Integratedrepor,ngandaccountabilityinprac,ce:

Caseinsightfromtheinsurancesector

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AlessandroLaiUniversityofVerona(Italy)

GaiaMelloniUniversityofEastAnglia(UK)

RiccardoStacchezziniUniversityofVerona(Italy)

IntegratedThinkingandRepor,nginprac,ceLUISSUniversity(Rome),17th–18thNovember2016

Researchposi,oningandaimofthestudy(1/2)

The InternaAonal Integrated ReporAng Council (IIRC) claimsthat Integrated ReporAng (IR) can enhance corporateaccountabi l i ty ( I IRC, 2013). [→ toward stakeholdersaccountability?]

Yet criAcal and interpretaAve studies have challenged thisoutcome(BrownandDillard,2014;deVillieretal.,2014;Flower,2015;Thomson,2015;etc.).[→investorsaccountabilityonly?]

Insufficientempiricalresearchdetailshow IRpreparersdealwithaccountabilitywhenproducingIR.

Tofillthisgap,thecurrentstudyanalysestheaccountabilityviewsexpressedbypreparersinvolvedinIRconstrucAon. 22

Researchposi,oningandaimofthestudy(2/2)

In parAcular, the study examines the discourses of IRpreparersaboutIR implementaAontounderstandhowtheycome to select a corporate accountability content, throughreasoning about the subjects disclosed in the IR (i.e.,what)andthelanguageused(i.e.,how).

The study aims to detect what accountability view(stakeholdersvs investors) ispredominant in theprocessofIRconstrucAonandtheroleofcontextualcondi,ons inthisprocess.

The IR pioneer Assicurazioni Generali S.p.A. (hereaZer,Generali)servesascasestudy.

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ThecasestudycompanyanditsIRGeneraliistheoneoftheworld’stopteninsurancecompanies.

GeneraliembracedtheIIRCproject in2011,joinedtheIIRCpilotprogramin2012, acAvely parAcipates to two IIRC business networks (insurance andnaAonal network of Italian IR adopters), and already has published threeannualIRs(2013,2014,and2015).

Its IR,preparedat thegroup level, is incorporated in itsfinancial report.Aspartofthefinancialreport,itisformallypublishedbytheBoardofDirectors.

The team in charge of its preparaAon forms is the “Group integratedreporAngandCFOhub” (hereaZer, IRhub).Fourpersonswork in the IRhub:theheadoftheoffice,the“HeadofGroupIntegratedReporAngFramework,”andtwootherpersons(onewhoalsoisinvolvedinCSRacAviAes).

The Group Chief Financial Officer, recently appointed General Manager,periodicallyparAcipatestohelpdefinetheIRcontent.Variousoffices,suchasinvestor relaAons, sustainability, and communicaAon, provide specificinformaAontotheIRhub.

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Theore,calframe(1/2)The content of accountability (i.e. accounts that accountorsprovides to addressees) is typically invesAgated by criAcal/interpretaAve accounAng scholars who seek to understandtheexperience andpracAcal engagementof actors involvedinaccountabilityrelaAonships(Messner,2008).

ForcorporateexternalreporAng,thiscontentrelatestohowthe message of corporate reports gets constructed andentailsreasoningaboutwhatandhow.

Emergingliteraturethathavetriedtoopenthe“blackbox”ofthe reporAng process, urges us to assess the relaAonshipbetween the “text” and the “context” of corporatecommunicaAon(Tregidgaetal.,2012). 55

Theore,calframe(2/2)ExploringtherelaAonshipbetweentextandcontextcanhelphighlightpreparers’ choicesof subjects (what)and language(how)whentheyproducemessages.According to the Teun van Dijk’s socio-linguisAc studies ondiscourse and context (2006, 2008, 2009), texts are influencedbyhowpreparersdefineandgiverelevancetothecontext:§  “It is not the social situa7on that influences (or is influenced by)

discourse, but the way the par7cipants define such a situa7on” (vanDjik,2008,p.X).

OrganizaAonalcontextinwhichthereportsareproducedandthe(wider)reporAngcontextinwhichtheyaremobilisedarecontexts that preparers likely consider in deciding what towriteornot,andhowtowriteit(Tregidgaetal.,2012).

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Methodology“Data collec,on”: in-depth semi-structured interviews withGenerali actors directly or indirectly involved in the IRimplementaAon [see Tables 1 and 2], and documentaAon thattraces the company’s shiZ toward IR and its organizaAonal andreporAngcontexts.

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“Dataanalysis”:Theinterviewtranscriptswerecodedtodetectthe accountability discourses on the subjects (what) and thelanguage(how)ofIR[seeExamples].In line with Van Djik’s theoreAcal interpretaAon of therelaAonship between text and context, we next explored thediscourses in terms of how IR preparers decide subjects andlanguageofIR,inrelaAontotheirdefiniAonofthecontext(s)inwhichtheIRisproduced.

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Table1–Informants’roleanddura,onoftheinterviews.Informant Dura7on(minutes)•  IRManager(Headofthe“GroupIRandCFOhub”) 80•  IRManager–secondinterview 60•  IRManager–thirdinterview 70•  IRMiddle-Manager(HeadoftheGroupIRframework) 40•  IRMiddle-Manager–secondinterview 40•  IRStaff1 75•  IRStaff2 65•  GeneralManagerandGroupCFO 90•  ForeignsubsidiaryCFO 50•  Investorrelator 40•  CorporateGovernanceManager 35•  CommunicaAonManager 40

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Table2–MaintopicsdiscussedduringtheinterviewsMo,va,onsforIRadop,on•  HowlonghaveyoubeenworkinginGeneraliandwhatisyourposiAonwithinthe

company?

•  WhyhasGeneraliadoptedtheIRandwhatarethemostimportantbenefitsrelatedtosuchadopAon?

•  WhatarethemainchallengesarisingfromIRadopAon?

•  WhoaretheintendedaddresseesofyourIR?Investors?Others?

•  Howdoyouaddressusers’specificinformaAonneeds?Doyoucollectfeedbackfromthem?

Actors/OfficesinvolvedinIRimplementa,on•  WhoarethemainproponentsofIRadopAonwithinthecompany?

•  Whoaretheactors/officesdirectlyinvolvedinthepreparaAonofthereport?

•  Howdotheseactors/officesinteractwithotherofficesinordertocollectinformaAon?

•  Whatistheroleofgovernancebodiesandtopmanagementindefiningthetopicsandthelanguageofthereport?

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Table2–Maintopicsdiscussedduringtheinterviews(cont’d)SubjectsandlanguageofIR•  HowarethetopicsofIRselected?HavethesetopicschangesoverAme?

•  ArethereanytopicsthatwereexcludedfromormarginalizedwithintheIR?Why?

•  TowhatextentGeneralifollowstheIIRCframework?

•  Whicharethemainsources(e.g.sustainabilityreport;governancereport;internaldocumentaAons,etc.)fordraZingthereport?

•  Howisthelanguageofthereportchosen?

•  HaveIRcontentelementsandlanguagechangedoverAme?Why?

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Subjects(what)•  Valuecrea,onstory

-Insurancebusinessmodel-Strategy

•  UnintegratedsustainabilityLanguage(how)•  Complexity(tobereduced)•  Aarac,veness(tobeincreased)

Theaccountabilitydiscourses:

Findings(1/5)

Organiza,onalcontext Repor,ngcontextSubjects(what)

•  Valuecrea,onstory

•  ShidsincorporategovernancewiththeappointmentofanewCEOandnewtopmanagers.

•  Investors,analystsandra,ngagenciesincreasinglyappreciateinformaAonaboutthevaluecreaAonprocess.

The accountability discourses and the preparers’interpreta,onofthecontext

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Findings(2/5)

Organiza,onalcontext Repor,ngcontextSubjects(what)

–  Insurancebusinessmodel

•  NeedtoshareknowledgeabouttheinsurancebusinessmodelinsidetheCompany.

•  LackofknowledgeabouttheinsurancebusinessmodeloutsidetheCompany.

•  TheIIRCFrameworkrequiresbusinessmodeldisclosure

•  TheIIRC“Insurancenetwork”(theCompanybelongstothisnetwork)givesgreatrelevancetospecificinsurancesectordisclosure.

–  Strategy •  ThenewtopmanagementwantstocommunicatethestrategyanditscascadebothinsideandoutsidetheCompany.

•  Needofinvestors(andotherstakeholders)toknowthestrategyimplementa,onprocess,especiallyaZerthegovernanceshiZ.

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Findings(3/5)

Organiza,onalcontext Repor,ngcontext

Subjects(what) •  Unintegrated

sustainability•  Incompleteintegra,on

betweentheIRhubandthesustainabilityoffice.

•  EnvironmentisnotconsideredtobeparAcularlyrelevantintheinsurancesector.

•  Investorsareinterestedinsustainabilityonlyforitsimpactsonfinancialperformances.

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Findings(4/5)

Organiza,onalcontext Repor,ngcontextLanguage(how) •  Complexity(to

bereduced)•  Perceivedneedtoshare

informa,onabouttheCompany’svaluecreaAonprocessamongnon-accoun,ngdepartments.

•  Investors’difficultytounderstandtheinsurers’financialreports.

•  “Storytelling”isincreasinglyappreciatedinvariouscontexts.

•  UsersareexpectedtoavoidceremonialandboringdocumentsliketradiAonalfinancialreports.

•  Aarac,veness(tobeincreased)

•  PreparingcorporatereportsisnotjustamaaerofcompliancewithlawsandregulaAons.

•  Investorsareexpectedtoposegreateraaen,onto“appealing”reports.

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Findings(5/5)

Discussion(1/3)

IR implementaAon entails thorny reasoning about the content ofaccountabilitytobeprovided(Abeysekera,2013).

SomeopAmisminrespectoftheideathatIR“ismorelikelytoreinforcerather than encourage cri7cal reflec7on on ‘business as usual’prac7ces”(BrownandDillard,2014,p.1120).

Discussions about the subjects of IR revolve around discourses of “valuecreaAonstory”and“unintegratedsustainability”.

Some opAmism in respect of the criAcs about the viability andusefulnessofbusinessmodeldisclosure inexternalreporAng(e.g.Page,2014;Singleton-Green,2014;Mellonietal.,2016).

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ThefindingssupporttheideathatIRhasliqletosayaboutsustainability(MilneandGray,2013,p.14;Flower,2015;Thomson,2015).

Discourses on the language of IR revolve around discourses of“complexity”and“aqracAveness”ofcorporatereporAng.

TheIRpreparers’discoursesareinlinewiththerecent“narraAveturn”inaccounAng (Beare, 2015) and the increasing adopAonof “less technicallanguage”withincorporatereporAng(Luegetal.,2016).

ThedecisionsaboutthesubjectsandthelanguageofIRreflectthepreparers’concurrentconsideraAonoftwokey“contextualsituaAons”:theredefiniAonof the corporate governance within the organizaAonal context, and the investors’increasinginformaAonneedswithinthewiderreporAngcontext.

Different “contextual situaAons” were not believed to create“tensions” (Higginsetal.,2014),yet IRpreparersconsideredthemastwoconvergingcondiAonsofthesame“socialsituaAon”.

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Discussion(2/3)

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Discussion(3/3)Preparers consider investors the key users of IR, and perceive theirincreasing informaAon needs in terms of both supplementaAon andsimplificaAonofthereporAngmessage.

The investors focusbrings intoquesAonthepossibility for stakeholdersaccountability (Brown and Dillard, 2014; Haller and Van Staden, 2014; Stubbs andHiggins,2014).However,thecontentofaccountabilityprovidedismoreholisAc(Rodrigue,2014) and less complex (Gray et al., 1998; Gray, 2006) than the one usuallyprovidedtoinvestors.

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Conclusions

The IR implementaAon entailed a thorny reasoning process about thecontent of accountability to be provided, and organizaAonal andreporAng context situaAons experienced by preparers played anintertwinedroleinthisprocess.AlthoughincreasingconsideraAonforvariousstakeholders’ informaAonneedsisemerging,investorsaredeemedthekeyusersofIR.This evidence suggests pessimist conclusions on the possibility that IRmayfavourstakeholdersaccountability.However, the percepAon of investors’ increasing informaAon needsunveils IR potenAals as a carrier for a more holisAc and usableaccountability.

[→towardaredefini,onofinvestorsaccountability?]

2020

ThankyouforyourkindaJen7on!

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§  Examplesofaccountabilitydiscoursesonsubjects(what)

The IR project […] was able to give a new turn to renewed need of information about our strategy and our business model (General Manager). Be[ing] in tune with the strategy […] remains our principal story to be told, otherwise it is not material to deal about sustainability. Then we have to assure a clear connectivity of these not financial information with the other part of our IR and with our main purpose. […] We can implement new figures in our IR if they have an impact on strategy (IR Manager). Sustainability has to be integrated. It’s really a great job to do […]. In Generali, IR advancement came before a progress in sustainability themes and procedures (Foreign subsidiary CFO). … … …

Appendix

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§  Examplesofaccountabilitydiscoursesonlanguage(how)

We printed many hundreds copies of our Financial Report to be presented to the Annual General Assembly and we realized that—after this event—the main part of these copies remained in our repository … [so] we became convinced that our financial report didn’t give any representation that really could interest its potential reader (General Manager). We had been having the need to improve our annual Financial Report for a long while. [We] decided to change the format, the pictures, the images we used in the documents. We put in the Financial Report also the faces of the people of different internal staff to make the reader understand that our Company is made by people (IR Middle-Manager). This work is an important part to get the target of having a readable and interesting document and it happened that we were obliged to change our communication provider when we realized that the main discourses we want to provide to the reader weren’t in tune with the suggested framework of the draft tentative document (IR Staff 1). … … …

Organiza,onalcontext Repor,ngcontextSubjects(what)

•  Valuecrea,onstory

•  ShidsincorporategovernancewiththeappointmentofanewCEOandnewtopmanagers.

•  Investors,analystsandra,ngagenciesincreasinglyappreciateinformaAonaboutthevaluecreaAonprocess.

The accountability discourses and the preparers’interpreta,onofthecontext

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Findings(1/4)

Organiza,onalcontext Repor,ngcontextSubjects(what)

–  Insurancebusinessmodel

•  NeedtoshareknowledgeabouttheinsurancebusinessmodelinsidetheCompany.

•  LackofknowledgeabouttheinsurancebusinessmodeloutsidetheCompany.

•  TheIIRCFrameworkrequiresbusinessmodeldisclosure

•  TheIIRC“Insurancenetwork”(theCompanybelongstothisnetwork)givesgreatrelevancetospecificinsurancesectordisclosure.

–  Strategy •  ThenewtopmanagementwantstocommunicatethestrategyanditscascadebothinsideandoutsidetheCompany.

•  Needofinvestors(andotherstakeholders)toknowthestrategyimplementa,onprocess,especiallyaZerthegovernanceshiZ.

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Findings(2/4)

Organiza,onalcontext Repor,ngcontext

Subjects(what) •  Unintegrated

sustainability•  Lackofintegra,on

betweentheIRhubandthesustainabilityoffice.

•  EnvironmentisnotconsideredtobeparAcularlyrelevantintheinsurancesector.

•  Investorsareinterestedinsustainabilityonlyforitsimpactsonfinancialperformances.

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Findings(3/4)

Organiza,onalcontext Repor,ngcontextLanguage(how) •  Complexity(to

bereduced)•  Perceivedneedtoshare

informa,onabouttheCompany’svaluecreaAonprocessamongnon-accoun,ngdepartments.

•  Investors’difficultytounderstandtheinsurers’financialreports.

•  “Storytelling”isincreasinglyappreciatedinvariouscontexts.

•  UsersareexpectedtoavoidceremonialandboringdocumentsliketradiAonalfinancialreports.

•  Aarac,veness(tobeincreased)

•  PreparingcorporatereportsisnotjustamaaerofcompliancewithlawsandregulaAons.

•  Investorsareexpectedtoposegreateraaen,onto“appealing”reports.

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Findings(4/4)