Business Model: Background Paper for Integrated Reporting

Investors and other stakeholders want to know what makes companies tick; at the same time, regulators are increasingly requiring companies to report clearly on their business models. In response, IFAC, with the Chartered Institute of Management Accountants (CIMA) and PwC, and at the request of the International Integrated Reporting Council (IIRC), have released this background paper, which highlights the business model as being at the heart of integrated reporting.

Currently, there is wide variation in how organizations define their business models and approach to disclosure. This highlights the need for a clear, universally applicable, international definition of a business model. The proposed definition and discussion in the paper aim to bridge the varied interpretations by highlighting common areas and ensuring a consistent application across industries and sectors.

The background paper found that, in a complex financial climate that has seen investors demand greater transparency, reporting on business models is currently inconsistent, incomparable, and incomplete because of a lack of consistent guidance.