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SUSTAINABILITY REPORTING
Integrated reporting
JIGSAW
MUST BE COMPLETE
Global capitalism is under intense scrutiny. Which is why, says Tracy Oates,
today’s sustainable companies need to integrate financial and ethical reports
to give stakeholders the complete picture of the challenges ahead
T
he practice of integrating Companies Act currently stipulates a level
sustainability reporting with the of comment on sustainability reporting
more traditional financial report and within annual reports.
accounts (FRAs) is a trend that is growing
as a result of the increasing pressure on Broader spectrum of stakeholders
major corporates to improve transparency The main importance of integrating
and accountability to all stakeholders. With sustainability data into financial reports is
the intense scrutiny that global capitalism that it facilitates communication to a wider
is now operating under, there is an audience. Companies today are aware of
acknowledgement that sustainability and accountable to a broader spectrum of
reporting should no longer be considered stakeholders and integrated reporting
as a stand alone report but should be brings sustainability reporting on to the
integrated into FRAs so that all same platform as financial disclosure,
stakeholders can gain a more complete especially to shareholders, potential
understanding of the risks, opportunities investors and analysts. The financial
and challenges facing companies today. community is increasingly assessing the
The evolution of reporting over the contribution and impact that sustainability
years has been significant. From the issues have on previously intangible
starting point of the mandatory annual corporate measures such as brand value,
financial report, reporting then took a corporate reputation, staff attraction and
further step forward with the retention and customer loyalty. In essence,
environmental report, which then the key question the financial community
embraced a more holistic approach with wants answered in integrated reports is,
the advent of the sustainability report that what value is derived from sustainability?
reported on the triple bottom line A company that shows how it positions
(environment, social and economic) as sustainable practice at the core of its
pioneered by large multinationals such as operations is more likely to attract the
Shell. The latest development is the interest of increasingly powerful ethical
integrated report. The current trend of investment funds. There is now increasing
integrated reporting now underlines the evidence of the link between sustainable
financial community’s greater appreciation financial reports. CorporateRegister.com practice and improved financial
on how economic, environmental and reports that integrated reporting is steadily performance. The Dow Jones
social best practice, or lack of it, can impact increasing with the number of FRAs that Sustainability Index 2008 reported a
on sustainable financial performance and integrate sustainability and financial data positive correlation between corporate
also responds to society’s demands that growing from just eight in 2004 rising to sustainability and financial performance
companies publish information on 175 in 2008. and the results of the Business in the
environmental and social performance as While for most countries integrated Community CR Index showed that FTSE
well as corporate governance. reporting is considered best practice, companies that actively managed and
The KPMG International Survey of Denmark has recently raised the bar and measured corporate responsibility issues
Corporate Responsibility Reporting 2008 introduced the new Social Responsibility outperformed the FTSE 350 on total
noted that 79% of the world’s biggest 250 for Large Businesses law. As a result, some shareholder return by between 3.3% and
companies now produce corporate social of the largest Danish companies, under 7.7% throughout the period 2002-2007.
responsibility reports, an increase of 52% both public and private ownership, are Integrated reporting provides a means to
since 2005. Yet only 4% integrate now required to include information on approach to risk management with clear
sustainable reporting within annual sustainable reporting. In the UK, the 2006 understanding of how environmental and
SB FutureProof ❘ October 2009 13
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