Implication of Integrated Reporting for SMEs

Abstract

　In today's world where sustainability is a major concern, even SMEs are required to disclose sustainability information as a condition of business with large companies. In this environment, we will examine the significance of integrated reports for SMEs, mainly through literature research. From the literature research, we can divide the significance of preparing an integrated report into two purposes: information disclosure to stakeholders and information use by managers. For information disclosure to stakeholders, there are requests for CSR information from large companies, improving trust, reputation, and recognition from stakeholders, reducing reputation risk, making it easier to borrow, and lowering interest rates. On the other hand, for information use by managers, there are strategic decision-making and risk management improvement, and for management use, there are strategy revision, improving employee motivation, forming an organizational culture of raising awareness, and organizational change. We will examine the significance of these using a case study from Italy. At the same time, we will clarify that preparing an integrated report is effective in addressing the management issues of Japanese SMEs.