When trying to put sustainability on the agenda it is sometimes wise to avoid the word altogether. Financials are not very sensitive to non-financial parameters. ‘It's all about the money.’ And yet they are an important link towards Integrated Reporting (IR). How to handle it?
On the 16th April this year the Consultation Draft International (IR) Framework was presented. The International Integrated Reporting Council (IIRC) is a broad coalition with the purpose to create thé globally accepted framework for integrated reporting. The ultimate aim is to make companies report on their value creation processes in future. But coming to consensus proved a major challenge. Financial people, versus the sustainability minded individuals, still see the world differently. In order to get the financials on board it was decided to speak to them in their own language and avoid sustainability jargon.
Preaching sustainability without talking about sustainability, is that not strange? Yet Paul Druckmann, CEO of the IIRC, has a logical explanation: ‘Money talks’ and it is therefore crucial that they come on board. But as they are still so far off from integrated reporting, it is very important to communicate carefully. In their own language they can better identify with the message and that is the first step towards their involvement.
Besides intrinsic involvement there are more potential pitfalls in introducing integrated reporting. In the Draft (IR) Framework different types of capital are distinguished. To date, the focus is on financial and material, but what about the intellectual, human, social and natural capitals? It is not (yet) clear how these variables will take shape.
There is still another point of attention: integrated reporting concerns itself with value creation, but what about the companies that ultimately mostly 'destroy value'? How can they be convinced of the usefulness and necessity of integrated reporting?
There are still plenty challenges globally, but fortunately for Europe the solution is already available: the EFQM Excellence Model! 'Integration' is the basis of the model and by using the EFQM Management Document organisations make this visible. Curious? More next week.
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