The Shift to Long-Term Thinking

What will ultimately drive business to prioritize sustainability?
  • Transcript


Question: What will be the ultimate driver toward an embraced approach to integrated reporting? 

Robert Eccles: Initially I think it will be, leadership will come from the corporate community. As I mentioned, there’s already 15 or 20 companies, admittedly a very few, but interest is high. I haven’t met a single company that I’ve talked to that thinks it’s a bad idea, they’re not sure they are ready to do it or they want to be leaders, so I think the first step that we’ll see is leading companies in the corporate communities, starting to issue integrated reports, that will get visibility, they will be seen as developing the new best practices. I think closely related to that is the large pension funds, which we were talking about encouraging companies to do so, even putting pressure on companies to do so. The NGO community, the stakeholder community, when I did the research for my book, I wasn’t sure if they would support integrated reporting, or they wanted to continue to have separate sustainability reports, they’re very supportive of this and so I think you’ll see the NGO’s that have been putting pressure on companies for separate sustainability reporting starting to call for integrated reporting. 

But ultimately, just to be clear, I think this needs to be done by regulation, I don’t think it should be done immediately, I think we need time to experiment, learn what’s involved, but if you’re going to have a sustainable society, virtually all your companies need to be framing what they’re doing in terms of a sustainable strategy with integrated reporting being a key tool for that, it’s not the silver bullet, that alone won’t do it, but it is certainly a key tool for doing that. And I would see that happening initially country by country, it could be required by the SEC here, suggesting that companies provide non-financial information in the MDNA, because that’s under the regulatory authority of the SEC. It has already happened in South Africa, through King III, Marvin King, a very well known corporate governance expert, who you probably know, produced a report calling for integrated reporting every listed on the Johannesburg Stock Exchange starting July 1st has to produce an integrated report. The French National Assembly is voting on this in May, I’m told. I’m not fluent in French, so I’m not able to check that out myself. The Prince of Wales, accounting for sustainability project, is in the process of organizing an international integrated reporting committee. It will have a steering committee, a working group, represented on the steering committee will be all the big accounting firms, major corporations, corporate groups, NGO’s, investor, investor groups, that will clearly create a lot of visibility. 

So, what I think will happen over the next year is that awareness will grow, understanding will grow about integrated reporting, more and more companies will practice it, more and more investors and stakeholders will encourage it, and I can’t predict the future, four years, five years from now, you’ll start to see legislation on a country-by-country basis. And I’m guessing, I’m hoping, that a decade from now, this will be the required practice all over the world.

Recorded on April 19, 2010