Within the corporate, accounting, securities, not-for-profit and regulatory communities, there is a growing sentiment of combining financial and sustainability information into “one report,” a phrase coined by the lauded book, One Report: Integrated Reporting for a Sustainable Strategy by Eccles and Krzus. This trend has inspired numerous articles and most recently, the August 2nd launch of the International Integrated Reporting Committee (IIRC) by the Accounting for Sustainability Project (A4S) and the Global Reporting Initiative (GRI).
I came across a highly readable perspective on this timely topic by global professional services firm, KPMG, titled, “Integrated Reporting: Closing the loop of strategy.” While there are many thoughts on this emerging trend and on how to proceed*, this paper presents a complex, potentially daunting subject in ways that any organization — regardless of its level of sustainability integration — can understand and consider. Most enlightening is its clarification of the difference between an “integrated reporting” approach and the literal creation of “one integrated report” to which some may reduce the concept.
Rather than advocating the strict combination of sustainability and annual reports, KPMG suggests that such a one-size-fits-all model may not accommodate the needs of diverse stakeholder groups. The risk would be either an overabundance or insufficiency of information, muddied further by obtuse legal reporting requirements. Instead, companies should tailor the full spectrum of information and its delivery, so it is easily accessible, clear, comprehensible, complete and balanced.
In short, KPMG advocates integrated corporate reporting, defined as a strategic framework for managing, measuring and communicating a company’s total performance in an integrated, standardized and comparable way. Integrated reporting refers to addressing and focusing equally on the comprehensive set of economic, environmental, social and governance factors that impact the business today and tomorrow — through the combination of vehicles that best meet stakeholders’ communication needs and preferences. Very helpful in this article is the discussion of the reasons, considerations and benefits associated with integrated reporting, and of the key steps toward implementing it, based on:
-The degree to which sustainability has been baked into the business (the management perspective)
-The information needs of diverse stakeholders (the communication perspective)
Excellent food for thought any company considering — or ready to begin — the road to integration.
*Note: Another good paper is “What does your reporting say about you?” by PricewaterhouseCoopers. It, too, advances the value of integrated reporting and discusses how to evaluate and align external and internal reporting within this framework to meet business, board and stakeholder needs.