Integrated reporting for a sustainable strategy: One Report has the potential to significantly change how companies operate and investors think, shifting the focus from that of meeting short-term financial goals to developing a long-term business strategy that not only makes a commitment to corporate social responsibility, but also to a sustainable society.

• Author: Eccles, Robert G.
• Position: FINANCIAL REPORTING

In light of the current economic and social climate, many companies are now publishing voluntary corporate social responsibility or sustainability reports that highlight environmental, social and governance issues pertaining to their business and industry. Such reports typically serve as a supplement to the company's annual financial reports.

While these organizations may have the right intentions, in most cases there is little linkage between the information published in these separate reports, which greatly limits either document's overall value.

It's an oversight that some companies are beginning to acknowledge and correct. There is an emerging international trend in business where a few innovative companies spanning different countries and industries have looked beyond separate reports for financial and nonfinancial results, integrating this information into a single document referred to as "One Report."

The majority of these organizations are new to the integrated-reporting arena, producing such a document for only the past year or two. Nonetheless, it appears that these frontrunners have caught the attention of stakeholders and other companies alike, as many organizations are now looking to follow their lead.

What is One Report?

One Report does not mean only one report. Yes, by simplest definition, One Report combines a company's key financial and nonfinancial information into a single document. However, the integration of financial and. nonfinancial reporting is about much more than simply issuing a paper document. Namely, One Report serves as a means of reporting financial and nonfinancial information in a way that reveals their impact on each other, answering a fundamental question: Just how does nonfinancial performance contribute to financial performance, and vice versa?

One Report has the potential to significantly change how companies operate and investors think, shifting the focus from that of meeting short-term financial goals to developing a long-term business strategy that not only makes a commitment to corporate social responsibility, but also to a sustainable society.

Integral to One Report and its success is Internet utilization, serving as a platform to provide more detailed data than what is available only in hard copy. In leveraging the Internet and its Web 2.0 tools and technologies--such as extensible Business Reporting Language (XBRL) tagging, Wikis, blogs, podcasts and forums--users gain the ability to perform their own analysis of financial and nonfinancial information, as well as communicate their thoughts and opinions with other stakeholders.

The Value to Stakeholders

Reporting matters. It communicates to the world a company's current performance--both positive and negative--and sets the stage for the future. In some cases, particularly with environmental performance, this information includes externalities that the company's operations place on society Carbon emissions, water pollution and ecosystem degradation are very prominent concerns, and a high priority for many industries.

With One Report, the relationship between financial and nonfinancial performance and the extent to which financial performance imposes social or environmental externalities becomes more apparent. The result is improved information provided to stakeholders about the company's performance and how it is being achieved--including its costs and benefits--that can ultimately lead to the following:

* The creation of an internal discipline necessary for embedding sustainability into a company's strategy and operations;

* Better company understanding that governance, strategy and sustainability are inseparable;

* Acknowledgment that a company is responsive to the risks and opportunities created by the need to ensure a sustainable society; and

* Enhanced corporate disclosure and transparency.

It is important to...