Businesses have never been more important in
people’s lives—they create opportunities through
employment, training and development, they
commercialise ideas and take risks, they invest
in the short, medium and long term, in new
technologies that will cure diseases and transform
the way we live. Yet rarely is the richness of business
activity communicated in technicolor through the
corporate reporting process. For too long businesses
have been straightjacketed into a compliance mind-
set, rather than one where the richness of their
activities and their contribution to value creation,
can be properly measured, evaluated and reported.
The challenge facing investors, as the recipients of
this information, is stark. A company’s share price
no longer acts as the defining market signal of a
business’ value because the ingredients of corporate
value are more diverse today than ever before.
These ingredients are not routinely measured and
reported cohesively and comparably in the financial
statements—the vehicle that remains the holy grail
of many mainstream investment institutions. So the
evolution in corporate reporting that sustainability
reporting is doing so much to bring about must
move hand-in-hand with changes in the behaviour
of investors and the needs of business. Only then
will the share price be restored as the reliable
signal of the value of a business. This will provide
confidence that investors have the information that
enables the efficient and productive allocation of
financial capital.
The report also points to developments in Integrated
Reporting. The growing movement that will help
to hardwire sustainability issues, amoungst other
“capitals”, into mainstream decision-making and
reporting, by providing the source of integrated
information—data and information in the context
of a business’ ability to create value over the short,
medium and long-term. It will be informed by
integrated thinking, the transformative process
of breaking down silos and recognising the
interconnections between the different operating
units within a business.
As the report points out, stock exchanges have a
major role to play in setting the agenda, as well as
responding to cultural and behavioural shifts in
market practice. They remain a strong and vital
force in attracting and promoting investment
as the institutions most exposed to the cut and
thrust of competitive capital flows. It comes as no
surprise that companies listed on emerging market
exchanges are embracing material sustainability
criteria as these markets set themselves apart
from the crowd to demonstrate the importance of
high quality corporate governance and reporting in
attracting risk capital.
The report shows how much has been done,
but it also keeps up the pressure for change in
the right areas. The spirit of innovation must be
maintained as sustainability reporting matures.
We must continue to have the foresight, vision and
courage to keep planting the trees, showing the
way and making it easy for others to follow—never
losing sight of the ultimate goal: economic and
business decision-making that is aligned to deliver
sustainable value creation that brings benefits
to providers of financial capital, society and the
Paul Druckman
Chief Executive Officer
International Integrated Reporting Council
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