- Integrated reporting or separate reporting
- Regulated reporting or voluntary reporting
One by one. OK?
Integrate or separate ?
There are many reasons for integrated reporting:
- all stakeholders see the whole picture
- demonstrates total strategic adoption of CSR practices
- elevates CSR practices to lhighly developed level of financial practices
- all reporting processes are aligned and more efficient
- create greater reporting discipline
- results in a more compact and coordinated report (1+1 = <2)(thats>
There are many reasons against integrated reporting
- the opposite of all the above (that was easy enough)
- the audiences are different
- CSR gets overshadowed by the financials
- the nature of CSR reporting doesnt fit well with financial reporting - they are fundamentally different
- the financial reporting cycle is highly sensitive and subject to many different regulatory pressures - aligning CSR with these reduces flexibility for CSR reporting
And the winner is :...................
Well, there is no winner, There are just thoughts and preferences. After reviewing the Novo Nordisk integrated report for 2008, i was left with the feeling that integration is a tough task, adn that non-financials certainly lose out. NN have been doing the integration thing for quite some time and are ackowledged at the leaders in this approach. I am not interested in the detailed financial data, top and bottom line is enough for me. With a little in between. But i am highly interested in everything that relates to the way they get to the top and bottom line. I wonder how many non-financial-geeks really take interest in the streams of numbers and tables. Bores me silly. Maybe that's why am not a millionaire :((. My conclusion: Integrated reporting may have relevance for investors and analysists. I suspect all other stakeholders would regard 90% of the financials as about as useful as an ashtray on a motorbike.
Regulate or irregulate
This is more interesting. The article mentioned above shows the levels of regulation in all of 9 countries - flimsy to say the least.
Reasons to regulate:
- make it happen - still many companies voluntarily do not report
- ensure controls in place
- reporting is a catalyst for action - if you have to report, you have to do something first (in theory)
- level the playing field for the "license to operate"- raise the bar
Reasons not to regulate:
- regulation may create the lowest common demoninator of reporting - meet the requirement but no more - kinda remove the competitive punch in today's voluntary reporting
- regulation will require enforcement - could lead to an army of administrators checking for CSR content at best, or at worst, non enforcement
- CSR is so broad that regulation has to be either very detailed or absolutely minimal - so whats the point ?
- forcing CSR into too prescriptive a regulatory mold could dampen the amazing creativity we see in the ways Company's express their CSR approach
And the winner is ..............................
Well, there is no winner. Haha. you guessed that, right ? Here, my view is somewhere in the middle. Sort of upper middle. High upper middle. CSR reporting should be supported by incentives, which are a part of regulation. Some metrics should absolutely be regulated. Businesses showing transparency should get encouragement . I am in favor of a level of regulation, but not to such an extent that the soul of CSR is destroyed.
So, a reasonably irregulated unintegrated approach appears to have a mild advantage over other options. Or am i just being negative? I can live with regulation and integration. As long as we remember that before we can produce regulated, non-regulated, integrated, unintegrated, any-ated type of report, we must see csr progress being made in the business. Maybe we ought to regulate for DOING as well as REPORTING ? Oops, now that's a tall order ....
elaine cohen is the joint CEO of BeyondBusiness, a leading reporting and social-environmental consulting firm based in Israel. Visit our website at: www.b-yond.biz !