Integrated Reporting

22 February 2012 by

Much noise was made of PUMA’s ‘pioneering’ Environmental Profit and Loss account last summer. The sports brand worked with global accounting firm PWC and sustainability consultancy Trucost to develop the report. The report is the first from a major international organisation as the integrated reporting movement gathers pace. It is expected that environmental reporting will enter the mainstream in the coming years, driven by increased emphasis on sustainability and energy and carbon reduction. The response to the report was overwhelmingly positive with minor criticisms focusing on the difficulty of calculating supply chain impacts.

Creating an environmental profit and loss account involves placing a monetary value on water use, greenhouse gas emissions and other areas of their business, across operations and supply chain. Reporting in this manner is known as integrated reporting and is a new approach to corporate reporting that demonstrates the linkages between an organisation’s strategy, governance and financial performance and the social, environmental and economic context within which it operates.

If integrated reporting becomes the norm, as is predicted by some analysts, there will be obvious implications on sustainability teams and how sustainability is managed in an organisation. Data capture and management will rocket to the top of the priority list as sustainability managers increase the depth and breadth of their sustainability reporting. Sustainability teams will need to be skilled in accounting procedures and practices and those with both sustainability and accounting skills will be highly valued.

John Elkington from The Guardian Sustainable Business asks ‘what will be different when integrated reporting is the new norm? Previously isolated streams of data, information and intelligence will be brought together in new combinations; the narrow focus on financial capital will expand to embrace multiple forms of capital (e.g. manufactured, human, intellectual, social and natural)...and much paper-based reporting will be replaced by online platforms enabled by the internet

Sustainability data systems will need to evolve to accommodate not just the entry and reporting of sustainability data but also the monetary value of their sustainability impacts. Systems will need to be flexible enough to respond to subsequent changes in reporting of sustainability data. Sustainability suites that have been developed by software houses with a background in business intelligence and accounting will find that they are in a better position to adapt their systems to accommodate the needs of integrated reporting.

Smaller, more environmentally focused systems will need to adapt their systems to meet changing requirements but they benefit from being smaller and more flexible than their larger competitors. In this sense, the market is an interesting position as currently these smaller suppliers offer sustainability systems which are often more advanced than the systems offered by the traditional software giants. If integrated reporting becomes then norm, they could find themselves under threat if the balance of favour shifts towards the larger, multinational software houses.

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