The UNGP Reporting Framework and Integrated Reporting

This statement was created in coordination with the International Integrated Reporting Council.

The International <IR>  Framework (<IR> Framework) and the UN Guiding Principles Reporting Framework (UNGP Reporting Framework) both seek to advance the quality of corporate reporting. The <IR> Framework aims to create a more cohesive and efficient approach to corporate reporting that communicates the full range of factors that materially affect the ability of an organization to create value over time. The UNGP Reporting Framework focuses specifically on one of those factors – how companies manage risks to human rights – and enables more meaningful reporting on this issue to be embedded within an integrated report. Both the <IR> Framework and the UNGP Reporting Framework emphasize a forward-looking approach to reporting and the demonstration of continuous improvement over time.

“The UN Guiding Principles Reporting Framework will help give clarity to companies wanting to improve their reporting on human rights, and provide guidance on identifying human rights content for inclusion in an integrated report.”
— Paul Druckman, (former) Chief Executive Officer, International Integrated Reporting Council (IIRC)

“For companies today, understanding and addressing human rights risks is an essential component of corporate performance. The synergies between the UN Guiding Principles Reporting Framework and the International <IR> Framework will help companies take a more holistic approach to their reporting.”
— John Ruggie, Chair of the Board of Trustees, Shift

The relationship between human rights and value creation

 International <IR> Framework  UNGP Reporting Framework
<IR> is enhancing the way organizations think, plan and report the story of their business. The UNGP Reporting Framework helps companies integrate respect for human rights into the core of how they do business and to reflect that in their disclosure.
The <IR> Framework states that the aim of an integrated report is to provide insight about*:

  • The external environment that affects an organization;
  • The resources and the relationships used and affected by the organization, which are referred to collectively… as the capitals and are categorized as financial, manufactured, intellectual, human, social and relationship, and natural;
  • How the organization interacts with the external environment and the capitals to create value over the short, medium and long term.

The Framework recognizes that value has two interrelated aspects – value created for the organization itself and value created for others, including stakeholders and society at large. Further, it defines the concept of value creation to include not only the positive creation of value but also situations where value is preserved or diminished. It recognizes that over time it is unlikely that value will be created through maximizing one capital while disregarding others.

The UN Guiding Principles Reporting Framework focuses on companies’ responsibility to respect human rights as set out in the UN Guiding Principles on Business and Human Rights. The responsibility to respect human rights means to avoid infringing on such rights and to address any negative impacts with which the company is involved. It therefore focuses on situations where the value of human capital and social and relationship capital could be diminished.The UN Guiding Principles Reporting Framework provides companies with a way to understand how the most severe negative impacts on human rights – and the resulting destruction of value – are relevant for its corporate reporting.

*Paragraph 2.3 of the <IR> Framework

Understanding what to report

The UNGP Reporting Framework recognizes that companies often lack insight into how human rights are relevant to their business. As a result, current disclosure on human rights is typically one of the weakest areas of companies’ reporting – often discounted completely, focused solely on philanthropic activities, or constrained to a narrow area such as specific supply chain labour rights.

The UNGP Reporting Framework shows companies how to understand and report on their ‘salient human rights issues’: those human rights at risk of the most severe impact across their operations and value chain. These are the most acute impacts – social, environmental or economic – a company can have on people. Evidence shows that a company’s salient human rights issues tend to converge strongly with risk to the business in the medium to long term, often affecting a company’s ability to create value over time.

The <IR> Framework leaves it to the judgment of the reporting organization to determine what information to disclose about material matters it has identified, focusing on those matters that substantively affect the organization’s ability to create value over time. As a company goes through this materiality determination process, attention to ‘salient human rights issues’ can help assess the key information about risks to people that may be relevant for inclusion. Consistent with the <IR> principle of conciseness, any salient human rights issues or relevant information about their management that are not included within the company’s integrated report can be made accessible through links to another report or on the company’s website.