Recent research has shown a need for broader information for effective corporate reporting.
A new report, Purpose Beyond Profit, has revealed that executives believe they need better information to deliver future business success. To create sustainable value for all stakeholders, executives globally report an interest in taking a longer-term strategic perspective and having more insight into drivers of future performance.
Professor Mervyn King (pictured), FCMA, CGMA, and IIRC Chairman, highlighted the role of shareholders in ensuring a company’s worth lies in the value it creates for various stakeholders and not solely for the purpose of making a profit. He said:
“The vision of leaders must be to have a company centric governance model which moves away from yesterday’s primacy of the shareholder. It needs to be implemented mindfully to achieve the relevant outcomes of effective leadership, value creation, adequate controls and legitimacy of operations.”
The study was conducted with over 400 finance professionals, a cohort including 41 CEOs/presidents, 177 CFOs and other executives from over 50 countries. The report findings highlight that customer satisfaction, value created for society and co-creation of value through external relationships are becoming central to future success. These insights explain why the adoption of integrated thinking and reporting continues to grow internationally.
Key findings of the research include:
- 96 percent of executives agree that bringing financial and non-financial information together provides a more forward-looking, longer- term view of performance.
- 93 percent agree that effectively explaining value creation is important.
- 89 percent believe they need to shift focus to wider value creation.
- 79 percent agree that a longer-term perspective would improve value creation.
- 38 percent reported that their businesses are working on capturing new types of information and creating new tools to better understand performance.
- Despite the above, only 24 percent believe their companies are doing a very good job reporting performance metrics beyond the financials.
Badi Promesse, FCMA, CGMA, MBA – Regional Vice President Africa, The Association of International Certified Professional Accountants, said:
“The issues revealed by the Purpose Beyond Profit report are fundamental to the success of businesses. Boards must now think about performance and value creation more broadly than just the financial bottom line. Integrated reporting is the ideal tool that brings together financial and non-financial information. It provides the board with a clear picture of how value is created over the short, medium and long term, enabling them to make informed decision to drive sustainable performance.”
Purpose Beyond Profit is a collaborative project between the Association of International Certified Professional Accountants (the Association) – the unified voice of the Chartered Institute of Management Accountants (CIMA) and the American Institute of CPAs (AICPA), Black Sun Plc, and the International Integrated Reporting Council (IIRC). The project is based on a global survey of business leaders, analyzing how value creation information is used and understood.
