<IR> Guide for SMEs
Based on the Integrated Reporting (<IR>) Framework, a practical handbook on how to measure and communicate SME performance in an integrated perspective has been developed.
IR Guide for SMEs in English
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Description of the <IR> Guide for SMEs:
The needs of SMEs concerning the evolution of their corporate reporting are multi-faceted. Nevertheless, most SMEs, albeit they can be innovative and prosperous, do not understand materiality of IR and even less have they the resources and the know-how to devote to IR and to disclosure of financial and non-financial data.
Understanding of the importance of IR for a supplier or would-be supplier of large companies, already obliged to prepare holistic reports, is an absolute necessity (trickle-down effect). Trust development of other stakeholders (potential investment providers, potential international partners, customers, etc. is not possible without disclosure of the value creation project overarching all kind of activities and capitals. That is why a chapter of the Guide has given short and clear-cut explanations why IR is necessary for SMEs on one side and how the different governments and other decision making bodies can encourage SMEs to start their journey towards IR on the other.
The guidance schemes elaborated by organizations specialized in IR (IIRC for instance) or countries (South Africa as a leader in the field) are still too complicated and their application is time-consuming for an SME. The experience-informed innovation of IO2 is, borrowing from IIRC’s. The Guidance innovation is the step-by step process explanation to support the SMEs on what and how.
IR standard and based on the results of IO1, to simplify and adapt these standards to the peculiarities of the SMEs and to do this in a six-country context. Two major outcomes are:
- The simplifications respecting the principles of integrated thinking has produced an easy access guidance for the SMEs. This simplification has helped influence on the participants of the project (trainers, content developers, SME managers, accountants and students) during the project and will impact the SME populations of the partner countries in long-term.
- The facilitation of the measurements (monetized and narrative, quantitative and qualitative) and reporting of both financial and non-financial performance. This has made cross border transferability of IO2 in the EU and beyond feasible.
IO2 has offered an instruction chain complying with the seven Guiding Principles used by international standard setters: Strategic focus and future orientation, Connectivity of information, Stakeholder relationship, Materiality, Conciseness, Reliability and completeness and Consistency and comparability.
The guide was developed in three phases. During the first phase from Mai 2020 till November 2020 a preliminary analysis was made under the lead of the HSRW team and primarily with the help of the Hungarian and Polish team determining the scope (i.e. content elements to be covered), the structure as well as formal requirements (i.e. uniform language, degree of details, general ideas on layout). During this phase, research on other existing guides as well as literature was reviewed and discussed to draw up the final outline and requirements for the guide. In order to facilitate the actual writing of the guide detailed recommendations for the structure of each chapter and for language and layout were agreed upon during a meeting in November 2020. For the second phase, each partner was assigned a chapter / section and asked to write a draft version. Under the lead of the German team together with the help of the Hungarian and Polish team the draft sections were reviewed. At the end of the second phase a draft version of the guide was available. Based on this first draft all partners agreed as an extra task on the development of an IT-based tool (https://interest.uni-bge.hu/) to support Integrated Reporting implementation. The development of this tool was under the lead of the Hungarian partner.
From end of February till mid-June 2021 the third phase, an extensive review was conducted. Several online meetings were conducted to incorporate findings and hence significantly improve the guide. Associated partners were also asked for comments and feedback. All findings were consolidated by the German team and incorporated into the draft version of the guide. As a last step of the review, an English native speaker of the German team conducted the final language review. The final English version of the guide was available by end of June 2022.
The upfront structuring of the tasks by the development of general guidelines as well as the extensive review phase proved to be very valuable in ensuring the creation of a consistent report in an efficient manner. The constant feedback loops ensured that multiple views and aspects are reflected in the guide. Involving all partners into the creation of the guide was important in order to benefit from each partner’s experience. Furthermore, a common understanding of the guide was ensured and facilitated the next steps of the project (i.e. development of online learning materials and conducting pilot trainings).
The last technical step was the translation of the English version of the guide into the respective national language of each partner (see above). This was conducted from August till November 2021 by each partner individually.
