Sustainability

The Emergence of Integrated Reporting

 

 

If you want to learn more about Integrated Reporting and how it can help your company, I think you will like this post.

On October 15, 2019, the Integrated Reporting <IR> U.S. Community hosted a webinar featuring John Wilcox, Chairman of Morrow Sodali, and Bob Laux, U.S. Lead for the International Integrated Reporting Council.

They presented an overview of The Emergence of Integrated Reporting, a paper by the Integrated Reporting Working Group at the Conference Board.

Why is Integrated Reporting important?

Using the Integrated Reporting <IR> Framework is important for all companies because it represents the next step for companies interested in enhancing their corporate reporting. Financial statements provide only a piece of the information necessary to understand the value of a company.

Over the past three decades, tangible assets have become a smaller portion of a company’s total value. In a recent study of the components of the S&P 500 Market Value, Ocean Tomo reported that in 2015 only 16% of the companies’ market value represented tangible assets.

 

 

Companies need to report on a variety of factors that affect their value but are not captured in financial statements. The <IR> framework provides a comprehensive approach to explaining from management’s perspective how value is created in the short, medium, and long term. In addition, this framework provides an opportunity for internal management to focus on issues that are material to creating value for the company.

Integrated reporting supports integrated thinking. This allows for the integration of the company’s components that are critical to its long term success. For example, in a technological services company information about its management of intellectual property and human resources is essential for creating long term value. The <IR> framework is designed for reporting on these critical issues as they interact with the company’s strategy, risks and opportunities as well as its governance structure.

As part of the webinar presentation, Bob Laux discussed The Integrated Reporting Process to illustrate how an organization creates value over time. The following graphic shows the six capitals (financial, manufactured, intellectual, human, social and relationship, and natural) of the <IR> framework and their contribution to an organization’s current and potential value.

 

I recommend that you read this interesting report and watch the recorded webinar here.

Integrated Reporting <IR> U.S. Community is a great resource for those interested in the integrated reporting movement in the U.S. This community provides live presentations on a variety integrated reporting topics that range from actual company reports to issues about assurance on integrated reports.

Cities, Cities and sustainability reporting, Global Reporting Initiative (GRI), Integrated Reporting, Integrated Reporting, Sustainability, Sustainability Reporting

GRI Standards for Cities

City sustainability reporting would be improved if cities used the Global Reporting Initiative (GRI) Sustainability Reporting Standards.

GRI Logo, 2015

The GRI framework is used by 74% of the 250 largest corporations. So what does this have to do with cities? As the most widely used framework, it is known by a variety of investors, governments, and NGOs. Many of the same investors, governments, and NGOs are scrutinizing city reports. If the city reports were prepared with a widely used standard, the reports would likely be better understood and more usable for decision making.

Cities have economic, environmental, and social impacts that should be measured in a systematic approach in order to be managed. The GRI Standards provide such an approach and encompass the triple-bottom-line by focusing on an organization’s economic, environmental, and social dimensions. All three are necessary to measure a city’s progress toward sustainable development. The GRI Standards state that organizations need to report only what is important to that city and to be transparent about its determination process.

What are some of the benefits? They are adaptable because they can be applied to any organization of any size and in any location. Cities can compare their progress from period to period. Does using the GRI framework allow for direct comparisons across cities? No two cities are directly comparable but by using the same standards sharing lessons learned would be easier. Cities can assess their economic, environmental, and social risks in addition to engaging their stakeholders about what impacts are important.

The GRI Standards provide metrics that could be used for input into an integrated report under the International Integrated Reporting Council Integrated Reporting <IR> Framework. The <IR> Framework allows organizations to demonstrate how they create value in the short, medium, and long terms. This is especially relevant for cities as they plan for the long  term. For example, if a city invests in electric buses powered with cheaper renewable energy, this investment creates value for the city in many ways. The city’s assets have increased because it purchased the buses. It now has a fleet of electric buses. Value is created each year because fuel and maintenance costs are reduced. The reduction in carbon emissions improves air quality, which results in the improved health of citizens. As a result, health care costs are reduced.

Health care cost reductions can be quantified and reported by a city. A 2014 study by a team of scientists at the Lawrence Berkeley National Laboratory (Berkeley Lab), the National Institute of Environmental Health Sciences (NIEHS), RAND Corp., and the University of Washington, reported that costs saved from reduced health impacts of GHG reduction strategies in the U.S. are estimated to be between $6 and $14 billion annually in 2020. This means the resulting GHG reductions amount to health costs benefits of between $40 and $93 per metric ton of carbon dioxide eliminated.

Take a look at cities that have adopted the GRI framework. The list includes Chicago, Atlanta, Melbourne, Dublin, and Warsaw.