The innovative companies that now combine their sustainability report
with their annual financial statement are reaping mainly intangible
benefits rather than concrete gains such as reduced costs.
A qualitative study of integrated reporting has found that direct cost
savings tend to be small, although there are staff time efficiencies if
annual reporting and sustainability reporting teams are merged.
Instead, the main advantages are intangible and internal, such as
improved understanding of links between sustainability and business
strategy, ‘consistent messaging’ across the business, and better
decision-making.
The exploratory study, commissioned by two Canadian banks, Vancity and
Citizens Bank, studied 12 companies that have integrated their
reporting, and interviewed 14 specialists, including some within
reporting companies.
Solstice Sustainability Works, the Canadian consultancy that did the
research, says that even some hoped-for intangible benefits were
difficult to establish, and that it is ‘too early to tell’ whether
integrated reporting will enhance a company’s reputation by
communicating its sustainability performance to a wider audience.
However, it discovered that employees and managers are most likely to
benefit from integrated reporting, because it improves internal
understanding of the business. Some companies found that it also
improved the consistency of their overall message. Novo Nordisk claimed
its integrated report had allowed it to bring ‘one coherent package’ to
its annual meeting, where the chief executive discusses financial
results and the chair discusses non-financial subjects.
Many companies that have produced integrated reports say the biggest
challenge is managing the sheer volume of information within a tight
timetable. Combining the reports can also result in an ‘overly large’
document, yet if some data is left out ‘there is a risk that material
sustainability information will be sacrificed because financial content
is regulated and tends to take precedence’. One solution is online
reporting.
Solstice principal Susan Todd said that, when done well, combining
reports in one document ‘makes a statement that there is one holistic
story about the business’, but in practice combined reports ‘sometimes
look like different stories inexplicably bound in the same volume’.
Symptoms of this ‘forced cohabitation’ include messages from the chief
executive making ‘only passing reference’ to sustainability,
performance highlights showing only financial data, and the
‘compartmentalized presentation’ of social and environmental data.
