Businesses need to account for their consumption – and generation – of all types of resource
Post the global financial crisis an increasing number of CEOs recognised the need to rebuild trust by broadening their strategic communications to a much wider set of stakeholders than just their shareholders, telling a coherent story of the resources consumed and the outcomes generated, and seeking to demonstrate how the net result over time is beneficial, not just for financial investors but also for other stakeholders and communities and for society as a whole.
The challenge for business leaders has been how to achieve this consistently in practice. Big companies have been bombarded over the years with well-meaning and often well thought out exhortations from NGOs or other such groups to measure and report on how their enterprises impact specific societal or environmental issues – health and safety, climate change, carbon footprint, supply chain, local communities… you name it.
While serving major clients as a partner in Deloitte UK, it often felt to me like corporate reporters were swimming in minestrone, impossible to see what it all added up to and too often triggering a tactical compliance response, which frankly makes no impact on the strategic thinking that influences the company’s core activities. We need to filter and assimilate to get to a consommé where there is clarity about what is trying to be achieved for all stakeholders.
This is where Integrated Reporting comes into the picture. The International Integrated Reporting Council (IIRC) issued its framework for Integrated Reporting in December 2013 as a means to provide greater insight into the resources (the so called “Capitals” – social, natural and human as well as financial and manufactured) used and affected by a business. It seeks to explain how an enterprise interacts with the external environment and these Capitals to create value over the short, medium and long term.
Ironically, Integrated Reporting isn’t really about reporting at all. It’s about integrated thinking, responsible business behaviours and innovation. And telling it like it is.
Integrated Reporting is a market driven initiative and the framework is principle based; there are no strict rules or boxes to be ticked. So it encourages business leaders to tell their own story with clarity, consistency and transparency.
Everybody involved recognises Integrated Reporting is an ambitious, indeed aspirational, undertaking and getting there will be a journey involving trial and error. A large number of businesses, including Deloitte UK, have already begun their integrated reporting journey by participating in the IIRC’s pilot programme. Now the IIRC have set up a number of networks, including a business network, to enable organisations to explore the opportunities and challenges of adopting Integrated Reporting through networking with peers, sharing experiences and best practice, and accessing crucial insights from investors and industry experts.
But there is scepticism in some camps about whether Integrated Reporting is the right answer and is it therefore worth embarking on the journey.
So Deloitte UK has produced a short document “A Directors’ guide to Integrated Reporting”, to tell business leaders everything they need to know about Integrated Reporting to help them to decide for themselves.
The guide looks at:
I am confident this is a journey worth taking and will be a big help to those enlightened business leaders who want to engage in a holistic and accessible way with all of their stakeholders.
Steve Almond is the Global Chairman of Deloitte Touche Tohmatsu Limited and Managing Partner, International Markets of Deloitte UK. He is a member of the International Integrated Reporting Council.