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considerable opportunity for improvement here. Similarly, while there are some very valuable exceptions, we would like to see further progress in terms of producing more analytical, forward-looking reports.
Managing the internal politics and ensuring effective integration Another challenge is ensuring that there is effective co-ordination and integration between the different functions involved in the traditionally separate activities of annual financial and sustainability reporting. Our recent experience with various companies across a range of sectors suggests that for many companies there has been some initial tension between the investor relations and/or finance functions on the one hand, and the sustainability and/ or corporate affairs functions on the other. Establishing the new reporting systems and ensuring clearly assigned responsibilities for integrated reporting will require unambiguous support from company leadership informed by their understanding of the importance of crossfunctional co-ordination. Leaving it in the hands of the investor relations department on its own, runs the risk that the traditional understanding of value creation and the historic approach to annual financial reporting, will continue to predominate, undermining the shift in approach and understanding that integrated reporting seeks to inspire.
BUSINESS COMPETITIVENESS
Ensuring effective engagement of the governing structure and using the process to interrogate strategy As I have suggested earlier, if <IR> is going to deliver on its potential then it is essential that it involves the active engagement of the organisation’s governing structure in a process that prompts them to reflect critically on how their organisation creates value over the short, medium and long-term. An important continuing challenge is that of ensuring this level of engagement. In our experience, we have found it hugely valuable to involve the organisation’s executive team in a frank dialogue that reflects on the organisation’s value creation process and business model, that critically considers how much value the organisation delivers (across all capital stocks), that identifies the external factors (the risks, opportunities and stakeholder perspectives) that affect its ability to deliver value, and that informs the organisation’s process of allocating assets to enhance value creation. In asking these questions we have found that the <IR> process can be very effective in interrogating and informing the organisation’s business and sustainability strategies. While there are some important remaining challenges I think we have seen some very valuable progress amongst South African companies over the past two years – and there are some significant lessons to be learned and shared from this experience.
THE SUSTAINABILITY AND INTEGRATED REPORTING HANDBOOK- VOL.1
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