Navigating Towards One Report

05 Aug 2010 – Alicia Ayars

It seems as if the topic of integrated reporting (IR) is on everybody’s mind these days (at least within the circles I run). That said there is little consensus as to what this looks like and how we, as a collective, are going to promote the structuring of future reporting, so that it adds value for both companies and readers.

In May of this year, the CEO of the Global Reporting Initiative (GRI), Ernst Ligteringen announced that the GRI was going to be involved in the convening of the International Integrated Reporting Committee, which was formally launched on Monday, 02 August 2010. The purpose of which is to complete a standard for integrated reporting by 2020.

Personally, I found this announcement both interesting and controversial. I believe that if IR is the future, there is a need for a standard/framework, so that companies will have a clear understanding of what an integrated report should include. While producing a standard will not be an easy task, there needs to be at least some direction. This has become increasingly apparent to me, as more than one company representative has pointed me to their integrated report. You know the reports I am talking about? Where the company CEO mentions recycling and minority indicators right before you are inundated with 90 pages of financial figures? I do not believe this is what GRI envisions when it promotes IR; however the anecdote raises legitimate concerns surrounding report quality in the absence of a clear definition.

That said, I genuinely question if IR is the way forward. I understand the anger and backlash against “business” in light of recent company scandals and the financial crisis, but does that necessitate a radical change in reporting? There are some fantastic corporate reports floating around, that are informative while managing to remain relevant to the individual businesses operations. Dow reports quarterly against its 2015 goals in addition to producing a 2-page teaser, an actual GRI report, a sustainability report and a financial report. Timberland, too, produces quarterly reports against four pillars, initially decided upon through intense stakeholder engagement. Novo Nordisk produces an integrated report, accompanied by a robust report website providing greater details. The GAP is printing sustainability information on the inside of their jeans, while Starbucks has moved away from a comprehensive GRI-style report and is pushing the issues they believe are fundamental to their customers. Finally, SAP is experimenting with highly interactive ways of reporting, so that users may manipulate their performance data. In this way none of the examples above are converging on a common reporting format, but I find that their creativity says much more about the style of management and commitment to reporting than a standardised report. This leads me to further question if IR really is the method by which we push “better” reporting?

Additionally, during internal conversations with my colleague JP Renaut he raised a subtle point in that IR shifts the typical audience away from multiple stakeholders to focus primarily on the investment community. If engagement across a range of stakeholders is fundamental, what purpose does IR serve?

I wish I had the answers to the questions above, but I am hopeful that where my knowledge stops the Integrated Reporting Committee’s starts. I am also encouraged to see that attempts are being made to standardise IR in South Africa by the Johannesburg Stock Exchange, as all listed companies must produce an integrated report. How this real-life experiment plays out is likely to have profound effects throughout the world and most notably in the BRIC countries as they grow and develop. We are only at the beginning, so watch this space…