Integrated Thinking by Integrated Doing

Transparency Benchmark study confirms the Reporting Trap threat
Integrated Thinking by Integrated Doing Integrated Thinking by Integrated Doing
Publ. date 23 Nov 2015
Mid-November, the 2015 results of the Dutch Transparency Benchmark were released. The benchmark is an annual research since 2004 on the content and quality of corporate social responsibility reports of Netherlands-based companies. Its goal is to provide transparency and promote the development of corporate social reporting among the largest companies.

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This year out of 485 companies, the benchmark’s top three consisted of AkzoNobel, Philips and Unilever: all well-known sustainability leaders as proven by their performance in other rankings such as the Dow Jones Sustainability Index.

Level of maturity doesn’t depend on the reporting format

Deloitte and CSR Netherlands (MVO Nederland) conducted a study among 30 frontrunner companies included in the benchmark to find out to what extend integrated reporting and thinking (aligned with the Framework published by the International Integrated Reporting Council) have been adopted. Today, 40% of the reports studied are Integrated Reports. Download a free full PDF copy of "Integrated Reporting as a driver for Integrated Thinking" study at the left section of this web page. 

One of the key takeaways  from the research is that the number of companies that publish an integrated report is increasing, but that the the level of maturity on the content of the report is not correlated. Examining the guiding principles and the content elements, combined financial and sustainability reports turn out to be less aligned with the Framework principles than their integrated or separate counterparts. Publishing a separate sustainability report or an integrated one is not a discriminator of the level of maturity. However, opting for an Integrated Report does influence the internal debate and increases awareness and development of Integrated Thinking. 

Academic views advocate focus on behaviour 

To build and nurture a high performance and high integrity corporate culture a common way of thinking is required to drive a common way of acting, since employees tend to act their way into new attitudes much more than they think their way into new behaviours. Counter-intuitively, when it comes to culture change within an organisation, our thinking follows our behaviour, not the other way around. For instance the INSEAD Shell Chaired Professor of Human Resources and Organisational Development, Professor Jean-Francois Manzoni, recently made the following statement during the "Leading The Business of Sustainability" program at the Unilever Campus in Singapore: "Reshaping the culture of an organization requires reshaping the behavior of enough people for long enough for them to internalize the new behavior to become “a habit”." 

To this point Marleen Janssen Groesbeek, professor of Sustainable Finance & Accounting, argues that “An integrated report guides organizations towards Integrated Thinking. It is a good idea to start with Integrated Reporting as people from all departments are necessary to fully develop Integrated Thinking.”

Through which lens is your company looking at reporting? 

Companies struggle with the creating value from sustainability as the business case often proves elusive and the transformation difficult. Systematic materiality analysis and industry-level standardization of sustainability issues have rendered non-financial reporting more professional, but also more complex. While an accountant’s lens with a risk mitigation perspective typically ensures that sustainability information is being collected in a methodical manner, it contains the risk of falling into the reporting trap, where publication of the sustainability report itself becomes the final objective.

In contrast, there is the investor’s lens. Investors are increasingly looking for frontrunner companies that report transparently on material risks, but also on how these companies leverage opportunities in order to ensure and enhance long-term economic returns. However many companies using their materiality matrix and data predominantly for reporting purposes only, miss the opportunity for value creation from sustainability.

Willem Lageweg, CEO of CSR Netherlands underlines this finding: “Frontrunners in business consider reporting to be more than merely a matter of accountability. They consider transparency to also be a strong driving force for innovation and value creation. Connecting transparency and reporting on value creation and innovation likewise avoids the so-called reporting trap. Reporting is all too often a tick-the-box exercise resulting in an administrative burden with limited value for organizations and their stakeholders.”

Rethinking sustainability reporting

The growing burden of engaging in sustainability reporting and benchmarks increasingly makes sense when companies look beyond the risk mitigation of material issues – to avoid the reporting trap.

 

Turning reporting efforts into stakeholder value

Are you looking for ways to get more value from your sustainability reporting and rating efforts? Please contact Josée van der Hoek, Founding Partner, for help or a second opinion, at +31 6 28 02 18 80 or josee@finchandbeak.com.

About Josée van der Hoek

Experienced strategic issues management specialist with expertise in strategy development, food waste and DJSI. | josee@finchandbeak.com

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