Wednesday, October 26, 2011

The CRRA 12 Navigation Guide

As most of you will know, the CRRA annual awards is the largest annual online sustainability report awards around the globe, organized now for the fifth time by, the global CR resources website which hosts the world’s most comprehensive directory of corporate non-financial reporting, profiling over 36,000 reports from over 8,400 organizations. The go-to place for sustainability reports.

As usual, CRRA attracts a collection of excellent reports, 93 in total this time around, from 29 countries including Turkey, Romania, Ukraine, Israel, Hungary, Japan, Greece, Singapore, Korea, Switzerland, Denmark, Portugal, Brazil and more. This is a whole 15,668 pages of CSR information (excluding the L'Oreal entry which is an online report and not downloadable). There are reports representing big firms, small firms, universities, municipalities and non-profits. A great collection of worthy reports, all published in the year prior to October 2011.  This year, in addition showcasing the report itself, companies were asked to provide a brief narrative about the key highlights of the report, in their own words. Most reporting companies have used this opportunity to provide more details for the readers during the voting process and it is well worth looking at these highlights if you don't have time to read all the 93 reports (!) to help you select which reports to look at in more detail.

Some quick facts:
  • Sanofi Aventis takes the prize for the longest report - 400 pages
  • Royal Dutch Shell takes the prize for the most number of entries - six in total - every category except first time report, SME report and integrated report.
  • 27 of the 93 reports entered in CRRA 12 also serve as a Communication on Progress to the UNGC.
  • Around 20 of the 93 reports entered in CRRA 12 are integrated (but only 18 are entered in the Best Integrated Report category)
  • Only 9 reports are more than 200 pages long and 7 reports are 30 pages or less.
  • The USA has the most number of entries - 35 voting opportunities - representing 22 reports. The UK follows with 19 entries representing 7 reports.
  • HP and Coca Cola Enterprises, first and second place winners in the Best Report category last year are both entered in the Best Report category this year. Bayer, third place winner in the Best Report category, is not entered this year in any category.
  • The Support Services sector (legal, consulting, marketing services etc)  is represented by 19 entries (11 reports), followed by the banks with 15 entries (6 reports)
  • The only report in the tobacco sector is British American Tobacco, which is entered in 5 categories.
  • The only Stock Exchange to enter the reporting awards is Deutsche Boerse with a report called "Positions". This is the third report by this organization but the first time they have entered CRRA.
  • The report with the least number of pages is M4C with an eleven page report, entered in the SME category.
And a quick look at the 9 categories:

We know that for the past few years, about 20% of all reports are first-timers and in many ways, these are some of the most interesting and the most innovative. CRRA 12 entries include 18 first time reports from 10 countries across 15 sectors. 13 out of the 18 reports (72%) are GRI-based, one is integrated and 5 (28%) are assured. The average number of pages is 64 with the highest page count going to Bloomberg with a whopping 235 pages.

Surprisingly (and disappointingly), this category attracted only 5 entries this time around. Wonder why? Are fewer SME's reporting? The five reports are from five countries and three sectors and have an average of 55 pages, ranging from 11 to 160 pages. Four out of five are GRI-based reports, and one  is an intergrated report.

18 integrated reports are competing in this category, with over 2,200 pages of narrative and data. Reports come from 14 countries with USA, Korea, South Africa and Germany having two reports each in this category. 18 sectors are represented with the leisure, software, transport and pharma leading in integration. Only two reports in this category are not GRI based (Siveco, Romania and Syngenta International of Switzerland) and of the others, only Wilderness Holdings Ltd of South Africa does not declare a GRI reporting level. 8 out of the 18 reports are at GRI A level and 10 (56%) are externally assured. Normally, we could expect to see a higher level of assurance for integrated reports, though the assurance of CSR related information is not always comprehensive.

9 contenders this year in the Best Carbon Category which was won last year by Hewlett Packard's 2008 Report. Reports come from 6 countries with USA and Brazil in the lead, and from 7 sectors, with the banking sector trying for three of the nine report entries. The longest report is Banco Santander of Brazil with 144 pages and the shortest, Vodafone Group plc with 23 pages. All reports are GRI-based, and all at A or B level with one exception (Wyndham Worldwide Corporation) which is a C level, and, the only report that is not externally assured.

24 reports are aspiring to with the Creativity Award, of which over half come from USA (9), UK (3) and Canada (4) and others from a further 7 countries. 15 sectors are represented with the Support Services sector contributing 5 reports out of the 24 which are entered. 22 reports are GRI-based, with Newalta Corp and Dell Corp being the odd two out. HP contributes the most pages (242) to the 1,892 pages in this category, which is 13% of the total.

25 reports in this category, from 18 sectors, with banks and pharma taking three reports each. 18 sectors are represented with banks and pharma at the top (3 reports each). 12 companies also report to the UNGC in this category. 17 countries contributed reports and all but three are GRI-based.

This is probably one of the hardest categories to judge as one has to guestimate what is not disclosed in order to assess the degree of openness! The 20 reports in this sector are from 19 different industry sectors, which shows that openness and honesty are universal values. However, only 10 of the 29 countries entering the Reporting Awards are represented in this category, with UK reporters believing they are the most open and honest of all, with 25% of reports here. Honesty, however, is not always best left to chance, so 13 of the 20 reports in this category have used external assurance. Natura Cosmeticos of Brazil has the biggest offering in terms of openness with a 250 pages, the longest report in this category.

14 reports have entered this category, bringing their assuring vendors along with them. 12 countries and 12 sectors are represented in this category, and the assurer who had the most work, apparently, was Ernst and Young UK who worked on the British American Tobacco report which is 216 pages long. None of the other reports in this category topped 151 pages. 
And finally, the largest category of all, in which you have a choice of 44 reports from 22 countries. All but 7 reports are GRI-based (which is 85% GRI) and of the GRI reports, all but 3 declared a reporting level. 25 of the total 44 reports (57%) are externally assured, 15 (34%) serve as UNGC COP's, and 6 are integrated reports. Reports in this category have a 90 page average, with the Vodafone Group report being the most compact at 23 pages.

All in all, a great selection. Congrats to all reporters who have entered the awards and good luck to all! Every report is an effort, every report is a production and every report is worthy of recognition (even if there is some ... or massive ... room for improvement). As usual, I am already excited to hear the results, but I think I will refrain from making predictions this year as I never quite get it right.

Voting is open until Friday 27th January 2012 and voters (anyone freely registered on the website) may select up to 5 choices in each award category. Those voters with a first choice for each award category are then entered in the Voters’ Prize draw and can win cash prizes. A total of £2,500 will be awarded to voters. Ha-Ha - it PAYS to VOTE!! But remember, if your report is entered in the competition, you and other employees cannot vote for your own company report! Which, I think, is fair. Tough, but fair!

Ahem! One more thing.....

While you are voting, please consider voting for my own Sustainability Report - How a little consulting firm makes a big impact - which is entered in four categories: Best Report, Best First Time Report, Best SME Report and Best Creativity in Communications.

Additionally, you might also please consider reviewing and voting for the Baran Group report - which I worked on - which is entered in two categories: Best Relevance and Materiality and Best Openness and Honesty.

And now, all that remains is for me to stock up on loads and loads of ice cream as I sit down to read 91 reports (Ha-Ha, I have a head start- I don't need to read the two reports that I worked on :)

Disclaimer: The analyses presented above are my own - I may have miscalculated here and there - apologies in advance - my blog posts are not externally assured - so use my numbers as a guide and not as the absolute truth.

And: WATCH this SPACE for more posts in the CRRA 12 Navigation Guide.

elaine cohen, CSR consultant, Sustainabilty Reporter, HR Professional, Ice Cream Addict. Author of CSR for HR: A necessary partnership for advancing responsible business practices  Contact me via  on Twitter or via my business website  (BeyondBusiness, an inspired CSR consulting and Sustainability Reporting firm)

Wednesday, October 19, 2011

My personal sustainability trip

My mother is 87 years old and having lived through years of wartime and austerity, she tends to know what sustainability is all about. Leave a light on, throw out a morsel of good food, buy anything more than is strictly necessary and you always got a lecture which oddly resembled the anti-consumerism and environmental stewardship themes of our current times. My childhood seems to have been one long sustainability education. Everything was reused, nothing was surplus, nothing was extravagant, nothing was unnecessary. Somewhat fixed in her ways, these habits have lived on and every time my kids leave a light on in our home, I hear my mother telling them to switch it off, even though we now live thousands of miles away. My mother lives in Manchester (UK), and visiting her this week, I realized that, not only is her old-style sustainability as relevant as ever, but she is also taking up Manchester's new style sustainability with gusto. Recycling, rubbish and waste in Manchester is now a regular topic of conversation.  Each household has four refuse bins : green for paper, brown for glass, tins and cans, blue for plastic and black for organic.

Photocredit :
All waste in my mother's home is now sorted so that it can get disposed of in the appropriate bin. During the few days my daughter and I visited with my mother, we made several trips to throw out the garbage. Every trip was preceded by a twenty minute explanation of which rubbish to throw in which bin. Every meal we concluded ended in a debate about some of the waste and which colour bin it should end up in. And even over a family dinner on Friday night at my niece's home, the main topic of conversation was the new organic waste caddy she had just received, for making food left-overs collection in the home more practical. Although none of my family have yet signed up for home composting master classes, there is certainly a new culture of waste disposal and recycling which has gripped the city and even my 87-year old mother is doing her bit.  

My mother and my daughter Eden - the garbage masters
Another sustainability experience in Manchester was our trip to Tesco's supermarket, where I always stock up on Tetley's tea bags and Bisto (see blog from another trip!). However, this time, we enjoyed earning extra bonus points  for my mother's Tesco Clubcard because we used our own shopping bags. At the checkout, the checkout-lady asked us how many of our own bags we had brought and duly recorded them in order to ensure my mother got a bonus for environmental awareness.

My daughter Eden with our Beyond Business shopping bags outside Tesco supermarket
Finally, the end of our trip came all too soon and we found ourselves in Manchester airport awaiting the flight home. Even here, sustainability was the theme of the day as we entered the Environment Zone:

Manchester Airport gets it!

The airport  has a Vision for Sustainability and has published a Sustainability Report in 2011 (GRI B level, GRI checked). It looks pretty good, too, demonstrating a range of energy-efficiency schemes and  a carbon challenge for all onsite businesses to reduce their carbon footprint.

Overall, I was impressed with sustainability in Manchester, both in the way it penetrates the home and urban living culture, raising awareness and changing people's habits. In fact, I was so involved in sustainability issues during a brief family holiday, that I am wondering if I can charge my travel as a business expense! haha.

elaine cohen, CSR consultant, Sustainability Reporter, HR Professional, Ice Cream Addict. Author of CSR for HR: A necessary partnership for advancing responsible business practices   Contact me via  on Twitter or via my business website  (BeyondBusiness, an inspired CSR consulting and Sustainability Reporting firm)

Wednesday, October 12, 2011

31 ways of looking at materiality

If everything is material, it's not material. Everything cannot be top priority. Everything cannot be most important. The complexity of sustainability, especially for large, global businesses, is vast. A list of potential material issues can run in to hundreds of issues. Ford, for example, started out with a list of over 500 issues and whittled those down to a mere 57 issues which the company considers material. Identifying and prioritizing material issues is one of the most difficult tasks of companies on the sustainability journey. Most ignore it. In Sustainability Reporting, most skip over the materiality piece, presenting instead what I call a shopping list of activities which includes just about anything which can be crammed into the heading of CSR. However, some do it better. The best reporters include a Materiality Matrix, which, arguably, is the most important part of any Sustainability Report, and certainly the thing I look for as soon as I have finished reading the CEO statement.

That's why the new report, Materiality Futures, from the recently formed consulting firm, Fronesys is a fascinating look at how companies report materiality. Chris Tuppen, formerly BT CSO, together with Jyoti Banerjee, a business application software professional, partnered up to found Fronesys and start making a material impact.

For those of you who can't remember what a Materiality Matrix looks like, here is the basic format that is included in the GRI Reporting Framework:
Issues appearing in the top-right part of the matrix are the most important ones which both impact the business results and are important to the organization's stakeholders.

Materiality Futures analyses the Materiality Matrices of 31 sustainability-reporting companies for reports published before August 2011, presenting a refreshing and innovative look at how materiality gets reported. Overall, Fronesys discerned 140 separate issues listed somewhere on these 31 matrices, quite a low number when you think that the companies analyzed listed between 8 and 65 issues with the overall average being 27 issues per company. The analysis whittles this down to 50 core issues which were listed by at least 5 companies, and are not industry sector specific, and mapped these issues in what Fronesys calls the Matrix of Matrices.

The top 10 issues which emerge as important both for businesses and stakeholders in terms of number of times mentioned and relative importance to business and stakeholders are:

1 Sustainable Products
2 Product Carbon Footprint/Energy Efficiency
3 Economic Development/Emerging Markets
4 Customer Relationships/Satisfaction
5 Economic Stability/Recession
6 Climate Change (policy/strategy)
7 Energy Use/Own Greenhouse Gas Emissions
8 Employee Retention and Attraction
9 Legal Compliance
10 Product Safety

It is interesting that Sustainable Products takes top place. Perhaps this is an indication that companies are hoping to make some money out of sustainability. The fact that Legal Compliance appears in the top ten is perhaps an indication of the efforts companies need to make simply to keep up with changing legislation in the area of sustainability. Although compliance is often thought of as a precondition for voluntary sustainability efforts, the fact is that compliance is by no means something to be taken for granted.

Issue number 50, right down at the bottom of the materiality ranking list, is Senior Executive Remuneration, something which is starting to affect more companies as shareholders, not only stakeholders, are taking a stronger stand and demanding more proof of performance and bang for the executive buck.

The two issues which were mentioned somewhere on the matrix by most companies (irrespective of their positioning) were Health and Safety (25 times) and Climate Change (24 times). This is what the overall matrix of companies looks like for climate change - you can see that most companies have it right up there with the leading issues.

Fronesys also offers two additional ways of looking at materiality:

Issue Coherence Level: This is the degree to which companies (and their stakeholders) agree that an issue is material. In any given set of companies, each will note specific material issues in at different points on the Materiality Matrix. The degree to which all companies are synchronized regarding the relative importance of the issue as noted on their matrix, is the Issue Coherence Level (ICL). Across the 31 companies analyzed, the highest coherence is achieved for Economic Stability / Recession, Stakeholder Engagement, Employee Retention and Attraction, Customer Relationships/Satisfaction. Sustainable Products, however, has a much lower level of coherence, demonstrating that, although many companies include this on their matrix, not all agree about how important it is. The lowest level of coherence is biodiversity. This is indeed an issue which is either high on the radar or or very low, depending on sector, I think, so it doesn't surprise me to see companies placing this in different corners of the matrix.

Materiality Convergence: This is another metric invented by Fronesys which shows the degree to which a company and its stakeholders agree or disagree on the relative importance of a particular issue. For example, a company might rate customer satisfaction, as Cisco does in their 2010 materiality matrix , as very important to the business but not so important to society.

Fronesys says that total convergence of issues between a company and its stakeholders would be "odd" where as "a total lack of convergence would suggest the company is out of touch."

So far, this is all very interesting, but ...err... what's the point? Why is comparing materiality of different companies important? Well, first, Fronesys says, this represents a benchmark for all companies battling with materiality prioritization. If each company in your sector (and its stakeholders) confirms that renewable energy is one of its most material issues, but it's nowhere on your radar, perhaps you should be asking why not.

However, there is another important motivator for this analysis - the run-up to integrated reporting. Fronesys maintains that the integrated thinking which necessarily precedes integrated reporting will require good materiality work.

"It is hoped that the IIRC framework will not only lead to a consolidation of the reporting of a companyʼs most material issues, but also lead to more forward looking reports that illustrate a more strategic alignment between sustainability and conventional business objectives. For any company adopting the IIRC framework, the process of materiality determination will need to be at the core of their thinking."

I am not so sure. Right now, the materiality matrices contained in sustainability reports are based on sustainability issues and do really address core (financially material) business issues. There is some overlap, but broadly, sustainability matrices do not truly serve Integrated Reporting in their current form because they mainly address sustainability as separate from the business. For Integrated Reporting, a business materiality matrix containing financial and sustainability issues will need to be created. As mentioned in a previous post, I hope that when all the issues are put together,  the issues which are primarily sustainability driven won't drop off the bottom of the matrix. However, maybe the development of Materiality Matrix Muscles will help and I concur that companies need to get better at "the process of materiality determination".

The issue that the Materiality Futures Report does not cover is whether, having developed the Materiality Matrix, a company adequately discloses on the material issues in the Sustainability Report. I often find that a Matrix is stuck somewhere in the report but the actual issues are not addressed in any depth. The whole point of identifying material issues is to understand them, make decisions about them and report on them to stakeholders. If you see a Materiality Matrix in a Sustainability Report, look for disclosure on the highly material issues.

There is another whole debate (which Materiality Futures references) and that is the process for determining material issues, stakeholder inclusion, diversity of stakeholder voices and how issue are prioritized. The fact that a Materiality Matrix exists is not necessarily an indication of good process, which Fronesys highlights as another area where disclosure should be improved. Sustainability is as much about the "how" as it is the "what". If you see a Materiality Matrix in a Sustainability Report, look for disclosure on how the Matrix was developed.

If I were to do a materiality matrix of issues in my life, I would probably find that 24/7 Ice Cream Supply probably comes out as the top issue, but don't ask me about process or the convergence score or the coherence level. 
elaine cohen, CSR consultant, Sustainability Reporter, HR Professional, Ice Cream Addict. Author of CSR for HR: A necessary partnership for advancing responsible business practices   Contact me via  on Twitter or via my business website  (BeyondBusiness, an inspired CSR consulting and Sustainability Reporting firm)

Saturday, October 8, 2011

Sustainability: the Yom Kippur lesson

As Yom Kippur kicks in for another year, it's time to atone for everything we did wrong. You know, sorry for this, sorry for that, apologies, I regret, I am filled with remorse, I repent, I didn't mean it. We are sorry for all our negative impacts this year and we promise to do better. In the Jewish religion, getting through Yom Kippur successfully means you earn a signature in the Book of Life, so that you can live another year. Judging by the not-so-remorseful state of most Sustainability Reports (and corresponding underlying corporate performance), few such signatures would be distributed. Sustainability Reports have become the epitome of self-congratulatory declarations of pride in all that companies have done that can loosely be categorized under the heading of sustainability. They are, often, full of self-satisfaction and conveniently bypass addressing sustainability failures in a frank and honest way.   

BP's 2011 Sustainability Report  could hardly avoid mention of the small Gulf of Mexico blip in the company's history. Bob Dudley, post-spill CEO says "We are so very sorry for what happened". That's an apology, of sorts. I am sure BP has lots of regrets. Yes, it happened. They are sorry about that. Not sure that quite earns them a signature.

So maybe signatures should be handed out for the good things that get done and not the absence of bad things. In this case, we would not need to atone but simply keep on going doing more good things and shouting about them. That would certainly make life simpler, though, in terms of Sustainability Reporting, it wouldn't go far enough in advancing sustainability. Because, ironically, the things that advance sustainability most are probably the things that companies omit from their sustainability reports.

So why is it that companies find it so hard to share their problems? Is a failure a sign of weakness and an apology equivalent to a drop in share price? After many years of working with multinational corporations, I got used to avoiding the word "problem" and referred only to "opportunity". Perhaps this is representative of the mindset which pervades Sustainability Reporting. If we were to be presented with all the outtakes of sustainability reports, it would make for the most interesting reading of all.

Realistically, we probably would not be right in expecting much more from Sustainability Reporting. Framing "failures" in terms of "challenges" and "opportunities" is the corporate world's way of saying we acknowledge the issues and we are trying to work on them.  Going the Full Monty is counter-intuitive. Nonetheless, we learn far more about sustainability performance in Sustainability Reports than we would were they not to exist and disclosure, of sorts, is definitely a driver of improved performance. As long as we understand each other. Transparent sustainability reporting is rarely transparent, it's only part sustainability and it's incomplete reporting. But that's why it works.  We should continue to drive for better sustainability performance and higher quality reporting. But we should also remain vigilant and look for clues about what companies are not telling.

As far as Yom Kippur is concerned, the main issue I have is that no ice cream is allowed for a full 25 hours. But don't ask me to make any disclosures about that ......

elaine cohen, CSR consultant, Sustainability Reporter, HR Professional, Ice Cream Addict. Author of CSR for HR: A necessary partnership for advancing responsible business practices  Contact me via  on Twitter or via my business website  (BeyondBusiness, an inspired CSR consulting and Sustainability Reporting firm)

Friday, October 7, 2011

Heretical thoughts on Integrated Reporting

I have been hesitant to add my voice to the Integrated Reporting debate because, as one who writes Sustainability Reports for a living, I might find that the requirement for dedicated Sustainability Reports slowly disintegrates as Integrated Reporting takes over. Therefore, I have had to examine my own concerns in the light of potential bias and fear that my passion for Sustainability Reports as standalone documents may get in the way of an objective analysis. However, as a reporter, I cannot stay on the sidelines, and heck, who is objective these days anyway?

To acclimatize myself for the debate, I re-read two excellent analyses of the new discussion paper that the International Integrated Reporting Committee published recently (download here). James Farrar, an outstanding commentator, takes the considered view and lists the oportunities and the challenges, asking whether Integrated Reporting can solve the information gap. Another superb analysis came from Richard Welford of CSR Asia, who comments that the IIRC document "raises some huge questions as to whether the IIRC is being so ambitious that it risks actually damaging what it is setting out to do."  Both of these accomplished and influential writers motivated me share my thoughts, which are still work in progress.

I find great fulfillment in writing Sustainability Reports because I firmly believe they add value in a way that Annual (financial) Reports can not. I believe Sustainability Reports speak to different kinds of stakeholders - ones who are interested, not (only) in the financial stability and forward projections of the firm and how much (more) profit it will make, but in the impact of companies on their lives and on the planet, almost regardless of a company's profitability. 

I believe that most stakeholders want to know about the soul of a company, about its practices, its stories and its relationship with the planet and its dwellers. For most stakeholders of companies, the fact that a company makes more profit is almost incidental. We know it's there, we know, somewhere in our consciousness, that companies exist to make profit. We understand the free market economy. We are ok with that.

But sustainability stakeholders, and that includes everyone outside of the financial services and investment professions, want the money thing to take care of itself. They don't want to be bothered with financial balance sheets. They want to know about the company and their life. The company and their children. The company and their local park. The company and the air pollution that is affecting their asthma. The company and the Amazon Rainforest that may be so far away but rainforest destruction is just heartbreaking. The company and how it treats its employees, some of whom are relatives. The company and its gender equality policy and why a colleague was not promoted despite clearly being the best for the job. The company and our smartphones and whether someone committed suicide on the production line due to stress at work. The company and how it raises the price of cottage cheese out of all proportion to the cost of its manufacture.

Sustainability is about people, not about balance sheets. It's about aspirations, not about cumulations. Companies need to make enough money, that's clear. But if sustainability becomes subordinate to the restlessness and greed of the financial markets and sustainability reporting is taken over by the brilliant minds which created the Great Financial Crisis, the shameful economic inequalities around the globe, the bonuses of senior executives, each of which is enough to keep a village in rural India in food and clothing for a year or two and even, the Integrated Reporting Framework, then we are likely to transform sustainability into a cool and calculated numbers game, where $ count instead of impacts, and reports count instead of values.

Now, don't get me wrong. There is a linkage between financial performance and sustainability. The so-called non-financials are actually very financial, for the most part. They cost money, they save money, they build business or they present risk. In most cases, sustainability performance can be calculated and as such, it makes sense to present them in a company's annual financial accounts. Sustainability is about risk, and safeguarding risk carries cost. Sustainability is about opportunity, and investing in the future often comes with a price-tag. And as consumers and purchasers of goods and services, we are all complicit in making the economy what it is today. Many of us have chosen to enjoy the benefits of today's economic wonderland without considering the true cost.

But, wasn't sustainability reporting borne out of a desire to reflect those imbalances in a way when everyone could understand, not just Finance PhD's? Didn't sustainability reporting serve to fill a gap that financial markets ignored? The Integrated Report should reflect, so the discussion paper says, integrated thinking. But at the same time, the current focus of the Integrated Report is the needs of Investors. In other words, the Integrated Report will become just another financial tool, serving the needs of those who want to get richer, by providing them with a modern methodology to evaluate whether sustainability performance makes more money or less. And if it makes less?

Yes, I agree that financial accounting needs to reflect elements of sustainability practices. Carbon accounting for example seems to be a no-brainer. Yes, I agree that we should move to quantify and integrate some aspects of ESG risk in financial reporting. Yes, I agree that integrated thinking could well lead to new integrated business models, rather than traditional models which equal "make money + do sustainability projects". Those are good things.

But no, I am not yet sure that the Integrated Reporting model will lead to a fair and balanced representation of a company's sustainable practices as they affect ALL stakeholders,  especially when those practices deliver impacts which cannot be readily squeezed into a mathematical number-crunching exercise. I am not yet sure that the lay stakeholder will find interest in the predominance of CFO-dictated jargon-ridden legalese that will be prevalent when The Integrated Report becomes the norm. I wonder if the non-financial stakeholder will be marginalized and will eventually become irrelevant in the heydey of integrated reporting, bringing things back full circle to when sustainability reports were not even on the horizon, with only a slightly modified epicenter.

So where I am, I guess, is in a sort of hybrid model. Let's call it Venn Reporting. It's kind of like Financial Reporting with a Sustainability Boost, and Sustainability Reporting with a Financial Boost. To follow an integrated strategy, a company must do the sustainability work. To deliver a good sustainable business strategy, a company must do the financial work. But like a Venn diagram, where both circles overlap is only part of the story and not the whole story. We need to make business strategy more sustainable, which means changing the models and the thinking, and we need to make sustainability strategy more business-like with more quantified targets, impacts and yes, financials. My concern is that force-fitting them both into one model delivers only one model. The financial model. Slightly padded, maybe, but still a financial model.

By now, I get to reading the IIRC discussion paper. I like the proposed framework for the Integrated Report which follows 6 key sections.

Organizational overview and business model: What does the organization do and how does it create and sustain value in the short, medium and long term?
Operating context, including risks and opportunities: What are the circumstances under which the organization operates, including the key resources and relationships on which it depends and the key risks
and opportunities that it faces?
Strategic objectives and strategies to  achieve those objectives: Where does the organization want to go and how is it going to get there?
Governance and remuneration: What is the organization’s governance structure, and how does governance support the strategic objectives of the organization and relate to the organization’s approach to remuneration?
Performance: How has the organization performed against its strategic objectives and related strategies?
Future outlook: What opportunities, challenges and uncertainties is the organization likely to encounter in achieving its strategic objectives and what are the resulting implications for its strategies and future performance?

However, it's all in the fine print. What's value? Financial value? What's risk? Financial risk? What are material issues? Financially material issues? Will  "reduce our carbon emissions" ever be as material as "launch a new product"? Against the massive weight of financially driven development, marketing, sales, employment imperatives, how will the true interests of non-financial shareholders emerge strongly enough to create a balance? How can we ensure processes are in place to ensure sustainable business decision-making and sustainable practices which are at the base of integrated thinking?   

There are some businesses which are inherently sustainable - cleantech, water and waste management technologies, for example. The indirect impacts of these businesses far outweigh the direct impacts of how much carbon they emit in their process or how much waste they send to landfill. By advancing their core business proposition, these companies advance sustainability. Integrated Reporting is easy for these companies. They don't have to establish a sustainability program - their business is the program. But 95% of all other businesses need to integrate ESG considerations in to every business decision and weigh up the financials. For these businesses, integrated reporting is well beyond current capabilities. For these businesses, the Venn model may work best. Report on sustainability performance and reflect the truly financially material elements in the Annual Report. As linkage capability (connectivity, the IIRC calls it) improves, so we will see more complete Integrated Reports. But there will always be a need for a document which reflects the spirit and soul of the company to a broader span of stakeholders, and that will be the detailed Sustainability Report.

That's not to say sustainability reporting is perfect. It is not, in so many ways. Despite the valiant efforts of the GRI, it is still not mainstream and the quality of reports published varies so widely that true comparability is almost impossible. The leap from inadequate sustainability reporting to adequate integrated reporting (really integrated) is like reinventing the cotton gin. 

I have no doubt that Integrated Reporting will move forward and there will be uptake, of sorts. It's the sexy thing in reporting today. It has the weight of all the most dominant financial powers in leading markets behind it and many influential individuals. Of course it has. It serves their interests. I just hope that, as integration integrates, sustainability doesn't disintegrate.

elaine cohen, CSR consultant, Sustainabilty Reporter, HR Professional, Ice Cream Addict. Author of CSR for HR: A necessary partnership for advancing responsible business practices  Contact me via  on Twitter or via my business website  (BeyondBusiness, an inspired CSR consulting and Sustainability Reporting firm)
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