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Integrated reporting: A key milestone for corporate communicators everywhere. 5 reasons why CEOs and communicators need to pay attention

April 2, 2013

 

This month brings a key milestone in the global evolution of corporate reporting, and the public relations and communication management profession is at the centre of the action.

 

On April 16th, the International Integrated Reporting Council, a coalition of regulators, investors, companies, standard-setters, the accounting profession and NGOs, will release its latest draft corporate reporting framework for public comment at events in 11 countries hosting the world’s largest stock exchanges.

 

The Global Alliance is proud to serve on the working group behind the document, representing our global profession, and many GA board members and association leaders will be at the April 16th events.

 

Why is this so important? I believe it’s because businesses communicators tell stories of value every day, and these stories influence decisions by shareholders, customers, suppliers, employees and all other stakeholders. Integrated reporting can change the way we tell those stories -- for the better.

 

Building on today’s financial and sustainability reports, integrated reporting presents an organization’s strategy, governance, performance and prospects within its full commercial, social and environmental context. The goal: to give shareholders and stakeholders alike a truer picture of how the organization creates value over time.

 

There will no doubt be many suggestions for improvement from those who lead corporations, prepare reports for them, or use corporate reports to make business, investment or stakeholder decisions. In the end, however, I am convinced that most will see integrated reporting as an idea whose time has come. Here’s why:

 

  1. Integrated reporting leads to integrated thinking. Smart CEOs fight ‘silo thinking’ by encouraging executives and employees to consider their connectivity to the business strategy and the interdependence of the various departments and divisions. You know the aphorism, ‘what’s measured is treasured’? It comes from the reality that the way managers report often shapes the way they think.

 

  1. Investors want better information, particularly in uncertain times. CEOs have a lot of reporting to do. The global financial crisis and high-profile lapses in corporate ethics have brought changes to corporate governance, and to financial, environmental, health, safety, sustainability and other reports. Yet for the investor, there are still two big problems: first, these reporting streams are not integrated; and second, they tend to look backwards rather than forwards. With a sharper picture of both risk and opportunity, investors are more likely to provide capital with confidence.

 

  1. Few businesses have silent stakeholders. While economic power has become more concentrated in corporations, communication power has shifted to stakeholders. Strategic CEOs know that with their operations being more transparent and scrutinized than ever before, they must acknowledge both problems and solutions within a clear context. Integrated reporting makes that possible – and potentially powerful in mitigating risk.

 

  1. The company represents the brand. A Swiss branding consultant, Christoph Eschmann, puts it succinctly: ‘The brand used to represent the company; now the company represents the brand.’ Countless CEOs see research tracking their customers’ growing desire for authentic consumption – i.e., buying products that reflect their values. The risk is high for brands whose owners are found wanting. Corporate reputations influence our decisions to buy or try products, to invest in companies, and to believe their claims.

 

  1. Integrated reporting requires integrated communication. For CEOs, few risks are greater than losing touch with their customers and stakeholders; that’s when even a successful business finds itself vulnerable to disruptive innovation, reputational damage and lost value. The very nature of an integrated report – which requires a company to consider how it uses financial, manufactured, human, intellectual, natural and social capital – requires robust, ongoing dialogue both inside and outside the organization.

 

The IIRC has a simple phrase to describe the benefits of integrated reporting: better reporting for better business. As the movement gains momentum, CEOs and boards must decide whether to lead or to lag.

 

Given the link between integrated reporting and better, more resilient businesses, there’s a simple question every corporate communicator should ask: shouldn’t our organization aim to be a leader?

 

Do you agree? You’ll have 90 days to comment on the new framework – and to offer suggestions to make it even better.

 

 

Daniel Tisch, APR, Fellow CPRS

Chair, Global Alliance