Here at Rivet we understand that in today’s world, business reporting is about more than just the financial numbers. It’s also about at least two other “impact” dimensions: Environmental and Social. So continuing our post-Copenhagen theme, I wanted to update you on the Connected Reporting initiative from Accounting for Sustainability.
This is how the Accounting for Sustainability initiative describes a “connected report”:
A connected report should be focused on the needs of long-term investors and executive management. Reported information should identify and explain the connection between the organization’s strategic objectives, the industry, market and social context within which the business operates, the associated risks and opportunities it faces, the key resources and relationships on which it depends, and the governance, reward and remuneration structures in place. Further, it should explain the connection between delivery of the business’s strategy and its financial and non-financial performance.
But why, I hear you ask…
Sustainability issues such as climate change and the over-consumption of the Earth’s finite natural resources ‘ increasingly living off the Earth’s capital rather than its income ‘ are challenges that are likely to lead to major changes in the way we live and work, in our economic model and in the level and type of government regulation.
In the face of this “sustainability revolution”, it is increasingly important for organizations to understand how such issues will impact on their continuity and long-term success, and to be able to communicate clearly both the impacts and the company’s response to investors and other stakeholders. It is only through the integration of environmental and social factors into business and management reporting that the fundamental connection between strategic direction, financial performance and sustainability impacts will be made clear.
So far, a number of organizations have voluntarily adopted the Connected Reporting principles, and according to the initiative’s website, they have been adapted for use by all public sector organizations in the UK based on Treasury guidance and are due for adoption in 2010. The idea of the Connected Report is interesting and worth a look. Also coming soon is the book Accounting for Sustainability, due for publication in April 2010, that provides more background on the academic basis for the initiative.
