5 Necessary Steps to Better Integrated Reporting AND a More Sustainable Company

With the Global Reporting Initiative's upcoming conference in Amsterdam and the growing interest--and execution--of integrated reporting, it is still important to remember the combination of the financial and non-financial data is a challenge for many companies.

Yesterday, during a meeting with SAP's Chief Sustainability Officer Peter Graf at the company's annual conference here in Orlando, he shared some insight into the journey he and the enterprise software giant together have taken on their path towards issuing its integrated report.

Some points may be obvious: for example, Graf's team worked closely with SAP's CFO and finance department to make the case for issuing an integrated report, including discussing how both quantitative and qualitative performance were important in disclosing the company's overall performance to shareholders and stakeholders.

But integrated reporting, Graf insisted, is not just about creating an annual report with the expectation that a more sustainable business will be the end result. Instead, the conception, drafting and execution of such a report should be a catalyst to inspire more innovation and creative thinking within a company.

So in Graf's view, here are the five steps behind an integrated report, or more precisely, integrated thinking within a company at all times, and for the long haul:

Understanding the business impact

What is material to both the mid- and long-term successes for your organization? It is important to identify the most crucial objectives and whether they are financial or non-financial. Once you understand how they are all related, outline their effects and how they are related to each other. For example, "employee engagement" is a common buzzword, but stakeholders have got to understand why engaged employees fundamentally matter. It certain makes a difference at a company the size of SAP: the company's senior management realized a one percent gain--or loss--in employee retention had a €62 million financial impact one way or the other.

Build a SUSTAINABLE strategy, not a "sustainability" strategy

“When you build a sustainable strategy, you understand what creates the core value for your business.” - Peter Graf, SAP

Many view sustainability--and pitch such ideas--as a way to save money. And indeed many companies (Walmart comes to mind) have proven that point. But in SAP and Peter Graf's view, sustainability must be at the very center of how an organization builds value for its customers and investors. A “sustainability” strategy will not work if it is a silo agenda within a company. In the end, a business that will remain sustainable is a far more worthy goal. So what is central at SAP? Creating innovative products that, in turn, help their companies run more ethically and responsibly. “It’s not just about cost savings,” Graf reminded me as we talked about sustainability, “but value creation.”

Innovate differently

I personally find “innovation” excessively overused and a favorite buzzword of the corporate communications and public relations crowd--as if everyone suddenly started to innovate two years, not 200 years, ago. So what does “innovate differently” mean? In Graf’s opinion, innovation is not only about improvements and efficiency, but transformation. Don't just revamp: rethink. Instead of flying more fuel-efficient carbon fiber airplanes, consider a cutting-edge virtual meeting platform. Rather than printing less, use more mobile-friendly technologies.

Engage employees

How can you motivate employees? Show “immediate value for them and they will create a better future,” said Graf. For many employees (and consumers), altruistic motives are not enough. The cold hard fact is that many of us want to know the immediate value for himself or herself and will not be inconvenienced. So at SAP, Graf and his team took on a bevy of projects. Eye-catching posters with QR codes gave employees tips on everything from health living to energy saving suggestions. And when the company developed an internal carpooling tool, now an SAP product, the CEO led by example and commuted by carsharing to SAP’s Germany headquarters. Finally, each team within SAP has access to a dashboard that monitors carbon emissions and how much money the team has saved--and how the group ranks globally. In sum, make it easy, make it matter and make it fun.

Deliver new value to customers

Many of these problems are far too complicated for one organization to handle on its own. The successful companies who will thrive in this era of volatile energy prices and diminishing resources will be those who have already have started to “co-innovate” with customers and suppliers. The stronger organizations will be the ones who view their entire value chain as an ecosystem and ongoing circular process--the old ways of looking at business as a linear progression, with waste and inefficiencies merely as the cost of doing business, is no longer viable.

Based in Fresno, California, Leon Kaye is the editor of GreenGoPost.com and frequently writes about business sustainability strategy. Leon also contributes to Guardian Sustainable Business; his work has also appeared on Sustainable Brands, Inhabitat and Earth911. You can follow Leon and ask him questions on Twitter or Instagram (greengopost).

Disclosure: SAP paid Leon Kaye’s expenses to attend the SAPPHIRE NOW Conference this week in Orlando.

[Image credit: Leon Kaye]