Integrated reporting: the challenge of communicating value

[Standard Bank Team]

The Chartered Secretaries of South Africa’s Conference on Corporate Governance was held in Johannesburg on 11 September. Karin Ireton, Head of Sustainability Management at Standard Bank Group, attended and reports that there was lively debate around company reporting, especially the new focus on integrated reporting, an area in which South Africa has been a first mover.

“Integrated reporting could be just another compliance instrument that forces companies to do more than the mandatory financial reporting and their sustainability reporting. However, I believe it offers a more positive opportunity, which requires the company to take a more analytical look at itself and challenges itself to tell its story succinctly, in non-technical language and to focus on what is really important.

“This includes testing the company strategy for issues outside of their control but within their operating context, which might cause their strategy to fail. Take the natural disasters which are expected to increase in frequency and severity as the climate changes. What impact will they have on suppliers, clients, customers or the company’s ability to operate optimally?

“In recent seasons we have seen cities experiencing more dramatic flooding, disrupting supply chains half a world away. Similarly, the social impact of growing young populations in developing countries who are frustrated by lack of opportunity is evident in many countries.

“If a company isn’t telling us how they are future-proofing their strategies, how would shareholders take long term views on future performance?

“It isn’t a trade off. Investing in society or the environment never excuses poor financial performance. But, the era of thinking that a company can survive by managing its finances in isolation of the world forces is over.

“The difficult bit about Integrated Reporting is there is no check list or formula that substitutes for the company applying its mind.”

Standard Bank Group was recently placed third in this year’s EY Excellence in Integrated Reporting Awards. See www.blog.standardbank.com/blog/2013/07/rave-reviews-reporting.