A New Business Philosophy: Introducing Integrated Thinking Principles

Now more than ever, businesses have a long-term view of their purpose, how they create value and for whom. According to The International Federation of Accountants, “integrated thinking is a 21st-century answer to today’s ever-changing environment, shaped by seismic factors such as the global pandemic, climate change and demographic change far beyond the control of any single business. It provides a structured approach for considering how to create the right environment within an organization, as well as for reviewing and course-correcting what can, at times, go wrong.” 

According to a recent article on the IFAC webpage, in December the Value Reporting Foundation launched the Integrated Thinking Principles (Principles), completing its comprehensive toolkit of resources. “The Principles are rooted in the International <IR> Framework and provide a structured approach to embedding integrated thinking into an organization year-round. The Principles are designed to be used with the <IR> Framework and the SASB Standards, which provide industry-specific disclosure topics and metrics.”

The article describes integrated thinking as “a management philosophy that unites the constituent parts of an organization and focuses the whole organization on value creation for the enterprise and its key stakeholders. It supports stronger governance and better management, underpinned by integrated decision-making and a holistic approach to resource allocation. It balances short-term performance needs with a longer-term approach to value creation and preservation. Integrated thinking can help create a virtuous loop of integration within an organization across functional siloes. Businesses that are in this integrated thinking loop are on a continuous journey, evaluated through a management and reporting philosophy that results in ongoing performance improvements.”

Integrated thinking has been successfully implemented in many organizations around the world across a wide variety of sectors, particularly by organizations that are on an integrated reporting journey and adopting the <IR> Framework. The Value Reporting Foundation’s case studies illuminate the benefits of integrated thinking.

IFAC points out that the Principles are designed to be embedded into an organization’s business model and applied across key activities overseen by the board and managed by the senior leadership team. They are implemented on three levels: the first comprises questions to the board and CEO on how widely each Principle has been adopted across the organization; the second offers the opportunity to assess how deeply the Principles have been embedded into the organization; and the third consists of strategic management tools, practices and processes to bring integrated thinking to life.

The Principles, says IFAC, “help unlock the full intrinsic value of an organization’s intangibles and communicate this to investors through an integrated report, based on the <IR> Framework and international financial and sustainability accounting standards.”

For more, see A New Business Philosophy: Introducing the Integrated Thinking Principles | IFAC.