Connecting quarterly updates to Swedfund’s long-term value creation activities

Posted
6 July, 2015

In April 2015 Swedfund, the Swedish state’s development project finance institution, published it first Integrated Report. Inspired by the International <IR > Framework the report represents an important step for our commitment to greater accountability and transparency.

Swedfund’s mission is to contribute to poverty reduction through financing sustainable business. Building on over 35 years experience of investments in the most difficult markets, Swedfund has an investment model standing on three pillars – (1) Impact on Society, (2) Sustainability and (3) Financial Viability. The pillars are based on several aspects related to the vision in the International <IR> Framework. All three pillars are considered throughout the investment cycle.

Integrated thinking and working across teams is vital to achieve our mission and over recent years, we have dedicated our work to implementing integrated thinking in all our processes.

As with many other companies around the world, we are required to publish quarterly reports. Considering the nature and fundamentals of our business we felt that the traditional format for Swedfund’s quarterly financial reports was no longer sufficient since it simply did not describe the entire spectrum of our business. As a consequence it did not provide a fair view, nor a strong enough linkage to how we address long-term value creation which we strive for within our three pillars.

As a result of this we published our first integrated quarterly report in April 2015. This is an attempt to better address how our daily investment operations and activities during the first quarter of the year will contribute to long term value creation.

Our experiences from applying <IR> inspired our approach to quarterly updates:

  • An integrated report gives a much fairer view of where Swedfund stands and the challenges and opportunities that lay ahead of us. It also describes in a much more comprehensive manner how Swedfund operates to create value within our three pillars.
  • Integrated quarterly reporting promotes transparency and it also corresponds better to the expectations of our owner and other stakeholders wanting to see on a continuous basis what we do.
  • The annual integrated report will benefit from the quarterly reports. Being a small organization with limited resources it was important for us to find a format in which there are synergies with the integrated annual report. Some of the components in the quarterly reports also push internal processes forward which is beneficial for the entire organization.

Naturally, as always when being innovative, we have come across some challenges trying to find a suitable format for the report. One of them is that the results indicators that we apply on a yearly basis are difficult to report on quarterly. This implies that the type of content is somewhat different – the quarterly report being more focused on material activities as compared to the annual integrated report, which is more focused on results. Moreover, considering that we have a long-term perspective on value creation, about 7-10 years, we are not yet clear on how to make direct linkages between activities during a specific quarter to specific results presented later in the annual integrated reporting. Over time we will refine the format of the quarterly integrated report or indeed move away from quarterly updates as reporting becomes more medium to long term focused.