Academics call on businesses to drop standalone sustainability reports
A new report has urged corporates to drop standalone sustainability reports in favour of integrated reporting methods, to better showcase how sustainability can act as a holistic driver for growth and value across a business.
The new IR Academic Database, launched on Wednesday (August 8) by The International Integrated Reporting Council (IIRC), contains 200 academic studies highlighting the potential positive ramifications of adopting integrated reporting, such as higher market valuation, increased stock liquidity and a longer-term investor base.
Research included in the database, which contains a number of studies regarding the 1,600 companies to have adopted the IIRC’s Integrated Reporting Framework, concludes that businesses which adopt the framework also benefit from better performance than those which publish separate annual reports on topics such as sustainability, financial performance and internal share transfers. The database will be updated frequently to highlight the business benefits of integrated reporting methods.
Since launching the framework in 2013, companies operating in 65 countries have dropped their standalone sustainability reports in favour of the new model, with many citing a drive to manage key risks with a holistic strategy as their reason for switching.
The organisation’s chief executive, Richard Howitt, said he hoped the launch of the new database would spur more business leaders to consider adopting the framework – and encourage investors to “routinely use integrated reports to support their capital allocation decisions”.
“With over 200 pieces of research, businesses can no longer ignore the need to communicate a holistic story of value creation to their stakeholders,” Howitt said at an event marking the launch of the database, which was held in Washington DC on Wednesday.
“Integrated reporting is not just the right thing to do for the sake of our markets, society and environment – it is the right thing to do for your business.”
According to the IIRC's guidelines, an integrated report is “a concise communication about how an organisation creates value over the short, medium and long term”. It is built on a multi-capital model which emphasises the interdependencies and connectivity of all a company’s six capitals: financial, manufactured, intellectual, human, social and relationship.
The IIRC’s policy and communications manager, Juliet Markham, has previously suggested that integrated reports should detail any negative contributions to global and national sustainability targets – such as the Sustainable Development Goals (SDGs) or national carbon budgets.
In contrast, the World Business Council for Sustainable Development’s (WBCSD) Reporting Exchange programme has found that there is now a total of 182 frameworks across 60 major nations that sustainability professionals can follow when creating a sustainability report – with 81% of these being “mandatory” in some form.
Indeed, a panel of sustainability experts to have spoken at edie’s annual Smarter Sustainability Reporting conference earlier this year concluded that reporting and sustainability needed to become a more integral part of business strategy to ensure that company accounts are not only understandable across different countries but comparable for stakeholder examination.
Speaking at the conference, which was held in London in March, WBCSD’s director of redefining value Mario Abela told delegates that making the sustainability report “disappear” by implementing an integrated report would serve not only as a way of avoiding the complex labyrinth of frameworks available, but as a method of “pushing sustainability into the mainstream” while avoiding “tick box” sustainability actions.
Even the Global Reporting Initiative (GRI), the largest reporting framework used by companies, has concurred that sustainability reports should be formed as an output of a holistic strategy where sustainability is embedded in the heart of the company. The organisation’s head of corporate and stakeholder relations Sabine Content told edie that GRI Standards are “uniquely suited” for creating both standalone sustainability reports, as well as showcasing data that can be combined into an annual report.