Consultant
Education and awareness
Integrated reporting requires a top-down and bottom-up commitment and seemingly infinite patience. A high quality integrated report does not happen overnight. A look at a few companies that have been publishing integrated reports for several years—Natura (since 2003), Novo Nordisk (since 2004), and UTC (since 2008 and the first US company to publish an integrated report)—makes it clear that integrated reporting is an evolutionary process.Mike will help your organization and its leaders understand the benefits of integrated reporting and the role the Board, the executive team and other functions within the company must play.
Read more about the case for integrated reporting
Integrated reporting readiness/report evaluation
Is your organization ready for integrated reporting? Is nonfinancial information subject to the same level of preventive and detective controls that exist for financial reporting? Does your report clearly communicate how your organization is monitoring and mitigating material ESG risks and leveraging opportunities for innovation? Does your report disclose the amount of cost reductions and revenue growth attributable to sustainability initiatives?Mike can assess your integrated reporting readiness and benchmark your current reporting against the Integrated Reporting Prototype Framework to aid the development of an integrated reporting roadmap.
Key performance indicators
The development of key performance indicators is possible only after the materiality analysis is complete. KPIs should focus on material issues, be relevant to the business sector, and have both performance and innovation perspectives. Developing these metrics requires hard analytical work and collaboration across business functions and units.Mike can help your organization develop KPIs appropriate for management decision making and external reporting until high quality sustainability accounting standards and sector-specific KPIs are accepted by national regulatory bodies.
Materiality analysis
Guidance on materiality for nonfinancial information has been published by several public and private sector organizations. None of the organizations that published this guidance have the same stature and credibility as FASB or the IASB and therefore their guidance does not rise to the level of “generally accepted.” This contributes to the lack of consistency between items identified as material in sustainability reports and risk factors identified in SEC filings. Existing materiality guidance provides few insights into how to evaluate the relevance of issues, which results in companies identifying 30, 40 or more nonfinancial factors as material.Mike can help your organization focus on nonfinancial issues material to your sector and clearly communicate how your company is mitigating ESG risks and leveraging opportunities for innovation.
Read more about materiality for nonfinancial information
Report content
Conversations about integrated reporting frequently raise the question of whether the goal of integrated reporting is to eliminate sustainability reports. That is the wrong question. Integrated reporting serves as a platform to furnish more detailed data than what is available only in a paper or downloadable PDF report. In addition, integrated reporting leverages the Internet and Web 2.0 tools and technologies in a way that facilitates the readers’ ability not only to perform their own analysis of financial and nonfinancial information, but also to communicate their thoughts and opinions to the company and other stakeholders.Integrated reporting is not about deciding whether to publish one report, or two reports or three reports. Mike can help your organization understand the real issues around report content. Integrated reporting is about communicating material financial and ESG information, using the corporate website to provide additional relevant information, and effectively engaging stakeholders through interactive media.
Sustainability report evaluation
The foundational concepts of integrated reporting include materiality, key performance indicators, understanding the financial effects of sustainability initiatives and controls over nonfinancial information. These concepts are at the core of assessing an organization’s readiness to embark on an integrated reporting journey. A strong focus on the core concepts of integrated reporting would significantly improve the relevance and usefulness of many stand-alone sustainability reports.Mike can use his integrated reporting expertise to help your organization enhance the quality of your sustainability report regardless of your plans to explore the adoption of integrated reporting.
Understanding financial and nonfinancial performance
Today’s reporting rarely communicates information about the economics of sustainability initiatives. Too many internal and external stakeholders view sustainability as being about CO2 emissions, or water consumption, or biodiversity, or labor rights. Those issues are only half of the equation. While each one of the foregoing issues is an element of sustainability, the term “sustainability” should be viewed much more broadly. Sustainability is about the capacity to create value for shareholders and society over the long-term. Sustainability initiatives should not only result in generating less waste, using less water, reducing CO2 emissions, but also drive innovation that enables companies to reduce costs through improvements to business processes and increase revenues through development of new products and services.Linking financial and nonfinancial performance is hard to do, but Mike can help your organization understand these relationships and disclose how different resources, the company’s business model and corporate culture combine to drive long-term value creation.
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© 2013 Mike Krzus Consulting