To integrate or not to integrate, that is the question…

//To integrate or not to integrate, that is the question…

There is a lot of discussion lately about integrated reporting and its importance to the future of CSR/Sustainability. Missing from most of this dialogue is the definition of integrated reporting, what exactly is it?

Many CSR professionals speak of it in very definitive terms but when pressed find it difficult to define or  perhaps worse the definition varies widely from profession to professional. While many non-CSR professionals, especially those tasked with managing and driving their companies CSR forward, blankly stare with glazed eyes when the topic comes up.  So, what it is and why should it matter to the reporting process?

Defining Integrated

The first step to better understanding what is meant by integrated reporting is to finally define a standard.  This may become a herculean task. Most CSR professionals  are still waiting for one global standard for CSR reporting and that prospect seems elusive. One of the biggest challenges is that many companies have already begun creating “integrated reports” that adhere to nothing more than their own internal definition of integrated. Examples of these reports are abundant; from Takeda Pharmaceuticals which melded some CSR data into their annual report and labeled it ‘integrated’ (a common approach) to Novo Nordisk’s annual report which strategically reports on ESG data that is directly related to company performance (an uncommon approach).

So which direction is correct?  Which approach is the ‘right’ approach?

Programmatic or Strategic?

To answer the question of which approach is the right approach, we must first answer the question of whether sustainability in an organization is programmatic or strategic.

Generally, if we take most companies that have simply combined ESG data with their financial report and called it integrated we can easily see that their CSR/Sustainability approach is ad hoc or based on making one of  more than 100 rankings (DJSI, FTSE4GOOD, CRO, etc, etc). Most have a dedicated ‘CR’ staff that spends the year developing and managing ‘socially responsible’ initiatives and creating reams of data on the performance of said initiatives. The links to company performance are tenuous at best and are often related to ‘reputation’ or ‘branding’.  This is not a ‘bad’ approach….after all we end up with companies behaving in a socially responsible manner and society and the environment benefit. However, CSR is not integrated and the report should reflect it.

Then there are those companies who have strategically integrated ‘sustainability’ into their business model and their annual reports reflect this approach. Let’s remember that the ‘Annual Report’ on financial data is not a nice thing that companies do for publicity…they are mandated by a number of national regulatory bodies that require their publication in order to be allowed to publicly raise funds in the public markets. This financial data is a legal requirement that is intended to provide transparency for people who might be willing to risk their money to support these companies with investments.  These companies aren’t just putting out ESG data for people to appreciate, these companies are including ESG data so investors will see that they are investing in a company that is more likely to sustain and prosper.

The first example is programmatic, the second is strategic.

So which approach is correct? Both approaches work, but if your company intends on keeping CSR/Sustainability as a program with a set of initiatives why invest the time, effort, money, and resources to create a report that will have to be audited, be held up to legal and investor scrutiny and in the end doesn’t reflect your organizations approach to CSR. It would be sufficient to create a GRI, ISO26000, or AA report that lists all your sustainability data and call it a day.

However, if your company is interested in becoming a sustainable/responsible business that strategically integrates it social, environmental, and governance impacts into the decision making process then perhaps embarking on a journey of integrated reporting is the right approach. The good news is that if you begin to strategically integrate ESG into your business model the result will be an annual report which is already integrated…and you’ll never have to answer the question of whether ’tis nobler to suffer the slings and arrows of outrageous fortune or take arms against a sea of troubles…you’ll have already taken arms against a sea of troubles.

2018-01-02T13:34:30+00:00 June 22nd, 2012|Reporting|0 Comments

About the Author:

With nearly 20 years of experience in the corporate environment and with nearly a decade of experience with sustainability, Eric has worked in the Middle East, Asia, Africa, Europe and North America cultivating his unique expertise in communication, sustainability reporting, and human rights. He brings the right blend of global perspective, business acumen, and issues knowledge to ensure his consultancy CRx Solutions can provide the right answers. Check out his profile on LinkedIn for more details.