A reawakening in consulting prowess where needed most
For a long time, there has existed a Tower of Babel type communications gap between a company’s number-crunching financial controllers (custodians of its tangible assets) and the brand-aware CSI managers and story-tellers (custodians of its intangible assets). While a rickety bridge exists in the human resources portfolio, environmental and social dialects often get lost in translation.
Corporate reporting made its infantile first steps during the Coming of Age of the Industrial Age. With the transformation from agriculture to industry, horseback to engine, wood to metallurgy, fire to electric energy came the spread of Western value systems over many Continents.
The world of commerce was transformed in a very short timeframe. Electric utilities, appliance manufacturers, and communications companies proliferated. The period following Henry Ford’s first US assembly line in 1913 fast tracked the era of industrial development and social welfare.
This century, by all accounts, we are reaching the tipping point – where population growth and consumption is threatening the very system that created our social and economic wealth, backed by the environmental wealth that we have made such industrious use of up until now.
Although corporate reporting has played an invaluable role with respect to stewardship of financial capital, it focuses on a relatively narrow account of historical financial performance and of the value-creation process.
In this day and age, a firm’s physical and financial assets represent a small percentage of market value – down from 83% in 1975 to only 19% just over three decades later in 2009. Integrated Reporting is a global movement that aims to formalise the reporting on these intangible factors that cannot be explained in isolation or be given justice within traditional financial statements.
On the journey to satisfy the needs of investor, stakeholder and civil pressure to provide more encompassing reports, a patchwork of laws, regulations, standards, codes, guidance and stock exchange listing requirements have been adopted the world over.
Technology simplifies business processes and has added huge value to supply chain sophistication, but it has also rendered firms so diversified and at lateral risk that financial reports and management annotations became protracted, complex and often indecipherable scripts receptive only to the most seasoned investor and employee.
While standalone sustainability reports (issued voluntary alongside a firm’s financial report) has aided greatly in bringing a balance sheet approach to Corporate Social Responsibility and brand value, Integrated Reporting marries the stewardship of financial capital with the firm’s holistic value-creation process, including social and environmental accountability.
Little-known outside the accounting fraternity until fairly recently, Integrated Reporting today is an area of specialisation for CSI and traditional communications and investor relations firms, professional services (legal and auditing), environmental impact (incl. carbon footprinting) and independent multi-disciplinary consultancies.
In South Africa, the market for these services includes JSE-listed companies (required via the King III Codes to produce Integrated Reports) and unlisted firms in the supply chain driven by Government and industry peers to account for their financial, social and environmental performance.
As a communications and CSI professional, my study of and entry into this field of reporting has transformed the way I view the businesses I consult to, and I approach the marriage of my writing and investigative skills in these ventures with great enjoyment. Perhaps the most interesting of the Integrated Reporting (and Assurance) processes is the stakeholder audits and quantification of social / environmental stories that form part of the process.
For more information on Sustainability, visit my regular blog spot at www.greenberetclub.blogspot.com or follow me on Twitter @LaniBusyB.