Coro’s Blog: On Purpose

I’m always looking for tipping points or levers or tools that have the power to catapult us into sustainable behaviour patterns on this small Earth. And guess what – it looks like the trusty sustainability report has a role to play in this profound evolution.

As sustainability reporting evolves and becomes more prevalent, some experts observe that reporting models are fragmented. This is not necessarily a bad thing. It can be an opportunity for a new order to arise. I’m excited by the potential for corporate reporting to coalesce into a new integrated system of reporting; one that will capture both financial and non-financial indicators and propel us into a new, more transparent economy.

In a transparent economy people, companies and governments can assess the performance of products and entire economies against global limits and targets and act accordingly. New mobile technologies make real-time information available on products, companies and supply chains so people can decide what to buy and where to invest and work.

A few things have come across my desk lately that point to this movement.

Evolution

First, the fourth generation of the Global Reporting Initiative’s (GRI) sustainable reporting guidelines, G4, is due out next year. GRI has completed one round of consultations, the results of which reveal current best practice in sustainability reporting and push for the next level of rigour.

The GRI results line up with a recent how-to guide on CSR / sustainability reporting I prepared for Credit Union Central of Canada (CUCC). You might want to check out the tool if you need a simple guide to help navigate the stages of sustainability reporting.

In addition, CSR/sustainability reporting is definitely on the rise. As profiled in the CUCC guide, a 2011 KPMG study found that 95% of the largest 250 companies worldwide now report on their CSR activities, up from 50% in 2005. The Corporate Register, which provides the world’s largest online directory of CSR reports, documented close to 5,000 English-language reports in 2010, and close to 6,000 reports including those written in other languages.

Opportunities and Fragmentation

Many of the big accountancies are monitoring the trends and exploring the opportunities in non-financial reporting services. (See: PwC’s 2010 CSR Trends, Deloitte on Integrated Reporting, KPMG’s International Survey on Corporate Responsibility Reporting 2011, Ernst and Young on sustainability trends including reporting trends and well as the Conference Board Report.)

But what has caught my attention is a probing analysis by Tomorrow’s Company, PwC and Chartered Institute of Management Accountants (CIMA) (2011). In their view, the global corporate reporting system is rooted in the past, and overlooks important externalities. Complex, parallel and unaligned financial and non-financial reporting systems have emerged, lacking coherence and coordination. It is a fragmented system.

Integration

The authors argue for a systematic approach to rebuilding the corporate reporting platform. They call for global standards for the measurement and reporting of carbon, water and scarce resources. As David Phillips, senior corporate reporting partner at PwC and one of the report authors points out in his opinion article, we need a reporting system capable of properly measuring all the resources businesses use.

Corporate reporting is poised to play its proper role in the operations of the world economy, providing accurate, comparable and relevant information to enable a systematic analysis of the health of natural, human and social capital in addition to financial and manufactured capital.

The International Integrated Reporting Council is tasked with developing a global framework for integrated reporting. They are in a position to ignite discussion amongst the G20 and inspire the creation of a global corporate information architecture that will help society track the global impact of corporate activity on our ecological and social systems.