Editorial: Integrated reporting vs. saving the world
Accountants can save the world, Prof. Mervyn King recently told me. In an interview that will be published in our upcoming CFO Magazine, the celebrated South African - who changed the face of corporate governance around the world - was quick to emphasise that this would not happen by writing reports, however integrated they may be. It is the thinking that needs to be changed. "If integrated thinking becomes common, we can have a sustainable planet by the end of the century," King predicts.
The professor gave me some great examples of companies that are starting to get it right - ranging from Coca Cola and Unilever to SAB Miller and Nedbank - but there are more. Last week, Nestle SA announced that the popular KitKat bar will soon be the first chocolate brand in the world to use only sustainably sourced cocoa. The industry often faces allegations of human rights violations like forced labour and child labour. This, Prof. King would no doubt say, is a great example of integrated thinking. He argues that the value of a company should be measured based on the impact of a firm on the economy, on society and on the environment.
It's something I also sometimes discuss with Claudelle von Eck, CEO of the Institute of Internal Auditors South Africa (IIA SA). As a member of the panel of judges for the CFO Awards, she frequently forces CFOs to make the distinction between integrated reporting and integrated thinking. Because lets face it... some of our JSE-listed companies and other big firms attach some community, environmental and sustainability-related stuff to their numbers and call it an integrated report - but that is not how to save the world.
Our next CFO Magazine will have both a piece on value creation by Von Eck and the interview with Prof. King, really something to look forward to! In the meantime, there is this excellent piece by Prof. Alex Watson listing 5 areas that companies should be focussing on in order to improve their integrated reports.