Financial executives are well acquainted with annual shareholder reports. But lately, the ‘one report’ concept is gaining momentum in Canada and the US.
One report, or integrated reporting, combines a company’s financial data with information on its sustainability performance. Vancouver City Savings Credit Union announced the move to integrated reporting in July.
“As demand for greater disclosure gains traction worldwide, we want to continue our leadership role by producing a fully integrated report—one that draws our financial, environmental and social results together,” the company wrote in the report’s introduction.
The concept isn’t new. Danish healthcare company Novo Nordisk has been using the system for years. United Technologies Corp billed itself as the only US company to publish ‘one report’ in 2008. Southwest Airlines also announced the shift to an integrated report recently.
Mike Krzus, a partner with Grant Thornton LLP’s public policy and external affairs group in Chicago, says integrated reporting is more than just blending two documents together.
“You need to ensure that the quality of the non-financial information is every bit as rock solid as the quality of the financial information,” Krzus says.
Novo Nordisk for example, requires its non-financial information to meet a rigour equivalent to Sarbanes-Oxley, he adds.
When assembling the report, procurement plays a key role in gathering and reporting data on the company’s environmental, social and governance (ESG) performance.
“When you think about it in terms of ESG risks, procurement is the front-line of defence,” he says. “If you look at the problems the Nike corporation had years ago with sweatshops and child labour, who is looking at that? It’s the procurement group.”
Krzus, who has co-written a book on the topic and interviewed countless financial executives, will share his insight at the Carbon Economy Summit on September 21 in Toronto.
In his view, the one-report trend will continue. “Within a matter of days we have [both] Vancity Bank and Southwest Airlines….We see integrated reporting as a very critical element of any company adopting sustainable strategies.”
For details on the conference, click here.