Research On Corporate Integrated Reporting Based On Sustainable Value Creation

Sustainable development has become global focus, which leads to changes in the external business reporting. However, the separation of economic sustainability, environmental sustainability and social sustainability results in the companies’isolated external reporting, namely independent annual report(based on the financial report as the main content) and sustainable development report(enterprise social responsibility report, environmental report), which is not conductive to communication on the creation of value, so the international accounting community proposed reporting which aims to integrate all kinds of reports into a "integrated report" and in December 2013, the International Integrated Reporting Council (IIRC) formally issued International Integrated Reporting Framework.Existing literatures enriches the research related to sustainability and enterprise reports, but there are still two import scientific problems to be solved:the first is the theoretical basis for the integrated reporting, namely what is the focus of value to prepare a integrated report; the second is the construction problem, namely based on the above focus of value, what kind of integrated approach should be used to construct integrated report. According to the logic of "theoretical basis-expansion of theory- the end result" of the theory and using qualitative and quantitative analysis, statistical analysis, case studies and other research methods, this thesis studies the evaluation theory of enterprise’s ability to create sustainable value, reexamines the nature of accounting theory, and further studies the integrated approach of enterprise integrated reporting focusing on sustainable value. Then this thesis provides a integrated reporting framework for China enterprises, trying to establish an internally consistent theoretical system of integrated reporting which focuses on the ability of sustainable value creation and takes the nature of accounting as starting point. On basis of the above studies, this thesis draws the following conclusions.Firstly, the integrated thinking and the focus of the sustainable value of integrated reporting are not accidental, but deeply rooted in the scientific theory of sustainability and embodied in the concept of sustainable development and sustainability science, research topics and the quantitative assessment methods of sustainability. On the other hand, multiple perspectives on the nature of accounting are mutual penetration and the understanding of the accounting nature is a historical and evolving process which should be promoted in the perspective of sustainable development in order to provide the theoretical starting point for construction of integrated reporting focusing on the sustainability value.Secondly, no integrated theory of enterprise sustainability, no integrating approach and framework for integrated reporting. The evaluation theory of enterprise sustainable value creation proposed in this thesis is a value-oriented integrated monetization metrics which takes the opportunity cost thinking and capital method as means and the evaluation of respective contribution of economic capital, social capital and environmental capital as foundations. The method is suitable for any form of economic capital, environmental capital and social capital, while the amount of capital included in model is not limited to monetization. This approach solves the evaluation of whether an enterprise can sustainably use the resources from the market level in an integrated way. The theory suggests that enterprises can’t create sustainability value by maximizing a form of capital while ignoring other capitals. Overall, the evaluation theory of sustainable value creation ability is in line with the principles of unitary, equality and contribution of sustainable integration. The statistical analysis in this thesis shows the application of the theory in the real world.Thirdly, the sustainability value approach expands the enterprise values to maximization of the sustainability value. The integration of sustainability within the enterprise takes place in various levels, from governance systems, strategies and business models to performance evaluation and reporting, and leads to the deepening of understanding of the nature of accounting. In the perspective of sustainability, accounting, in essence, is a tool through the measurement of economic capital investment, environmental and social capital and their capital value created to determine the sustainability value of the subject. The function of accounting is to evaluate enterprise’s sustainability value and by providing the related information contributable to enterprise’s sustainable development to improve the efficiency of resources. Accounting objective is to determine the sustainability value of a particular subject and the core of the nature of accounting is to measure the sustainability value, which sets forth requirements for the authenticity and integrity of the sustainability value information. Accounting measurement results need to be communicated to stakeholders in the form of reports which includes the related information of sustainability value. It is a historic evolving from financial reporting and sustainability reporting to the integrated reporting and is the inevitable result of the deepening understanding the nature of accounting. There are both distinctions and inheritance between integrated reporting and other reporting.Fourthly, in essence, integrated reporting is a tool to disclose the sustainability value creation ability, so it should integrate the local reporting information, the key performance indicators information, business model and strategic information focusing on the enterprise’s ability of sustainability value creation. In terms of the information connectivity levels, there are there approaches of integrating local reporting to integrated reporting, namely weak, general and strong integration, among which the last integration forms is the real integrated reporting. According to the focus of the sustainability value, the three fundamental aspects of economic, environmental and social combining with the four dimensions of "competitors and best practices", "value chain" and "innovation and knowledge", "internal processes", embedding financial capital, manufacturing capital, human capital, intellectual capital, environmental capital and social capital, builds a integrated theoretical framework of performance measurement. Construction of integrated model of business models and strategies by way of three-stage process integration highlights the highly dynamic characteristics of business model and strategic system.Fifthly, China’s enterprises have the feasibility toward a integrated sustainability report and should learn from international experience and use above integrating approaches to construct a enterprise integrated reporting framework which adapts to China’s condition and focuses on the ability of sustainability value creation. International cases indicate that the preparation and disclosure of the integrated report should focus on the ability to create sustainability value and take integrated thinking as the prerequisite, information connectivity as the soul, the integrated business models and strategies as core, and KPI system as quantitative information sources reflecting enterprise’s sustainability value creation ability. China’s enterprise integrated reporting framework constructed in this thesis includes goal, qualitative characteristics of information, preparation principles and elements. The goal of integrated reporting in China is to fully explain how to create sustainable business value and provide useful information for decisions of various stakeholders; the quality characteristics of information includes decision correlation, information connectivity, simplicity, importance, consistency and comparability, authenticity and integrity. The preparation of integrated report should follow three principles, namely sustainability value orientation, stakeholder orientation and useful guide for decision. Focused on the ability of sustainability value creation, integrated report should include external environment and enterprise overview, enterprise strategy, business model, governance, risk and opportunities, business performance and future prospects and so on.The contributions of this thesis are as follows:Puts forward to an evaluation theory of sustainability value creation ability and deepens the understanding of the nature of accounting; designs an integrated approach of information in integrated reporting focusing sustainability value; then construct a integrated reporting framework for China’s enterprises, which not only expands the related theories but also provides reference for practice.