Featured image: Matevž Paternoster’s photo of 5.200 a 5,200-year-old wheel found near Ljubljana

Integrated reporting (IR) is a global initiative to upgrade organisational reporting.

From a traditional reporting perspective, IR objectives are challenging to understand. Or better: they could be understood, but those familiar with financial reporting alone are already suspicious of environmental or CSR reporting as too vague and inconclusive.

My simple explanation of IR objectives is slightly more direct than the one mentioned on the IIRC page. I would rather state that:

The IR aims to turn numbers into stories and turn stories into numbers.

To understand this statement, one should consider a couple of predispositions that traditional accountants and corporate reporters do not consider essential to the businesses they run.

First: memetic added value

Organisations (corporations, NGO’s, governmental institutions, public companies, municipalities, states…) are memetic entities. All organisations, human, physical, biological,… take physical inputs and produce physical outputs. The only distinct feature of human organisations is the production of memetic added value. Birds use woods for protection, while humans use them both for protection and for memetic value exchange. (Follow the tag “memes” on this page to find more about memes.)

Second: book value and memetic value

The value of goods for humans does not lie in their physicality, but in their memetic value. The same wood is worth almost nothing if its memetic value is “a log,” but if its memetic value is “5.200 years old wooden wheel from Slovenia,” then its value is enormous. Artefacts produced by humans thus mainly have value at the memetic level. Organisations are human artefacts. That is why any company’s book value tells you very little about such a company’s real value. Book value can be understood as “log value” of the mentioned wheel, while an incomparably larger value of such a company lies in its memetic value.

Third: the tangible intangibles are numbers

Traditional accounting indeed sought to decipher “real value” through concepts such as “goodwill” and “intangibles”. The word “intangibles” thus gives us the completely wrong impression that they can not be expressed in words. Quite contrary: “intangibles” can only be expressed in words and pictures. But then, what else can one expect from accountants who traditionally deal with numbers? They do not know what to do with words, so intangibles express themselves in their vocabulary as numbers only. Clear dead end.

On the contrary, it is a book value that is really intangible and something that IR has to make tangible (memetic). In contrast, so-called goodwill as a story has to find solid (integrated) financial expression. Let us be clear: There is book value, and there is a memetic value of any human artefact.

Fourth: biological integrated reporting

The success of any biological creature rests on its reporting system. Each phenotype (emerging from its genotype) receives a vast number of external and internal reports: about temperature, predator threats, and mating opportunities from the outside, and zillions of internal feedback from one cell to another and from one organ to another. Each biological organisation employs a highly elaborated integrated reporting system on the genetic (biological) level. A biological reporting system that is not integrated would not be successful.

Fifth: integrating biology with memetics

Humans developed a parallel reporting system to biological, a memetic one. Memes are second replicators that “produce” stories as artifacts, as much as genes produce phenotypes. (Both systems differ, though, but for this purpose, such a parallel suffices.) So each human being instinctively integrates both reporting systems.

We integrate physical feedback when our head bumps into a wall with memetic feedback, such as fake stories that the physical world exists only in our imagination. A widely known but not well-understood statement is: “Perception is reality.” In fact, the statement should go: “Conception is reality”, as I have proven in Memes Beyond Genes. This statement tells us all about our memetic nature. Human conception has this additional dimension, expressed in memes and stories, while animals and plants create their reality only at the perceptual level. Humans instinctively integrate reporting from both systems.

Seventh: existing is not living

Organisations, as human-made entities (artefacts), live only at the memetic level. They exist on a physical level but do not live there. They are not biological entities that could live on a physical level. They cannot reproduce at the genetic level, but they reproduce vigorously at the memetic level. For that reason, they follow all the rules that evolutionary biology explains as prerequisites for life. Organisations are alive on a memetic level. They reproduce on that level. Organisations are both artifacts and memetic fields. Memes use them (and us) for their reproduction. Memes reproduce through organisations as much as they do through us.

Conslusions

It was essential to state the above predispositions to instruct us on how to understand the reality we have to express in our reporting system. We cannot report on something that we do not understand. Traditional accounting not only does not understand organisational reality but even misleads us all about it.

The concept of 6 capitals introduced by IIRC is a good step towards integrating various value creation mechanisms and finally towards their reporting. But until they are understood as memetic activity results, results of memetic value chain creations, we will not breach the gap between numbers and words. Apparently, it is not so easy for accountants to understand that the number (value) is only a frozen result of memetic value creation. It is the IR community’s task to focus on memetic value creation first.

Appendix from January 2026

 This post was originally written in 2021. Only a few amendments have been made due to recent findings from my memetics research.

This appendix is, though, necessary because the reporting practice has deteriorated so much since then that it needs clarification.

The above post is just my wishful thinking. After the European Commission adopted European sustainability reporting standards in 2023, any hope for integrated reporting vanished. The reason is that standardization implies strict, top-down rules. If there are strict rules to be followed and if those rules are detailed on hundreds of pages, then what would you expect from reporters struggling to comply with those rules? Companies spent considerable financial and human resources to comply with the Corporate Sustainability Directive (CSRD), who would expect from them to put in place integrated reporting on top of CSRD.

Integrated reporting explicitly rejected an option to standardize reporting. They knew, and I have explained above why, that reporting always emerges from the bottom up. Each organism has its own reporting system adjusted to a unique set of values, vision, mission, comparative advantages, and personality. Like no dog is like any other dog, so no organization is like any other organization. Each must define for itself what is material to its sustainability. The European Commission killed this philosophy. They killed it on the double cost of companies. First, they spend valuable resources to satisfy Brussels bureaucrats; second, they do not report what is material to them, so they alone benefit from this reporting.

CSRD thus added yet another calamity to the European business community, almost as harmful as the green agenda.