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Three years ago, to reflect the connections between our financial and nonfinancial performance, we began to integrate performance reporting to present a more holistic view of AEP. This year’s report marks our third integrated report. Until now, there was no guidance on integrated reporting. The International Integrated Reporting Council (IIRC), working with companies, financial institutions, accounting firms, environmental and sustainability advocates and others worldwide, releases a working framework in late 2011. AEP’s 2012 report reflects this framework in an attempt to build upon the foundations of financial, management commentary, governance and sustainability reporting in a way that shows their interdependencies.  Following is a full description of the framework’s elements, which appear in each section of this report. Learn more about the work of the IIRC online.



Organizational overview and business model: What does the organization do and how does it create and sustain value in the short, medium and long term?

The Integrated Report provides essential context by identifying:

  • the organization’s mission, principal activities, markets, products and services;
  • its business model, value drivers and critical stakeholder dependencies; and
  • its attitude to risk.


Operating context, including risks and opportunities: What are the circumstances under which the organization operates, including the key resources and relationships on which it depends and the key risks and opportunities that it faces?

To provide context, an Integrated Report identifies:

  • the commercial, social and environmental context within which the organization operates, including significant laws and regulations that affect the organization’s ability to create and sustain value in the short, medium and long term;
  • the resources and relationships that are key to the organization’s success, including key stakeholders, their legitimate needs, interests and expectations, and their importance to the organization; and
  • the organization’s key risks and opportunities, including those that relate to its relationships and to its impact on, and the continued availability, quality and affordability of, relevant resources.

This Content Element builds on the high-level overview of the organization and includes:

  • a more in-depth description of material issues;
  • the organization’s process for determining which issues it considers material; and
  • how the material issues affect the organization’s ability to create and sustain value over time (e.g., how the organization integrates key emerging or escalating risks and opportunities into its strategies).


Strategic objectives and strategies to achieve those objectives: Where does the organization want to go? And how is it going to get there?

An Integrated Report describes the organization’s strategic objectives and its strategies to achieve those objectives. It sets out how the organization will measure achievement and target outcomes for the short, medium and long term. 

This discussion builds on the description of the organizational overview and operating context to provide report users with an understanding of what drives and protects the value of the organization.

It identifies:

  • risk management arrangements related to key resources and relationships;
  • the linkage between strategies and other Content Elements; and
  • what makes the organization unique and able to realize value in the future, such as the extent to which sustainability considerations have been embedded into its strategy to give it a competitive advantage.


Governance and remuneration: What is the organization’s governance structure, and how does governance support the strategic objectives of the organization and relate to the organization’s approach to remuneration?

An Integrated Report provides insight about the organization’s oversight and tone at the top. It includes:

  • an explanation of the organization’s leadership and strategic decision-making processes, including the skill set of those charged with governance;
  • what actions those charged with governance have taken to influence the strategic direction of the organization, including its culture, ethical values and relationships with key stakeholders; and how the remuneration of executives and those charged with governance is linked to performance in the short, medium and long term, including how it is linked to the organization’s use of and impact on the resources and relationships on which it depends.


Performance: How has the organization performed against its strategic objectives and related strategies?

An Integrated Report includes qualitative and quantitative information, including:

  • KPIs and KRIs regarding the organization’s performance against its strategic objectives and related strategies;
  • the organization’s impacts (both positive and negative) on the resources and relationships on which it depends;
  • The significant external factors impacting performance; and how the organization fared against its targets.

Information regarding financial performance is integrated with information regarding performance with respect to the other capitals. The discussion also encompasses how innovation affects the ability of the organization to create and sustain value. 

Performance information includes a description of the organization’s view of its major external economic, environmental and social impacts and risks up and down the value chain, along with material quantitative information to the extent practicable.  While other reports and communications (such as financial statements, a sustainability report or detailed website disclosures) may be referenced or linked for those report users who want additional detail on various aspects of performance, the performance discussion in an Integrated Report is considerably more concise and connected. The linkages between past and current performance and between current performance and future outlook should be made clear.


Future outlook: What opportunities, challenges and uncertainties is the organization likely to encounter in achieving its strategic objectives and what are the resulting implications for its strategies and future performance?

Future outlook builds on other Content Elements to highlight anticipated changes over time. It provides information, built on sound and transparent analysis, about:

  • how the organization is currently equipped to respond to the operating context that it is likely to face in the future,
  • how the organization balances short- and long-term interests,
  • potential repercussions of where the organization expects it will go in the short, medium and long term,
  • the actions needed to get there, and the associated uncertainties.

The Integrated Report should identify any real risks that could have extreme consequences, even though the probability of their occurrence might be considered quite small.