A journey towards integration

Several major Australian businesses, including NAB and Stockland, are joining growing global momentum for integrated reporting, measuring environmental and social impacts, writes Roger Simnett and Sarah Adams.

Integrated Reporting continues to build in momentum across the world. The International Integrated Reporting Committee’s discussion paper was only released back in September; however a lack of an established framework has not held back some organisations from progressing with their own integrated reporting journey.

Recently, KMPG has found that 25 per cent of the world’s 250 largest companies have adopted some form of integrated reporting in their most recent reports (with 62 per cent of these claiming to integrate sustainability in their core business).

The recently released Global Reporting Index Sustainability Disclosure Database also lists hundreds of reports flagged as integrated reports.

While much of this momentum is international, we already have indications in Australia over the popularity of the concept, particularly in the corporate sector.

The recent CSI Shared Value and Integrated Reporting Roundtable provided an insight into how the concept of Integrated Reporting is attracting interest across Australia’s most progressive business and other organisations.

Three top Australian organisations have elected to participate in the International Integrated Reporting Pilot Program: NAB, Stockland, and bankMECU.

NAB is a leading Australian company in terms of its approach to corporate responsibility and sustainability, and their NAB 2010 Annual Review is an example of an integrated report for Australia.

In a previous article, Peter Shergold identified Stockland as a ‘shared value business’ on account of its progressive approach to ‘creating shared value for our investors, customers and community’ (Stockland dares to share, November 29).

Finally, as Australia’s first customer-owned bank, Integrated Reporting provides bankMECU an opportunity to reflect its stakeholder-centric approach in its reporting framework for 2011-12.

It is also refreshing to see Integrated Reporting pursued outside of the IIRC program: a testament to how it resonates with business.

Westpac has also embarked on their own Integrated Reporting journey; with their 2011 Annual Review prepared on an integrated basis. This report shows how issues around sustainability, customer service and employees are integral to Westpac’s strategic focus of ‘financing the future’.

These examples point to the progress being taken towards Integrated Reporting, however one of the biggest hurdles for many Australian organisations remains the shared challenge of social impact measurement.

A credible and robust integrated report must be underpinned by a series of established measures of social and environmental impact. It appears that many organisations are more familiar and comfortable with environmental impact measurement, but feel less confident around selecting and measuring progress on social indicators despite the many tools, approaches and frameworks that are proliferating.

Further, striking the right balance between meeting stakeholder requirements for comparable indicators, and selecting those measures that are most relevant and material to any particular organisation remains a challenge for many organisations. These challenges must be overcome by each organisation prior to moving forward with integrated reporting.

It is also clearly apparent that most examples of Integrated Reporting in Australia remain in the corporate sector.

Some international associations have elected to participate in the IIRC pilot program, however Integrated Reporting can be implemented across other sectors (including the public sector).

Recently, we published a paper investigating how Integrated Reporting represents an opportunity for guiding the future of not-for-profit reporting in Australia.

We will be monitoring all of these developments and initiatives closely, alongside the progress of the IIRC in consultation and production of the Integrated Reporting Framework.

The article was written by Professor Roger Simnett, Australian School of Business, UNSW and Sarah Adams, Centre for Social Impact, UNSW.

CSI is an academic organisation bringing together the business, government, philanthropic and not-for-profit sectors, in a collaborative effort to build community capacity and facilitate social innovation. Its blog provides forum for discussion and debate on topic relating to social impact.

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