Rikke Netterstrom, Executive Director, CSR Asia, suggests some of the issues companies in Asia need to consider when considering adopting integrated reporting.

Combining the traditional annual report with the stand-alone sustainability report in an integrated report, is no new idea. The latest Global Reporting Initiative (GRI) sustainability reporting guidelines (see ‘The GRI guidelines’ sidebar) have guidance on integrated reporting and the International Integrated Reporting Framework provides valuable guidance to those taking the plunge. Business leaders all over the world have taken up the baton and dropped the sustainability report, and companies such as SAP and Novo Nordisk are proving that this can be done in ways that won’t harm the quality of disclosure.

But is it right for your business? We engage with a large number of businesses considering this option, and sustainability managers who are not sure how to respond when the CEO asks their view, so here are few questions which might be worth putting forward the next time you are asked.
Have we considered our wider disclosure strategy?

Stakeholders, commercial, financial as well as civil society will not take kindly to companies who reduce the availability of data and progress against targets under the guise of integrated reporting. If not included in the main report, information needs to be available in a different format, for example through a dedicated website with policies and up-to-date data available. Some companies already have great online disclosure, but for many this is a large piece of additional work to be completed.

Do we have the right advisers?

An annual report is a regulatory document, subject to restrictions and guidelines from stock exchanges, company law and accountancy rules.
The integrated report will need to meet these same standards. Companies needing advisory on their report would therefore do well to appoint agencies with a robust understanding of these parameters. An integrated report requires extra vigilance and investment in bringing in the right skills.

Will our report still be useful to the target audience?

Many respected companies use their sustainability reports extensively in face-to-face meetings with civil society, Socially Responsible Investment (SRI) funds and other expert stakeholders. Our experience is that the traditional GRI report is a strong tool in such contexts, giving stakeholders the information they need – no more and no less – at their fingertips and in an easily digestible language. GRI reports give a quick overview of governance structure, activities and performance figures which are not tucked away in the legalese language of annual reporting. On the flip side, some investors might not appreciate having to search through lost-time-accident rates and diversity data in order to find the loan-to-value ratio of your China business (yes, we know – they should be interested, but they might not be).

Is there a risk of producing a phone book?

Asia has a large number of highly diversified conglomerates, with activities across a wide range of sectors or spread across dozens of countries. An integrated report attempting to deal with all material aspects for all activities and incorporating legally required disclosures is likely to end up as thick as the phone book of Greater London, and about as likely to be read.

Is our company culture supportive of integration?

The culture clash between the departments traditionally charged with the annual report and those responsible for the sustainability report can cause a severe imbalance and ultimately a poorly integrated report. The reality is that in most companies, finance and legal departments have considerably more weight than sustainability departments. So a period of cultural integration between the two, ensuring that there is engagement and mutual respect may be necessary to allow for a robust integrated report that doesn’t look like an annual report with sustainability tagged on out of courtesy.

Having worked in sustainability reporting for 15 years, I am naturally biased towards a traditional format. Most of our clients use their reports extensively, and in some cases they are downloaded much more frequently than the annual report because they speak to a broader audience. However, I also welcome innovation and the inherent intent of mainstreaming sustainability, and some companies have really broken new ground with their integrated reports. The bottom line is: think through why you are doing it and how you will do it, and the answer to whether to do it should be easy.

Rikke Netterstrom
Executive Director, CSR Asia
This article first appeared in CSR Asia’s e-newsletter ‘CSR Asia Weekly’. Copyright CSR Asia 2015.

 

SIDEBAR: The GRI guidelines

The Global Reporting Initiative (GRI) has pioneered sustainability reporting since the late 1990s, producing its widely used ‘sustainability reporting guidelines’. GRI supports the development of integrated reporting and is actively participating in its evolution. It believes that its latest generation of sustainability reporting guidelines are a good starting point for companies embarking on integrated reporting. It has also convened a Corporate Leadership Group on integrated reporting to be able to contribute more directly to its development.

More information is available at: www.globalreporting.org.

 

 

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