Transcript
Question: What is integrated reporting and what are some
of its benefits?
Robert Eccles:
Integrated reporting is a very simple idea, it essentially involves
combing a company’s annual report, which is its financial information,
with a voluntary corporate social responsibility or a sustainability
report, combining those into a single report to show the relationship
between financial and non-financial performance, which I would define in
environmental, social, and governance terms. It involves providing
more integrated information on the company’s website, so it’s not simply
about a paper document, and it also involves leveraging a company’s
website to provide more detailed information of interest to particular
stakeholders, as well as for improving dialogue and engagement with
shareholders and other stakeholders, so it’s as much about listening as
it is about talking.
The benefits to integrated
reporting, I think, are many. Number one, it provides a coherent,
consistent, and, by definition, integrated message to the entire world,
so a company isn’t saying one thing to shareholders and another thing to
stakeholders. I think having separate messages in today’s day and age
is very difficult. It leads to better clarity on the part of the
company about the relationships between financial and non-financial
performance. Companies are increasingly making the claim that
sustainability is good for business, integrated reporting is an
opportunity for them to provide a more coherent and specific explanation
for why that’s the case. It lowers reputational risk, it improves
engagement with shareholders, it’s a form of discipline, a company that
is producing an integrated report by definition will need to have more
integrated management of the entire range of performance variables,
financial, environmental, social and governance.
It’s
interesting to see in the past couple of years, this is really
beginning to happen, different industries, different countries,
independently, simultaneously, I don’t think these companies could have
possibly known about what each other was doing, so I think integrated
reporting is clearly an idea whose time has come. Two days ago, I got
an email, I participated in a Linked-In discussion about integrated
reporting. It turns out a major Dutch bank, called Rabobank, is
producing an integrated report for the first time and I was reading
through the discussion about what they’re doing, and I laughed, I mean,
it was like these words had been lifted out of my book, which couldn’t
be the case, because they clearly started working on this at least a
year ago, and my book only came out a month ago, but the language was
nearly the same. And so, again, I think it’s just, you know, one more
piece of evidence that integrated reporting is one of those ideas whose
time has come.
When I talk to people about it,
my colleagues, they’ll say, “What an obvious idea, it’s a simple idea,”
and I laugh and I say, “It certainly is, but it’s only happened now.”
And I think it’s that way with big ideas, they seem obvious once
they’ve been stated and I think I’m fortunate to just have for a variety
of reasons, been able to notice that this has happened in the corporate
community and try and capture and codify it, to help spread the word
and to help speed the adoption of integrated reporting, because I think
it’s absolutely fundamental for a sustainable society.
Recorded on April 19, 2010
