Is integrated reporting really the way to engage SRIs?
Our guests:
Mike Tyrell - SRI Connect
Barbara Evans – Bloomberg
Nicola Brenchley – BT
Ian Wood – BT
Joel Roxburgh – Vodafone
Martin Blaxall – AstraZeneca
Claire Dixon – GSK
James Wallace – RSA
Rose Fenn – Unilever
Susanna Wilson – HSBC
Daisy Campbell – Cobham
Integrated reporting is seen by some as the holy grail of sustainability reporting, demonstrating that sustainability is truly embedded in your business. We invited some of our clients, together with guests from SRI Connect and Bloomberg, to discuss whether this is true. Here is a summary of the main points raised.
Ensuring that sustainability information is presented in the context of the business strategy is a vital starting point. If it isn’t, then any sustainability information is merely ‘inserted’, not ‘integrated’. Making sure any discussion of your business strategy addresses your most important issues is the first step to convincing investors that sustainability affects company value.
Our SRI professionals argued for sustainability information in a format that mainstream analysts can use - they want robust metrics with targets and KPIs which can be compared between companies and sectors. But how realistic is it for sustainability information to be reported like this? We know there are significant challenges in trying to quantify many sustainability impacts in a meaningful way, while differing metrics and methodologies confound comparisons between different companies.
The need for numbers doesn’t render narrative irrelevant. Qualitative information adds credibility to numerical data, and some context and explanation of trends in the annual report may be important. But more detailed information, including descriptions of policy and case studies, should be made available through other channels such as a website or sustainability report.
All these complexities are hampering progress toward the real goal: an assessment of the impact of sustainability performance on share value. Mainstream and SRI analysts need to work together to develop a broader, long-term perspective of the value of the businesses they assess. For this, they need to understand you as much as you need to understand them. In an ideal world, both sets of analysts would attend meetings with company IR departments, CEOs and CFOs. And companies need to do their bit by integrating information about sustainability factors that will have a significant impact on their business into their mainstream investor communications.
So, getting value from integrated reporting relies on truly integrating sustainability factors into a discussion of your business strategy. But in moving towards integrated reporting, we shouldn’t forget that most stakeholders do not read annual reports. Those interested in sustainability will look for a specific sustainability report or website for the breadth and depth of information they need. So we can’t wave goodbye to the corporate sustainability report just yet!
