SESSION THREE INTEGRATED REPORTING Cross-departmental collaboration, discussion Demonstrating linkages and strategic interrelationship and decision-making is becoming more In August 2010, the Prince of Wales’ Accounting for Sustainability Project important and apparent as we move towards a and the Global Reporting Initiative (GRI) announced the formation of the new era of integrated reporting – linking financial, International Integrated Reporting Committee (IIRC). The IIRC’s remit is to non-financial and governance information “create a globally accepted framework for accounting for sustainability” throughout corporate reports. – the long-term goal of which is to bring about a step-change in the Since the global economic crisis, mainstream reporting model. there has been a great deal of debate around In order for the IIRC to achieve its goals, it is crucial for the changing role of business. No longer is it companies to understand what integration involves: to embrace the sufficient or acceptable for companies just to concept and show how financial and non-financial information is make money. Nowadays, companies have to strategically interrelated and how each influences the other. It is no longer behave well in their pursuit of profit and growth. sufficient for companies to simply bolt sustainability information onto the They have to balance the interests of their end of a corporate report, they need to show how impact awareness is business with the interests of society and echoed in all decision-making processes. the environment. At Black Sun’s Corporate Reporting Conference, one expert Money, of course, has traditionally been contributor asked the central question of business and integrated the central focus of the reporting process. But, at reporting: “How do sustainability issues influence a company’s strategy and business model? How does that link through to “…One of the IIRC’s main areas of focus, is to help companies remuneration, to the bring the different strands of reporting together; to unite those KPIs that the company disparate individuals and interests within an organisation is using, then to risk and break down the silo mindset that acts as a barrier and other aspects of performance?” to integration…” We understand it is by no means an Black Sun, we believe that companies also need easy undertaking, and many companies have yet to embrace the process of to account for their actions and impacts, integration. However, according to a recent Black Sun poll, some integrating social and environmental issues within organisations are certainly moving in this direction. When asked whether their corporate reports. Only in this way will they corporate responsibility (CR) was integrated at the core of their business show that such issues are central to their core strategy, 33% of respondents said “yes, very much so”. Forty six percent business operations, and that ethical values also claimed to be targeting “wider stakeholder groups” when preparing underpin their creation of financial value. Indeed, their annual report, which is encouraging. investors are just as likely to ask what companies One of the IIRC’s main areas of focus, is to help companies are doing about the Carbon Disclosure Project bring the different strands of reporting together; to unite those disparate as they are about their economic performance. individuals and interests within an organisation and break down the silo And a corporate report that answers these mindset that acts as a barrier to integration. questions will go a long way to satisfying The move towards integrated reporting is gathering momentum stakeholder demands for financial and and the members of the IIRC are looking for companies to bring together non-financial accountability. their material information within their reporting in order to present a very So, can integrated reporting provide a coherent picture of the business, underpinned by specific information of framework for the future? And can companies interest to different stakeholders. facilitate the harmonised discussions and decision-making that needs to take place in order for integration to succeed? 18 © Black Sun Plc 2011 www.blacksunplc.com