantly improvedproduction However, of carbon our dioxide in our operations and integrate newVariouproduce transportation fuels from coal and gas. However, we are committed emissions intensity improved to 3,05 (measured as carbonf the inclusion of Oryx GTL, and Sasol Polymers and Sasolzero liquid effluent discharge designs, whichtechnology dioxide into our FT processes, SNE will look into renewable recycto substantially reducing our carbon emissions by, among others, developing equivalent per ton of production) in 2010. This comparesnificantly increasing production volumes, which offsetare being developed irrespective of waterand lower-carbon with 3,24 in energy options such as solar, biofuels and biomass, for stmore efficient production processes and investigating carbon capture and 2009 and 3,02 (restated) in 2008. The improved overallns increase. The targets we have set for all our operationsavailability or pricing.as well GHG as intensity nuclear, hydro and natural gas.pavinstorage (CSS) solutions. We have set several targets to reduce our greenhouse is a result of the inclusion of Oryx GTL, and Sasol Polymers and Sasolzero lonly our desire to be a responsible gas emissions company, intensity but also by 15% (on the 2005 baseline) in all our operations by Synfuels significantly increasing production volumes, which offsetare beess that a strong business case 2020, exists and we for have sustainable spent R100 million (US$11,1 million) in 2009 on energy the emissions increase. The targets we have set for all our operationsavailant.efficiency-related projects, which should achieve a reduction of aroundreflect not only our desire to be a responsible company, but also760 000 tons of GHG emissions a year.our awareness that a strong business case exists for sustainabledevelopment.Our proprietary Fischer-Tropschtechnologyoannual review 2010 • our business • our integrated4Discussion of material issues that arise as a result of business activities,including targets and costsIdentification of strategic responses to changingbusiness environmentTowards Integrated Reporting 17

Towards Integrated Reporting – Innovation in Action (continued)BHP Billiton 2010 Annual Report pp 152 – 153http://www.bhpbilliton.com/home/investors/reports/Documents/bhpBillitonAnnualReport2010.pdfThese pages show the linkage between key financial andperformance, and includes quantification of remunerationnon-financial drivers of strategy, remuneration policy andpractices and the alignment between remuneration andremuneration 6 Remuneration practice. Report This continued is reinforced through discussion company performance.of the linkages between remuneration and both risk and6 Remuneration Report continued6.2.2 Strategic alignmentthe Remuneration 6.2.2 Strategic Committee alignment recognises that we operate in a global environment and that our performance depends on the qualityof our people. the Remuneration Remuneration Committee is recognises used to that reinforce we operate the in a Group’s global environment strategic and objectives, that our performance and the depends committee on the quality keeps the remuneration policyunder regular of our people. review Remuneration to ensure is it used is appropriate to reinforce the Group’s for the strategic needs objectives, of the and Group. the committee keeps the remuneration policyunder regular review to ensure it is appropriate for the needs of the Group.the diagram the diagram below below illustrates illustrates how BHP BHP Billiton’s Billiton’s remuneration remuneration policy is linked policy to the is six linked key drivers to of the our strategy six key and drivers how the of our strategy and how theremuneration remuneration structures for for executives (including the members the members of the GMC) of serve the to support GMC) and serve reinforce to support these linkages. and reinforce these linkages.Drivers of strategySupported byremuneration policyEnacted through remuneration structuresDrivers of strategyPEOPLE The foundationof our businessis our people.Talented andmotivated peopleThe foundation are our mostof our business preciousresource.is our people.Talented andmotivated peopleare our mostpreciousresource.Supported byremuneration policy18 www.theiirc.orgNON-FINANCIALNON-FINANCIALWe provideRemunerationRemuneration frameworks rewardConsistent with our long-term strategiccompetitive rewards frameworks to operate reward within achievement and of demanding efficient financial way. managementfocus, performance measures are generationslinkedto attract, motivate strong our Code performance of performance targets, driving superior programs. to long-term growth. 6.2.3 This Risk rewards alignment of growth.and retain highly in the areasresults across the Group.executives for delivering sustainableBusiness Conduct.skilled executives6 Remunerationof health,Reportsafety,returns and avoiding the excessive global risks. financial crisis has heightened the focus on riskcontinuedwilling to work environmentmanagement within organisations, and in particular onaround the world. and communityremuneration frameworks that work to ensure executives take6.2.2 Strategic development.alignmenta long-term6.2.3 Riskapproachalignmentto decision-making – minimising6.2.4 Performanceactivitiesalignmentthe Remuneration Committee recognises that we operate in a global environment and that our performance depends on the qualitythe global financial crisis has heightened the focus on risk While the Board recognises that market forces necessarilyof our people. Remuneration is used to reinforce the Group’s strategic objectives, and the committee keeps the remuneration policythat focus management only within on organisations, short-term and in results particular on at the expense influence remuneration of longer practices, it strongly believes thatunder regular review to ensure it is appropriate for the needs of the Group.remuneration frameworks that work to ensure executives take the fundamental driver behind our remuneration structure isRemunerationRemuneration frameworks reward term business a long-term Consistent approach growth to decision-making and with success. our – minimising long-term activities business strategicthe diagram below illustrates how BHP Billiton’s remuneration policy is linked to the six key drivers of our strategy and how theperformance. Accordingly, while target remunerationthat focus only on short-term results at the expense of longer is structured to attract and retain executives, the amount• GMC base salaries remuneration structures for executives (including the members of the GMC) serve to support and reinforce these linkages.frameworks • 15% of STI for reward • STI outcomes achievement for the GMC are of weighted demanding financial • The LTIP operates over a term long-term business focus, growth horizon.the Remuneration performance and Committee success. has measures considered of are remuneration the ways linked actually which received is dependent on theare aligned with GMC members is towards achievement of challengingPerformance Shares are the tested Remuneration over a Committee has considered the ways in whichachievement of superior business and individual performancerisk is reflected throughout BHP Billiton’s rewardand generating sustained shareholder value.comparable strong measured performanceagainst financial performance KPIs linking remuneration targets, to the driving superior five-year performance risk management period. to long-term is reflected growth. throughout This rewards BHP Billiton’s rewardstructure and is satisfied that it reinforcesNON-FINANCIALFINANCIALShort-term performance indicators and outcomesroles in global in health, the areas safety,performance results of BHP across Billiton’s the assets Group. andstructure forthe desired all executives,behaviours. this is largely for achieved delivering and is satisfiedthrough the sustainable that it reinforces• The LTIP links a significant Group’s componentapproach to StI LtI rewards, which comprise An individual scorecard of measures is set for each executivecompanies ofPEOPLE environment LICENCEWORLD-CLASS capital management FINANCIAL programs:the desired behaviours. this is largely achieveda significant portion of remuneration for the GMC.at the through commencement thePROJECT PIPELINE GROWTH OPTIONSof each financial year. these scorecardsof health, TO safety,of pay for executives to the deliveryOPERATEASSETSSTRENGTH ANDreturns and avoiding excessiveincluderisks.a similar sizeand communitythe key financial and non-financial measures that the– Profit After DISCIPLINE Tax (adjusted for foreign of superior returns. Group’s the approach equity component to of StI StI rewards and is deferred LtI rewards, for a two-year which compriseBoard believes will drive BHP Billiton’s performance. At theand complexity. The environmentfoundation development We depend onMaintaining exchange, Balancing price and exceptional Focus items) Looking beyondperiod, and performance under the LtIP is measured over a conclusion of the financial year, each individual’s achievementof our business key safety andhigh-qualityfinancial flexibility delivering anthe project – Executives only a derive significantfive-year value period. from portion of remuneration for the GMC.the actual rewards received by members of against their measures is assessed by the RemunerationBase salaries for is our people. environmental assets with the costenhanced resource pipeline toand measures. community and Earnings Before Interest and Tax –the GMC therefore reflect the Group’s performance and share Committee and Board and their cash StI reward is determined.Talented andimperatives and managing them in of finance inendowment to pursue new their LTIP awardsother executivesprice over an extended period.motivated people on our abilitythe most effective effective capital underpin future growth options.this is matched with an allocation of Deferred Shares or Optionsare development.• The Group’s25% to 50% weighting.the where equity BHP component Billiton of StI rewards is deferred for a two-yearperforms strongly relative In addition, to comparatorour mostto operate within and efficient way.generationsStI and LtI outcomes are not driven by a(or a combination of the two), to which the individual willare marketprecious performance our Code of – Capital management programs. (cost of growth. and schedule)period, and performance under the LtIP is measuredformulaic approach. the Remuneration Committee applies not have access over for two acompanies in growing its TSR.years (unless they leave the Groupresource.Business Conduct.competitive withina qualitative judgement to determining StI and to under specific circumstances).in the areas of10% to 15% weighting.– Full vesting under five-year the LTIP period.vesting only under occurs the actual rewards received by members ofLtIP, and may determine that rewards not the relationship between StI rewards and the performanceeach geography,health, safety,where BHP Billiton’s the GMC TSR be provided outperforms therefore in circumstances reflect where the committee Group’s determines performance of the Group over and the share past five years indicates the success ofand equitableWe provideRemunerationRemuneration • ‘On target’ frameworks performance rewardConsistent against with our the long-term KPIs strategicit to be inappropriate or would provide unintended outcomes. our remuneration strategy in aligning executive rewards withcompetitive environmentrewards frameworks reward achievement of demanding financialfocus, performance measures are linked the index TSR by price more over the than Remuneration an 30% extended over Committee does period. not apply any discretion to shareholder interests (as shown in the graphs below). Furtheracross the Group. to attract, motivate strong performance performance delivers targets, a driving cash superior STI reward to long-term of 80% growth. of This base rewardsallow vesting when performance hurdles have not been satisfied. details of the Group’s Attributable Profit and Basic Earningsand • retain 15% and highly community of in STI the areas for results across the Group. • STI outcomes executives for delivering the sustainable GMC are a weightedfive-year period.skilled executives of health, safety, salary. The maximum cash returns award and avoiding of excessive 160%• The LTIP operates over a long-termrisks.per Share over thehorizon.past five years can be found in section 3• Further rewards willing developmentIn addition, StI and LtI outcomes are not driven by ato work environmentof this Annual Report (including descriptions of these terms).around GMC the world. members and community is is rarely awarded, towards and is achievement only available of challenging• The Minimum Shareholdingare availableimpacts STIformulaic Requirement approach. Performance the Remuneration Shares are Committee tested over applies adevelopment. where all non-financial and financialwas increased in July 2010 Average to STI 300% reward for of GMC membersAverage STI reward for GMC membersto executives measured outcomes for againstKPIs linking remuneration to the a qualitative vs Profit Attributable five-year judgement to Shareholders performance to (excluding determining exceptional items) period. StI rewards vs Basic Earnings and per Share totargets are fully achieved.annual gross base salary for the CEO andfor performance16100300100• GMC base salaries • 15% of STI for • STI outcomes for the GMC are weighted • The LTIP operates over a long-term horizon.are alignedhealth, all executives.with GMCsafety,members is towards achievement ofperformancechallengingPerformanceofSharesBHPare testedBilliton’sover a 200% assets for other and GMC vesting members under to the ensure LtIP, and may determine that rewards not9090against all at risk• Cash STI rewards are matched by an awardcomparablemeasured against financial KPIs linking remuneration to the five-year performance period.14 • The LTIP links a significant component• 250roles environmentThe Remunerationin global health, safety,performance of BHP Billiton’s capital assets and management • The LTIP links a significant component programs: executives and shareholders be provided interests in circumstances where the committee determines8080components ofof BHP equity, which is deferred forcompanies Committee of environment hascapital management programs:of pay for executives to the delivery remain aligned. it to be inappropriate 12 of pay for executives would provide to unintended the delivery outcomes.a similar sizeand – Profit After Tax (adjusted for foreign7070remuneration.of superior returns.200and complexity. and overriding community two years providingdevelopmentexchange, price and exceptional – Profit anitems) After appropriate– Executives Tax only derive (adjusted focusvalue from for foreign10Base salaries for measures.and Earnings Before Interest and Tax –of superior returns.6060The at riskon the longer-term time frame, their LTIP awards even where in • Executives are prohibited the Remuneration from Committee does not apply any discretion toBHP Billitonother executives• The Group’s25% to 50% weighting.performs strongly relative to comparator85015050are marketdevelopmentdiscretion tocomponentsperformance– Capital regard management to annual (costexchange,and schedule) STI rewards. price and exceptional hedging any items) unvested allow equity vesting and whencompanies in growing its TSR.competitive reduce within incentive– Executives any performance hurdles have not been satisfied.only derive value fromin the areas of10% to 15% weighting.– Full vesting under the LTIP only occurs4040serve the dualeach measures.geography,6health, safety,and Earnings where BHP Billiton’s Before TSR outperforms Interest shares and that Tax are – held as part of theand equitable outcomes• ‘On target’ performance against the KPIs100environmentthe index TSR by more than 30% overtheir LTIP awards 30 where BHP Billiton30purpose of:across the Group.delivers a cash STI reward of 80% of baseMinimum Shareholding Requirement.and communitya five-year period.4to reflectsalary. The maximum cash award of 160%• Further rewards development2020• The Group’s25% to 50% weighting.– incentivisingis rarely awarded, and is only available • The Minimum Shareholding Requirementperforms strongly relative to 50 comparatorare available below-target impacts STIwhere all non-financial and financialwas increased in July 2010 to 300% of21010and rewarding to executives outcomes targets are fully achieved.annual gross base salary for the CEO andfor performancesafety – Capital management (cost and schedule)all executives.200% for other GMC members to ensureAverage STI 0 reward companies for GMC members in 0 growing its TSR. 00executives foragainst all at risk• Cash STI rewards are matched by an award• The Remunerationexecutives and shareholders interests2006 2007 2008 2009 20102006 2007 2008 2009 2010components ofof BHP Billiton equity, which is deferred forCommittee hasremain aligned.remuneration. in environmental the areas of10% to 15% weighting.vs Profit Attributableexceptionaltwo years providing an appropriate focus– Full to vesting Shareholders under (excluding the LTIP exceptional overridingProfit attributable to shareholders (excluding exceptional items)BasiconlyEarnings peroccurs items)ShareThe at performance.riskon the longer-term time frame, even in • Executives are prohibited fromdiscretion toAverage STI reward for GMC membersAverage STI reward GMC membersperformance;componentsregard to annual STI rewards.hedging any unvested equity and anyhealth, reduce safety, incentive16serve the dualshares that are held as part of thewhere BHP Billiton’s TSR 100 outperforms300outcomesandpurpose of:• ‘On target’ Minimum performance Shareholding Requirement. against the KPIsto reflect– incentivising environmentbelow-target– promotingthe index TSR by more 90 than 30% overand rewardingsafety ordelivers a cash STI reward of 80% of base 14executives forretention andenvironmentalexceptional and communitya five-year period.250performance.80performance;rewardinganddevelopment12– promotingloyalty.• The Minimum Shareholding Requirementretention and70rewarding impacts STI200loyalty.10 was increased in July 2010 to 300% of60We providecompetitive rewardsto attract, motivateand retain highlyskilled executiveswilling to workaround the world.Enacted through remuneration structuresPEOPLEDrivers of strategySupported byremuneration policy• GMC base salariesare aligned withcomparableroles in globalcompanies ofa similar sizeand complexity.Base salaries forother executivesare marketcompetitive withineach geography,and equitableacross the Group.• Further rewardsare availableto executivesfor performanceagainst all at riskcomponents ofremuneration.The at riskcomponentsserve the dualpurpose of:– incentivisingand rewardingexecutives forexceptionalperformance;and– promotingretention andrewardingloyalty.152 | BHP BILLItON ANNUAL REPORt 2010152 | BHP BILLItON ANNUAL REPORt 2010Enacted through remuneration structuresLICENCETO OPERATEWe depend LICENCE onkey TO safety OPERATE andenvironmentalimperatives andon our abilityWe to operate depend within onkey our Code safety of andBusiness Conduct.environmentalimperatives andon our abilityoutcomes forall executives.• The RemunerationCommittee hasan overridingdiscretion toreduce incentiveoutcomesto reflectbelow-targetsafety orenvironmentalperformance.152 | BHP BILLItON ANNUAL REPORt 2010WORLD-CLASSASSETSFINANCIALSTRENGTH ANDDISCIPLINEMaintaining WORLD-CLASS Balancinghigh-quality ASSETS financial flexibilityassets andwith the costmanaging them in of finance inthe most effective effective capitaland efficient Maintainingway. managementhigh-quality programs.assets andmanaging them inthe most effectiveFINANCIALPROJECT PIPELINEFINANCIALFocus onSTRENGTH delivering an ANDenhanced resourceDISCIPLINEendowment tounderpin futureBalancing generationsfinancial of growth. flexibilitywith the costof finance ineffective capitalsalary. The maximum cash award of 160%is rarely awarded, and is only availablewhere all non-financial and financialtargets are fully achieved.FINANCIALProfit attributable – excluding exceptional items (US$B)GROWTH OPTIONSLooking PROJECT beyond PIPELINEthe projectpipeline topursue newgrowth options.Profit attributable – excluding exceptional items (US$B)Focus ondelivering anenhanced resourceendowment tounderpin futureExplanation and quantification ofalignment between remuneration andstrategic objectives, both financial andnon-financialAverage STI reward (as % of maximum award)GROWTH OPTIONSLooking beyondthe projectpipeline topursue newgrowth options.annual gross base salary for the CEO and850150200% for other GMC members to ensure• Cash STI rewards are matched by an awardexecutives and shareholders 406interestsof BHP Billiton equity, which is deferred for100remain aligned. 30two years providing an appropriate focus 4on the longer-term time frame, even in • Executives are prohibited 20 from502regard to annual STI rewards.hedging any unvested equity 10 and any6.2.3 Risk alignment shares that are held as part of the0002006the global financial Minimum 2007 2008crisis Shareholding 2009 2010has heightened Requirement. the focus on riskmanagement Profit attributable within to shareholders organisations, (excluding exceptional and items) in particular onAverage STI reward for GMC membersremuneration frameworks that work to ensure executives takea long-term approach to decision-making – minimising activitiesthat focus only on short-term results at the expense of longerterm business growth and success.the Remuneration Committee has considered the ways in whichrisk management is reflected throughout BHP Billiton’s rewardstructure for all executives, and is satisfied that it reinforcesthe desired behaviours. this is largely achieved through theGroup’s approach to StI and LtI rewards, which comprisea significant portion of remuneration for the GMC.the equity component of StI rewards is deferred for a two-yearperiod, and performance under the LtIP is measured over afive-year period. the actual rewards received by members ofthe GMC therefore reflect the Group’s performance and shareExplanation price over is an reinforced extended period. through discussionof linkInwithaddition,riskStIandandperformanceLtI outcomes are not driven by aformulaic approach. the Remuneration Committee appliesa qualitative judgement to determining StI rewards and tovesting under the LtIP, and may determine that rewards notbe provided in circumstances where the committee determinesit to be inappropriate or would provide unintended outcomes.the Remuneration Committee does not apply any discretion toallow vesting when performance hurdles have not been satisfied.Basic EPS – excluding exceptional items (US cents per share)Average STI reward (as % of maximum award)6.2.4 Performance alignmentWhile the Board recognises that market forces necessarilyinfluence remuneration practices, it strongly believes thatthe fundamental driver behind our remuneration structure isbusiness performance. Accordingly, while target remunerationis structured to attract and retain executives, the amountof remuneration actually received is dependent on theachievement of superior business and individual performanceand on generating sustained shareholder value.Short-term performance indicators and outcomesAn individual scorecard of measures is set for each executiveat the commencement of each financial year. these scorecardsinclude the key financial and non-financial measures that theBoard believes will drive BHP Billiton’s performance. At theconclusion of the financial year, each individual’s achievementagainst their measures is assessed by the RemunerationCommittee and Board and their cash StI reward is determined.this is matched with an allocation of Deferred Shares or Options(or a combination of the two), to which the individual willnot have access for two years (unless they leave the Groupunder specific circumstances).the relationship between StI rewards and the performanceof the Group over the past five years indicates the success ofour remuneration strategy in aligning executive rewards withshareholder interests (as shown in the graphs below). Furtherdetails of the Group’s Attributable Profit and Basic Earningsper Share over the past five years can be found in section 3of this Annual Report (including descriptions of these terms).Average STI reward (as of % of maximum award)Average STI reward for GMC membersvs Basic Earnings per ShareBasic EPS – excluding exceptional items (US cents per share)BHP BILLItON ANNUAL REPORt 2010 | 1536.2.4 Performance alignment02006 2007 2008 2009 2010While the Board recognises that market forcBasic Earnings per influence Share remuneration practices, it stronglyAverage STI reward for GMC membersthe fundamental driver behind our remunerabusiness performance. Accordingly, while taQuantified demonstration is structured to of attract alignment and retain executivebetween remuneration of remuneration and actually company received is dependperformance achievement of superior business and individand on generating sustained shareholder va100908070605040302010Short-term performance indicators and oAn individual scorecard of measures is set foat the commencement of each financial yearinclude the key financial and non-financial mBoard believes will drive BHP Billiton’s perfoconclusion of the financial year, each individagainst their measures is assessed by the ReCommittee and Board and their cash StI rewthis is matched with an allocation of Deferre(or a combination of the two), to which the inot have access for two years (unless they leunder specific circumstances).BHP BILLItON ANNUAL REPORt 2010 | 153the relationship between StI rewards and thof the Group over the past five years indicatour remuneration strategy in aligning execushareholder interests (as shown in the graphdetails of the Group’s Attributable Profit anper Share over the past five years can be fouof this Annual Report (including descriptionAverage STI reward (as of % of maximum award)

WHAT WILL INTEGRATEDREPORTING MEAN FOR ME?“Integrated Reporting and transparency is not only the right thing to do, but it has broughtwith it a broad range of business benefits, ranging from richer access to capital markets andidentification of cost savings to an increase in employee engagement.”Lord Sharman of Redlynch, Chairman, AvivaBenefits and ChallengesThe implications of Integrated Reporting will vary for different participants in the reporting supply chain depicted in the diagrambelow. This section of the Discussion Paper outlines the main benefits and challenges with respect to Integrated Reporting forreporting organizations, investors, policy-makers, regulators and standard-setters, and other stakeholders. The benefits of IntegratedReporting set out in this section are equally relevant to other key stakeholders such as customers, suppliers and governments who areincreasingly demanding demonstration of a more integrated picture of performance as a prerequisite for doing business.Policy-makers, Regulators and Standard-settersAssurance ProvidersReporting OrganizationsReportingInvestorsOther UsersAlternative pathways to Integrated ReportingWhile the IIRC anticipates that an Integrated Report willultimately become the primary report for all organizations,individual organizations will follow different routes overdifferent timeframes towards that end. All organizations willbe bound by existing regulatory reporting requirements untilthese are changed, but this will affect them in different waysdepending on the jurisdiction(s) and industry(ies) in whichthey operate. Alternative routes that organizations may followinclude the following.• Combining the sustainability report with the managementcommentary or the full annual report. While a combinedreport is not an Integrated Report, it can be a logicalfirst step for some organizations as they exploreopportunities to integrate the content of the two reportsinto a more concise form and build understanding ofhow performance in one area drives value in another.• Publishing a concise, standalone, Integrated Report asthe only addition to a statutorily required annual reportor regulatory filing. This may be particularly attractivefor organizations not currently producing a separatesustainability report that their stakeholders have cometo expect.• Modifying the sustainability report or, to the extentpermitted given the organization’s regulatoryenvironment, the management commentary by tailoringit in accordance with the Guiding Principles and ContentElements of Integrated Reporting.• Adopting Integrated Reporting internally to underpinmanagement information. This will provide businessbenefits while liaising with regulators either to introduceIntegrated Reporting for all organizations or to introduce“safe harbours” for those who choose to innovateand experiment.20 www.theiirc.org

Key points in this sectionThe main benefits and challenges of Integrated Reporting are presented here from thefollowing perspectives:• reporting organizations;• investors;• policy-makers, regulators and standard-setters; and• other stakeholders.Reporting Organization PerspectiveBenefitsAlthough Integrated Reporting is an emerging practice, anumber of benefits have been identified in research to date,as summarized below: 9• reported information better aligned with investor needs;• more accurate non-financial information available fordata vendors;• higher levels of trust with key stakeholders;• better resource allocation decisions, including cost reductions;• enhanced risk management;• better identification of opportunities;• greater engagement with investors and other stakeholders,including current and prospective employees whichimproves attraction and retention of skills;• lower reputational risk;• lower cost of, and better access to, capital because ofimproved disclosure; and• development of a common language and greatercollaboration across different functions withinthe organization.ChallengesRegulation – Many components of Integrated Reporting arethe subject of existing local regulations which vary betweenjurisdictions. Progress towards Integrated Reporting is, therefore,likely to evolve at different speeds in different countries.International consensus on the direction taken will be important,in particular for organizations operating across jurisdictions.Directors’ duties – The fiduciary and other duties ofthose charged with governance are not consistent across alljurisdictions. Consequently, the focus of an IntegratedReport may differ, in particular in relation to the usersto whom the Integrated Report is addressed.Directors’ liability – Because the scope of IntegratedReporting will cover new and evolving subjects, with a greaterfocus on the future, concerns about the liability of those chargedwith governance will need to be addressed. This might bethrough the adoption of globally accepted and harmonized“safe harbours” or a broad business judgement rule.Commercial confidentiality – Organizations will need toprovide a more strategic focus and, in some cases, informationnot currently subject to mandatory disclosure requirements intheir Integrated Reports. They will, therefore, need to balancethe benefits mentioned above with the desire to avoid disclosingcompetitive information.Capacity building – Building knowledge and experienceacross the reporting system will be essential to long-term success.The IIRC Pilot Programme (see page 24 for more details) willhelp to build this capacity, with the learning captured anddisseminated by the IIRC for all to access. An online forumwill also be created to encourage knowledge sharing.Information systems – Organizations will need toestablish or strengthen information systems for capturingand aggregating information.Organizations that are interested in experimentingwith Integrated Reporting over the next two yearsare invited to join the IIRC Pilot Programme – seepage 24 for more details.Q9. From your perspective as a reporting organization:(a) Do you agree with the main benefits as presented in the Discussion Paper? Why/why not?(b) Do you agree with the main challenges as presented in the Discussion Paper? Why/why not?Towards Integrated Reporting 21

What Will Integrated Reporting Mean for Me? (continued)Investor PerspectiveBenefits• Fiduciary duty – The provision of a more integratedinformation set will help those who invest on behalf ofothers, such as pension funds, to discharge their fiduciaryduty by taking into account the full range of issues thataffect organizational, and therefore financial, successand investment returns.• Future orientation and outlook – IntegratedReporting puts greater emphasis on information aboutthe future. This will assist investors in assessing theorganization’s ability to generate future cash flows.• Risks and opportunities – Integrated Reports disclosekey risks and opportunities as management views them.This will enable investors to assess the short-, medium- andlong-term impact of these risks and opportunities across theirinvestment portfolio.• Comparability – Integrated Reporting provides aplatform to help enhance sector-specific reporting modelsand to bring together information from different forms ofreporting. This assists improved sectoral and geographicalanalysis and comparison of issues such as business ethics,management of conflicts of interests, and bribery and corruptionwhere they are relevant and material to the organization.• Connected information – Integrated Reporting makesclearer the linkages between the organization’s strategy,governance and financial performance and the social,environmental and economic context within which itoperates. It also better aligns externally reported informationwith information that management uses for decisionmaking. This enables investors to assess more effectively thecombined impact of the diverse factors that materially affectan organization’s long-term value.• Improved analysis – Analysts, both sell-side and buyside,will have access to an organization’s most significantinformation in one concise and integrated form, with theopportunity to “drill down” to more detailed informationwhere necessary. This can streamline the analytical processand help analysts to incorporate a wider set of KPIs andother factors into their analysis.• More effective decisions, better investmentreturns and more effective capital allocation –Collectively, the above benefits will result in more effectiveinvestment decisions, better long-term investment returnsand more effective capital allocation.Challenges• Revised analytical techniques – Analytical tools thatincorporate a wide range of financial and non-financial factorsare evolving. The IIRC Pilot Programme will work with investorsto develop disclosures relevant for investment analysis.• Investment supply chain – Many of the currentcompensation and incentive structures along the investmentsupply chain drive a focus on the short term. A wide rangeof steps are being taken by regulatory and non-regulatoryactors to rebalance this focus. Integrated Reporting cansupport these efforts by taking into account the wholespectrum of factors that impact an organization’s successand, therefore, its long-term investment returns.Investors interested in developing integrateddisclosures relevant for investment analysis areinvited to join the IIRC Pilot Programme – see page24 for more details.Q9. From your perspective as an investor:(a) Do you agree with the main benefits as presented in the Discussion Paper?Why/why not?(b) Do you agree with the main challenges as presented in the Discussion Paper?Why/why not?(c) Do you agree that Integrated Reporting will drive the disclosure of informationthat is useful for integrated analysis? Why/why not?22 www.theiirc.org

Policy-maker, Regulator and Standard-setter PerspectiveBenefits• More effective capital allocation – The moremeaningful communication brought about throughIntegrated Reporting will support more effective capitalallocation across the economy generally and, to the extentthat Integrated Reporting supports capital flowing to thoseorganizations that are responding most effectively to futurechallenges, can encourage the investment necessary torespond to issues such as energy security, food scarcity andclimate change.• Harmonization of approaches and reduced “redtape” – Reporting is shaped by a patchwork of laws,regulations, standards, codes, guidance and stockexchange listing requirements, described in a recentreport as “a jigsaw in pieces”. 10 Integrated Reportingoffers a platform for policy-makers, regulators andstandard-setters, working together, to:––integrate reporting requirements within a jurisdiction;––harmonize advances in reporting that have beenachieved in different jurisdictions; and––approach new reporting issues on a consistent basisas they emerge across jurisdictions.• Economic and market stability – The recent globalfinancial crisis has made it clear that risks can develop, beharboured and be transmitted through market participantsand practices that fall outside the traditionally prudentiallyregulated institutions. One important tool in addressingthese risks is greater transparency of market participants,which Integrated Reporting can facilitate. This, linked withthe better internal decision making and behaviours thatIntegrated Reporting encourages, as well as the longertermperspectives that it enables, may well deliver lowervolatility in markets. Moreover, it permits policy-makers andregulators to identify such risks as they emerge so that theycan be dealt with in a timely way, thus adding to greatereconomic and market stability.• Stewardship of common resources – Because of thebroader perspective required by Integrated Reporting, bothin terms of the resources and relationships that it takes intoaccount and the longer timeframe over which value creationis considered, it leaves organizations better placed to act, andbe more accountable, as stewards of the community’s commonresources, in particular human, natural and social capital.• Access to information – Integrated Reporting,by providing decision-relevant information, can supporteffective action by policy-makers and regulators as usersof that information.Challenges• Revising legislation, regulation andstandards – Mechanisms for revising legislation,regulation and standards require leadership, politicalwill, coordination, time, resources, consultation and dueprocess. This is particularly so where proposed changesinvolve more than one subject area (e.g., environmentallaw and securities law), and more than one jurisdiction.• Liability and business confidentiality – The scope ofIntegrated Reporting will cover new and evolving subjectsand will have a more strategic focus. The resulting concernsof management, those charged with governance andassurance providers about liability, fiduciary duties andbusiness confidentiality will need to be addressed.Q9. From your perspective as a policy-maker, regulator or standard-setter:(a) Do you agree with the main benefits as presented in the Discussion Paper?Why/why not?(b) Do you agree with the main challenges as presented in the Discussion Paper?Why/why not?Towards Integrated Reporting 23

What Will Integrated Reporting Mean for Me? (continued)Other PerspectivesCivil Society• Alignment of sustainable issues – Organizations thatadopt Integrated Reporting will display their stewardshipnot only of financial capital, but also of human, natural,social and other capitals, which is likely to align with theinterests of many civil society interest groups.• Stakeholder engagement – Integrated Reporting’semphasis on stakeholder engagement is likely to result ingreater consultation with civil society interest groups.• Supply chain – Integrated Reporting will provide greatervisibility of how an organization impacts on the stakeholdergroups across its supply chain.• Focus on specific issues – The integration ofenvironmental and social issues with financial issues couldresult in a reduction in focus on some issues of concern toparticular civil society interest groups. The IIRC is engagingwith key civil society interest groups and will utilize existingguidelines, codes, etc. throughout the development ofthe Framework.Employees• Future prospects – Current and prospective employeeswill be able to gain an integrated perspective on the futureprospects of their employer. They will also be better able todiscern whether their employer’s values are consistent withtheir own.• Connecting the organization – Integrated reportingfacilitates the breaking down of reporting silos and theintroduction of integrated thinking. This allows employeesto gain a better understanding of how their performancelinks to the objectives of the organization and to identifyhow they contribute to the ability of the organization tocreate and sustain value over time.Assurance providers• Independent assurance – The independent audit offinancial statements currently plays a critical role in theworld’s capital markets, and independent assurance ofsustainability reports is recognized as best practice. It istherefore reasonable to expect that when an IntegratedReport is an organization’s primary report, investors andother stakeholders will want that report tobe subject to independent assurance.• New techniques – Some information in an IntegratedReport may be more difficult to assure than informationdisclosed under traditional reporting frameworks. This willrequire the development of new techniques, standardsand reporting mechanisms to support assurance onIntegrated Reports.Academics• Research – As researchers, academics will have a strongrole to play in the development of the initial Frameworkand in researching emerging topics as Integrated Reportingevolves over time.• Education – As educators, academics will have a strongrole to play in education and capacity building acrossthe reporting system, which will be essential to IntegratedReporting’s long-term success.The IIRC Pilot ProgrammeThe IIRC is conducting a two-year Pilot Programme, commencing in October 2011, to test and further develop the InternationalIntegrated Reporting Framework. Working as a network of peer-group organizations and investors with whom knowledge can beexchanged and experiences shared, the IIRC Pilot Programme aims to:• encourage organizations to innovate in their reporting practices;• inform the future evolution of reporting and investor practices; and• drive convergence in international reporting guidance.For more details and to express interest in participating, see www.theiirc.org/pilotQ9. From your perspective as a key stakeholder:(a) Do you agree with the main benefits as presented in the Discussion Paper?Why/why not?(b) Do you agree with the main challenges as presented in the Discussion Paper?Why/why not?24 www.theiirc.org

SUMMARY OF CONSULTATIONQUESTIONSThe IIRC welcomes comments on all aspects of the DiscussionPaper from all stakeholders, whether to express agreementor to recommend changes. Your answers to the ConsultationQuestions, and any other comments you would like to make,should be submitted to dpresponses@theiirc.org or online atwww.theiirc.org. For the purpose of analysis, you are asked toidentify the organization to which you belong and where it islocated. All comments received will be considered a matter ofpublic record and will be posted on www.theiirc.org. Commentsshould be submitted by Wednesday 14th December 2011.The World has Changed – Reporting Must Too (page 4)Q1. (a) Do you believe that action is needed to help improvehow organizations represent their value-creationprocess? Why/why not?(b) Do you agree that this action should be internationalin scope? Why/why not?Towards Integrated Reporting (page 6)Q2. Do you agree with the definition of Integrated Reportingon page 6? Why/why not?An International Integrated Reporting Framework (page 8)Q3. Do you support the development of an InternationalIntegrated Reporting Framework? Why/why not?Q4. (a) Do you agree that the initial focus of IntegratedReporting should be on reporting by larger companiesand on the needs of their investors? Why/why not?(b) Do you agree that the concepts underlying IntegratedReporting will be equally applicable to small andmedium enterprises, the public sector and not-for-profitorganizations?Business Model and Value Creation (page 10)Q5. Are: (a) the organization’s business model; and (b) itsability to create and sustain value in the short, mediumand long term, appropriate as central themes for thefuture direction of reporting? Why/why not?Q6. Do you find the concept of multiple capitals helpful inexplaining how an organization creates and sustainsvalue? Why/why not?Guiding Principles (page 13)Q7. Do the Guiding Principles identified in the DiscussionPaper provide a sound foundation for preparing anIntegrated Report – are they collectively appropriate;is each individually appropriate; and are there otherGuiding Principles that should be added? Why/why not?Content Elements (page 14)Q8. Do the Content Elements identified in the Discussion Paperprovide a sound foundation for preparing an IntegratedReport – are they collectively appropriate; is eachindividually appropriate; and are there other ContentElements that should be added? Why/why not?What Will Integrated Reporting Mean for Me? (Reportingorganizations – page 21, Investors – page 22, Policymakers,regulators and standard-setters – page 23, Otherperspectives – page 24)Q9. From your perspective:(a) Do you agree with the main benefits as presentedin the Discussion Paper? Why/why not?(b) Do you agree with the main challenges as presentedin the Discussion Paper? Why/why not?(c) Do you agree that Integrated Reporting will drivethe disclosure of information that is useful forintegrated analysis (from the perspective of investors)?Why/why not?Future Direction (page 25)Q10. (a) Do you agree that the actions listed in the DiscussionPaper should be the next steps undertaken by theIIRC? Why/why not? Are there other significantactions that should be added?(b) What priority should be afforded to each action?Why?Q11. Do you have any other comments that you would likethe IIRC to consider?26 www.theiirc.org

ABOVE ALL, INTEGRATED REPORTINGIS ABOUT GOOD BUSINESS“In Tata Group the core belief is what we do must benefit society and this is why we support the development ofIntegrated Reporting. Sustainability must be in your DNA.”Ishaat Hussain, Finance Director, Tata Sons Limited“Managing pension assets means that we have a responsibility towards millions of people to ensure they receivedecent pensions; we therefore need to generate decent returns in a responsible manner over the long term. IntegratedReporting helps us get the full picture of a company’s performance and make sound investment decisions.”Professor Angelien Kemna, Chief Investment Officer, APG andChief Executive Officer, APG Asset Management“The case for globally consistent financial reporting standards is well understood and accepted. It is appropriate toapply the same global approach to other aspects of corporate reporting. This initiative represents an important stepon that journey.”Hans Hoogervorst, Chairman, International Accounting Standards Board“It is about time that we stopped printing together financial and sustainability reports without any visible and concretelinks between them.”Professor Nelson Carvalho, Universidade de São Paolo“If you are a company committed to the long term, and one of your ambitions is to be trusted, you have no choice –Integrated Reporting is the way to communicate.”Jim Singh, Chief Financial Officer, Nestlé“The goal of the IIRC is not to increase the reporting burden on companies and other entities. Rather, it is to help themand all their stakeholders make better resource allocation decisions. All of us have a stake in a sustainable society.”Göran Tidström, President, International Federation of Accountants“Integrated Reporting builds on the practice of financial reporting, and environmental, social and governance reporting.It equips companies to manage their operations, brand and reputation strategically and to manage better any risks thatmay compromise the long-term sustainability of the business.”Professor Mervyn King, Deputy Chairman, IIRC and Chairman, GRITowards Integrated Reporting 27

ACKNOWLEDGEMENTSAND ENDNOTESIIRC membersSir Michael Peat, Principal Private Secretary to TRHThe Prince of Wales and The Duchess of Cornwall(Chairman)Professor Mervyn King, Chairman, King Committeeon Corporate Governance and Chairman, GlobalReporting Initiative (Deputy Chairman)Helen Brand, Chief Executive, ACCAProfessor Nelson Carvalho, Universidade de SãoPaulo, Brazil and Chairman, 25th Session ofUNCTAD’s ISARPaul Clements-Hunt, Head of Unit, UNEP FinanceInitiativeAron Cramer, President and CEO, Business forSocial ResponsibilityRobert Eccles, Professor of Management Practice,Harvard Business SchoolGerald Edwards, Senior Advisor on Accountingand Auditing Policy, Financial Stability Board(Observer)John Elkington, Founding Partner & ExecutiveChairman, VolansDr Wolfgang Engshuber, President, CorporateCenters, Munich Re America and UNPRITim Flynn, Chairman, KPMG InternationalHans Hoogervorst, Chairman of the InternationalAccounting Standards Board (from July 2011)Ishaat Hussain, Chief Financial Officer, TataMichael Izza, ICAEW Chief Executive and GlobalAccounting AllianceProfessor Angelien Kemna, Chief InvestmentOfficer, APG and Chief Executive Officer, APGAsset ManagementThomas Kusterer, Chief Financial Officer, EnBWEnergie Baden-Württemberg AGHuguette Labelle, Chair, Transparency InternationalMindy Lubber, President of Ceres and Directorof INCRCharles A. McDonough, Vice President andController, The World BankSir Mark Moody-Stuart, Chairman of theFoundation for the Global CompactDennis Nally, Chairman, PricewaterhouseCoopersInternational LimitedJeremy Newman, Chief Executive Officer, BDOInternationalEdward Nusbaum, Chief Executive Officer,Grant Thornton InternationalDavid Nussbaum, WWF-UK Chief Executive,WWF InternationalRoberto Pedote, Senior Vice President of Financialand Legal Affairs, NaturaRussell Picot, Group Chief Accounting Officer,HSBCJames H. Quigley, Senior Partner, Deloitte LLPRené Ricol, General Commissioner for PublicInvestment (France)Atsushi Saito, President & CEO, Tokyo StockExchange Group, IncRick Samans, Managing Director, WEF andChairman, Climate Disclosure Standards BoardMaria Helena Santana, Chairman of the ExecutiveCommittee of the International Organization ofSecurities CommissionsLeslie Seidman, Chairman, Financial AccountingStandards BoardJim Singh, Chief Financial Officer, NestléBjörn Stigson, President, World Business Councilfor Sustainable DevelopmentGöran Tidström, President, International Federationof AccountantsCharles Tilley, Chief Executive, CIMAJim Turley, Chairman and Chief Executive Officer,Ernst & YoungDoug Webb, 100 Group of Finance DirectorsChristy Wood, Chair, International CorporateGovernance Network (ICGN)Li Yong, Vice Minister of the Ministry of Finance,P.R. China and President of CICPA (from July2011)Working Group membersPaul Druckman, Executive Board Chairman,The Prince’s Accounting for Sustainability Project(Co-Chairman)Ian Ball, Chief Executive Officer, InternationalFederation of Accountants (Co-Chairman)Dr Nelmara Arbex, Deputy Chief Executive,Global Reporting InitiativeFrank Curtiss, Head of Corporate Governance,Railpen and Board member ICGNPeter Dart, Director, WPPJessica Fries, Director, The Prince’s Accounting forSustainability Project (Secretary)James Gifford, Executive Director, United NationsPrinciples for Responsible InvestmentEric J. Hespenheide, Partner, Deloitte & Touche LLPKiyoshi Ichimura, Executive Board Member, TheJapanese Institute of Certified Public AccountantsAlan Knight, Independent Standards AdvisorClaudia Kruse, Head of Sustainability andGovernance, APG and Chair, ICGN IntegratedBusiness Reporting CommitteeBob Laux, Director, Accounting and Reporting,MicrosoftJerome Lavigne-Delville, Special Advisor, UNGlobal Compact OfficeErnst Ligteringen, Chief Executive, GlobalReporting InitiativeSteve Maslin, Partner, Grant ThorntonDr. Robert Kinloch Massie, Senior Fellow, Initiativefor Responsible Investment, Kennedy School ofGovernment, Harvard UniversityDavid Matthews, Partner, KPMGDr Anthony Miller, Accounting and CorporateGovernance Programme, UNCTADDr Jeanne Ng, Director, Group EnvironmentalAffairs, CLP Holdings LimitedDavid Phillips, Partner, PricewaterhouseCoopersJanet Ranganathan, Vice President for Science andResearch, WRIProfessor Roger Simnett, Associate Dean,Research, University of New South WalesSusanne Stormer, Vice President, Global TripleBottom Line Management, Novo NordiskAlan Teixeira, Director of Technical Activities,International Accounting Standards BoardGraham Terry, Strategy & Thought Leadership,SAICA Senior Executive, South African Instituteof Chartered AccountantsDr Steve Waygood, Head of SustainabilityResearch and Engagement, Aviva InvestorsYuki Yasui, Deputy Head, UNEP Finance InitiativeAdditional Task Force and AdvisoryGroup membersMarjolein Baghuis, Communications and NetworkRelations Director, Global Reporting InitiativeBastian Buck, Manager – Technical Development,Global Reporting InitiativeRalf Frank, Managing Director, DVFARobert Giglietti, Deputy Controller-FinancialReporting, GEGavin Grant, Chairman, Burson-Marsteller UKLois Guthrie, Secretary, Climate DisclosureStandards BoardJonathon Hanks, Founding Director, InciteSustainabilityYoichi Mori, Technical Director, The JapaneseInstitute of Certified Public Accountants28 www.theiirc.org

John Paluszek, Chair, Global Alliance for PublicRelations and Communication ManagementSallie Pilot, Director of Research & Strategy,Black SunPeter Proestakes, Assistant Director, FinancialAccounting Standards BoardNick Ridehalgh, Senior Director, KPMG SydneyTom Rotherham, Associate Director, Hermes EquityOwnership Services (EOS)Neil Stevenson, Brand Executive Director, ACCAAlan Willis, Independent Standards AdvisorSecretariatJessica Fries, Director, The Prince’s Accountingfor Sustainability Project (A4S) and Director,PricewaterhouseCoopersLisa French, Director Reporting Framework, GlobalReporting InitiativeSuperna Khosla, Head of Communicationsand Engagement, A4S and Senior ManagerPricewaterhouseCoopersMike Krzus, President, Mike Krzus ConsultingMariko Mishiro, Research Fellow, WorldIntellectual Capital Initiative (WICI)Charlotte Masiello-Riome, CommunicationsStrategy Advisor, A4SMichael Nugent, Senior Technical Manager,International Federation of AccountantsDr. Jeremy Osborn, Project Manager, CIMAMike Reid, Project Manager, A4S and Manager,Grant ThorntonBeth A. Schneider, Director, Deloitte & Touche LLPBethan Walker, Communications Officer, A4SJoris Wiemer, Senior Coordinator – ExternalRelations, Global Reporting InitiativeVictoria Windmill, Project Manager, A4S andManager, DeloitteOther acknowledgementsMembers of the Accounting Bodies Network ofThe Prince’s Accounting for Sustainability ProjectRobert Bruce, JournalistRobert Bunting, Past President, InternationalFederation of Accountants (former member ofthe IIRC)Lauren Dalley, Group Account Director, Black SunJane Diplock, Former Chairman of the ExecutiveCommittee of IOSCO (former member of the IIRC)Alan Fisk, Technical Editor, InternationalAccounting Standards BoardRobert H. Herz, Former Chairman, FinancialAccounting Standards Board (former member ofthe IIRC)Donald Hill, Design Director, Black SunBritt Keay, Account Manager, Black SunMitsuru Komiyama, Former Executive BoardMember, The Japanese Institute of Certified PublicAccountants (former member of the WorkingGroup)Richard Reid, London Chairman, KPMG (formermember of the Working Group)Victoria Scott, Research Analyst, Black SunTakayuki Sumita, Chairperson, World IntellectualCapital Initiative (WICI)Sir David Tweedie, Former Chairman of theInternational Accounting Standards Board(former member of the IIRC)In addition, the IIRC would like to thank the manyhundreds of people around the world who havecontributed to the development of IntegratedReporting and this Discussion Paper throughparticipation in meetings, roundtables, seminars,online discussion and other eventsEndnotes1 Ocean Tomo (2010), “Ocean Tomo’sIntangible Asset Market Value Study”2 Management commentary is also known asmanagement discussion and analysis, businessreview and narrative reporting3 Sustainability reporting is also known as triplebottom line reporting, environmental, socialand governance (ESG) reporting, corporateresponsibility reporting and corporate socialresponsibility reporting4 See, for example, Boston College CarrollSchool of Management (2008), “The Useof Non-Financial Information: What DoInvestors Want?”, Arnold, V., Bedard,C., Phillips, J. and Sutton, S. (2009),“Understanding Professional and Non-Professional Investors’ InformationRequirements”, Financial Services Counciland The Australian Council of SuperannuationInvestors (2011), “ESG Reporting Guidefor Australian Companies – Building TheFoundation For Meaningful Reporting”,Haigh, M. and Shapiro, M.A. (2011),“Financial Institutions: taking greenhousegases into account” produced by the ClimateDisclosure Standards Board for the Departmentfor Environment, Food and Rural Affairs, UK5 UN Global Compact-Accenture (2010),“A New Era of Sustainability, UN GlobalCompact-Accenture CEO Study 2010”6 Bloomberg (2010), “The Sustainability Edge,Sustainability Report 2010”7 See, for example, Financial Reporting ReviewPanel and Accounting Standards Board(2011), “Cutting the Clutter. Combating clutterin an annual report”8 These sources include White, A.L (2010),“The Five Capitals of Integrated Reporting –Toward a Holistic Architecture for CorporateDisclosure” and Forum for the Future (2009),“The Five Capitals Model – a frameworkfor sustainability”9 See, for example, Eccles, R.G. and Krzus, M.P.(2010), “One Report: Integrated Reporting fora Sustainable Strategy” and Hopwood, A.H.,Unerman, J. and Fries, J. (2010), “Accountingfor Sustainability: Practical Insights”10 CIMA, PwC and Tomorrow’s Company(2011), “Tomorrow’s Corporate Reporting– A critical system at risk”Towards Integrated Reporting 29

Your comments requestedPlease join us in this unique effort to develop an overarchingframework for Integrated Reporting by providing feedback on thisDiscussion Paper. Your answers to the Consultation Questions in thisDiscussion Paper, and any other comments you would like to make,should be submitted to dpresponses@theiirc.org or online atwww.theiirc.org. For the purpose of analysis, you are asked toidentify the organization to which you belong and where it islocated. All comments received will be considered a matter ofpublic record and will be posted on www.theiirc.org.Comments should be submitted by Wednesday 14thDecember 2011.www.theiirc.org