By Talia Eisenberg, Presidio Graduate School (MBA/MPA candidate 2017)

Corporate Sustainability: The Importance of Integrated Reporting 

Sustainability reporting advances sustainability goals because it clarifies triple bottom line materiality issues, risks and opportunities. By having a tangible report surrounding both external industry and internal company aspects, the success of a companies desired mission and outcome can be analyzed while giving stakeholders transparency and accountability. 

Integrated reporting is a growing trend where businesses combine sustainability reporting with financial information or 10-K’s. The more companies do this, the more an expectation and standard is cemented for lagging companies to feel the pressure, take initiative and practice integrated reporting. A benefit of combining sustainability reporting with financials is that stakeholders can see where one influences the other – more and more companies are realizing that the two worlds impact one another—this is partially driven by a demand in transparency and accountability by B Corp assessments, GRI’s and CDP reports. Investors, policymaking bodies, and employees (just to name a few stakeholders) are more eager than ever to understand how the seemingly intangible “outside” issues (ESG's) impact tangible financial performance within a company and vice versa. If information is power then education for all related to as many metric links as possible will help shape businesses and the future of society. For example, as an investor I may want to better understand how Coca-Cola's extreme water usage may inversely impact the future global water supply. Scarcity and rising water prices contribute significant expenses to most corporations who depend on water for sourcing, production and transportation of goods. An increase in water prices and supply make a large material dent in the depletion of the world’s growing water deprived populations, in fact many scientists have predicted that by 2030, half of the global population won't have access to fresh water. Hopefully, as more stakeholders become informed their will be a greater motivation to push for innovative sourcing and recycling techniques, accountability and tariffs. Once a mainstream consumer awareness tipping point is reached through public transparency practices such as IR, corporations will be more inclined to listen and take action to create change. If they don't, their bottom line profits will be jeopardized. 

A downside to integrated reporting is that it is very new. Because of this a common framework hasn’t been developed yet. With no real accountability system standard in place, internal stakeholder confusion is often a result for the limited number of companies currently publishing reports. It's challenging to benchmark against other companies when everyone is measuring differently. Biased reporting lacking in a set of standards, can also cause confusion for outside stakeholders. They can easily choose what to report on and what to leave out—like B Corp and SASB, there is no requirement to be assessed. Today, IR’s are a tool that forward thinking, sustainability focused companies are choosing to do to inform their stakeholders and track and refine their growth plans. As more and more company IR’s are being generated, there will hopefully be a best of practices standard established so that a company report not only incorporates financials but includes a well-rounded and complete array of social and environmental impacts.