‘Integrated reporting highlights important non-financial information, such as social impact and environmental costs. Investors need this data, but is that the limit to the benefits of IR, or will the companies themselves gain an advantage?’
Integrated reporting (IR) is still in its infancy. Many companies have embarked on the journey and have a belief in the benefits of IR, but to most they remain long-term gains rather than short-term wins.
But where should these long-term benefits accrue? More integrated external reporting should lead to better IR and an improved understanding of the business fundamentals.
That, in turn, will drive the adoption of more effective strategies for long-term value creation.
The IR spotlight on long-term sustainable business success should encourage more organisations to identify their main value drivers.
Understanding them should help to align internal reporting with the achievement of strategic objectives, while the IR focus on explaining the most material matters in a clear and concise way should further help to improve management information.
The IR framework encourages organisations to consider all of the resources needed to service a business model.
Historically, this focus would almost exclusively have been on financial resources – does the organisation have sufficient working capital to operate for the foreseeable future?
More recently, this approach has developed to include building long-term supplier relationships and natural resource management, but IR is driving further developments – extending time horizons and broadening the range of key inputs considered to include wider social and environmental issues.
IR is aimed at the needs of investors, but organisations that adopt more integrated thinking, and decision-making focused on the creation of value in the short, medium and long term, will also share in the benefits and gain competitive advantage.
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Innocent Drinks is a non-traditional reporter when it comes to sustainability.
We don’t produce a glossy CSR report for the investment community or other stakeholders, nor do we label our products according to their environmental credentials for consumers.
It’s not that these types of reporting don’t have uses, but more that we have limited time and resources available so we prioritise spending the majority of our time actually working on sustainability projects, rather than writing about them.
When we do report on sustainability we like to tell people the stories behind the work that we do – it’s much easier to relate to a story about an Indian mango farmer who is adapting to climate change than to a number about a carbon footprint (which, let’s face it, is pretty meaningless to the majority of the population). Is this of benefit to our business?
Yes, I believe so. Loyalty is the result of many different factors, but one of them is definitely feeling like you have a relationship with that brand – that you understand who they are and what they think is important.
Our sustainability stories demonstrate our company values to our consumers and help them to understand the work that we are doing and that they, through their purchase, are supporting. There are also benefits at an industry sector level.
When we are looking to create partnerships with other companies or to fund NGOs through the Innocent Foundation they know that we are a brand with values and that they can trust us.
Our open and honest style of communications helps to open many doors and create strong partnerships, through which we can achieve even more on sustainability issues.
So yes, there are lots of business advantages to reporting on sustainability and they are not always ones that can be quantified in a spreadsheet, but they will definitely be felt across the business.
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