Outing the outcomes

Posted
1 October, 2015

South Africa’s Integrated Reporting Committee (IRC) has tasked its Working Group to come up with an information paper on Outcomes. The reason is that too few companies are getting this right in their integrated reports.

It’s an area needing improvement that doesn’t appear to be particular to the South African reports. When asking international colleagues to send through good examples on outcomes in integrated reports, the answer is invariably ’well we don’t really have any’. It’s a puzzle as to why reporters are going awry – after all, the Framework’s definition of outcomes is clearly worded:  the internal and external consequences (positive and negative) for the capitals as a result of an organization’s business activities and outputs. In essence, the question to ask is what effect have you had on the capitals you use or affect by dint of being in business because these outcomes can affect your future inputs.

The IRC’s information paper aims to offer useful considerations on outcomes for reporters. The information paper will be available online on the IRC’s website www.integratedreportingsa.org in December this year.

On reading the reports put out by South African companies I think that part of the problem in some instances stems from taking a limited view of value creation. Some companies confined their view only to value created for the company and value created for stakeholders. While this is a part of value creation for sure it seems to have resulted in the exclusion of the consideration of the consequences of doing business on other capitals. Aiding and abetting this view is that some companies seem to have forgotten that the term ‘value creation’ isn’t only in the positive – it includes preservation and diminution.  (The good news though is that at the least the companies are finding out how their stakeholders perceive value, which is integral to stakeholder responsiveness.)

There probably needs to be more awareness made of the link between outcomes and value creation. The Framework defines value creation as: the process that results in increases, decreases or transformations of the capitals caused by the organization’s business activities and outputs.  In its entirety then, the consequences of doing business on the capitals used or affected is what value creation is all about. The quality and harmonious integrated report will show this process and disclose the important outcomes, whether or not they are able to be quantified, whether or not they are intended, and whether or not they relate to the now or the future.