The State of Sustainability and Integrated Reporting 2018 research authored by the US-based Sustainable Investments Institute (Si2), has recently shown that only 14 S&P 500 companies issue what Si2 considers to be fully integrated reports. This is despite increasing investor interest on the subject – see asset manager, Triodos’, case for its equity investments to use the tool.
The research identifies that sustainability reporting of large global companies is ‘maturing rapidly’ – the practice is now commonplace for a significant majority of global players. Despite a development timeline of almost 30 years and increasing sophistication requirements of stakeholders, however, changes in format have so far been piecemeal. The integrated reporting framework represented one of the most important evolutionary steps when it was launched in 2010, but ten years on and we are still a long way from a reporting revolution.
The real value of integrated reporting lies in the ‘integrated thinking’ approach that it encourages businesses to adopt. This requires the corporate board to take a much more holistic view of a company’s business model, by adding five additional capitals to the traditional focus on financial capitals:
- manufacturing capital
- human capital
- social and relationship capital
- intellectual capital
- natural capital
Striving for integrated reporting without fundamentally shifting business thinking, and internal corporate processes, risks not satisfying any stakeholder demands at all. The difficulty in creating this shift in mindset, however, lies in the philosophy ‘integrated thinking’ represents. It is not a standardised model, but something that is unique to every business and is, therefore, hard to do.