W H I TE PA PE RIntegrated Reporting:A Means for Corporations to BecomeSocially Responsible and Accountable.By Liv Apneset...
According to Klaus Schwab, the Executive Chair of the World              as well as provide operational guidance on sustai...
• International Integrated Reporting Committee                  “I believe we will look back on the creation     (IIRC) — ...
stakeholders, contributors and reviewers. And, if simply getting    Liv is also an accomplished writer and commentator, ha...
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Whitepaper integrated reporting in the Cloud


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To make our economy sustainable we have to relearn everything we have learnt from the past. That means making more from less and ensuring that governance, strategy and sustainability are inseparable. Integrated Reporting builds on the practice of Financial Reporting, and Environmental, Social and Governance — or ESG — reporting (also known as Corporate Social Responsibility — CSR), and equips companies to strategically
manage their operations, brand and
reputation to stakeholders and be better
prepared to manage any risk that may
compromise the long-term sustainability of
the business.”*

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Whitepaper integrated reporting in the Cloud

  1. 1. W H I TE PA PE RIntegrated Reporting:A Means for Corporations to BecomeSocially Responsible and Accountable.By Liv Apneseth Watson, Director of Research & Development, AccountAbility and Executive Advisor, WebFilingsThe recent BP oil spill that leaked more than 14 million barrels “To make our economy sustainable we haveof oil into the Gulf of Mexico made it readily apparent that ourexisting system for corporate reporting has failed shareholders to relearn everything we have learnt fromand stakeholders alike in evaluating a company’s risk. Traditional the past. That means making more from lessreporting of company performance, which primarily consistsof balance sheets, income statements, and the accompanying and ensuring that governance, strategy anddirectors’ report, is simply not measuring up. Some go so far sustainability are inseparable. Integratedas to say that the overconsumption of finite natural resources,the very real risk of catastrophic corporate accidents, and Reporting builds on the practice of Financialthe implications of climate change are possibly the greatestchallenges facing the world. Reporting, and Environmental, Social andIn a “post-BP crisis” world, companies find themselves in the Governance — or ESG — Reporting (alsomidst of rapid global transformation with increased demand to known as Corporate Social Responsibility —perform not only financially, but to also become good corporateglobal citizens — remaining accountable to their stakeholders. CSR), and equips companies to strategicallyThe concept of companies looking beyond profitability alone, manage their operations, brand andengaging and focusing on their role in society, and reportingon this activity to stakeholders is generally termed Corporate reputation to stakeholders and be betterSocial Responsibility (CSR) reporting. Weaving the CSR report prepared to manage any risk that maytogether with the traditional financial performance report intoone document is referred to as “integrated reporting”. That is, compromise the long-term sustainability ofintegrated reporting refers to the combined representation ofa company’s performance in terms of both their financial and the business.” *non-financial results. Today, many smart companies are nowproviding integrated reports as a means to attract new business — Prof. Mervyn King, Chairman of the Globalopportunities, safeguard their reputation, maximize competitive Reporting Initiative, (GRI)advantages and mitigate operational risks. Source: International Integrated Reporting Committee (IIRC)
  2. 2. According to Klaus Schwab, the Executive Chair of the World as well as provide operational guidance on sustainabilityEconomic Forum, “corporate global citizenship” means that assurance and stakeholder engagement. The AA1000companies must not only be engaged with stakeholders but standards are designed for the amalgamated thinkingmust be stakeholders themselves alongside governments and required by the low carbon and green economy, and theycivil society. His reasoning is that companies depend on global support integrated reporting and assurance.development, which in turn relies on stability and increased • The Global Reporting Initiative (GRI) — Providesprosperity; it is in their direct best interest to help improve a framework for companies and organizations onthe state of the world. This thinking among global leaders sustainability disclosure. Its vision is to realize a daytoday is increasingly driving companies to produce Corporate that disclosure on economic, environmental, and socialSocial Responsibility reports — mostly on an annual voluntary performance becomes as commonplace and comparablebasis. Over the last few years, a select number of companies as financial reporting and equally as important tohas started to integrate CSR reporting into their annual organizational success. The GRI Consortium is a network-reports. Integrated Reporting is part of the shift in business based organization that has pioneered the developmentresponsibility driving companies to become corporate global of the world’s most widely used sustainability reportingcitizens. Integrated reporting therefore provides greater context framework and is committed to this framework’sfor performance data, clarifies how sustainability fits into a continuous improvement and application. More thancompany’s DNA, and helps embed sustainability into company 1,000 organizations globally declare that they use the GRIdecision making processes. Guidelines for their sustainability reporting, includingThere is increasing demand from international investors, 3M, Cisco Systems, Citigroup, Dell, Eli Lilly, Intel, Generalaccounting bodies, governments and other stakeholders for Electric, Procter & Gamble, and United Technologies.integrated reporting. The best illustration of this trend is the • The Prince’s Accounting for Sustainability Project (A4S)growing number of organizations that make CSR reporting their — His Royal Highness the Prince of Wales himself leadsactual business. Some of those organizations include: this important project. Accounting for Sustainability is a • Principles for Responsible Investment (PRI) — Represent project to bring organizations and other key stakeholders signatories to the United Nations’ Principles for Responsible together for the purpose of developing practical tools Investment Initiative (PRI). Launched in 2005, the PRI today that enable environmental and social performance to be accounts for more than 560 global investment institutions better connected with strategy and financial performance with more than $18 trillion in assets under management. and, thereby, embedded into day-to-day operations and PRI signatories pledge to integrate consideration of CSR decision making. issues into investment decisions and ownership practices. They recognize that social and environmental issues can be material to the financial outlook of a company and therefore to shareholder value. “The case for globally consistent financial • Ceres — An Advocacy Non-Government Organization (NGO), Ceres is on the green bandwagon and works with reporting standards is well understood and investors worldwide to improve corporate and public policies on climate change and other environmental, social, and accepted. It is appropriate to apply the corporate governance issues. As part of this mission, Ceres same global approach to other aspects launched and coordinates the Investor Network on Climate Risk (INCR), an alliance of more than 90 institutional investors of corporate reporting. This (International and financial firms that collectively manages nearly $10 trillion Integrated Reporting Committee — IIRC) in assets to influence companies to issue CSR reports. initiative represents an important step on • AccountAbility — This organization has developed the AA1000 series of principles-based standards that are that journey”. * designed to help organizations become more accountable, responsible and sustainable. They address issues affecting — Sir David Tweedie, Chairman of the International governance, business models and organizational strategy Accounting Standards Board
  3. 3. • International Integrated Reporting Committee “I believe we will look back on the creation (IIRC) — On August 2, 2010, The Prince’s Accounting for Sustainability Project and the Global Reporting Initiative of this Committee (International Integrated announced the formation of the International Integrated Reporting Committee — IIRC) as a turning Reporting Committee. The Committee’s bold vision is to bring forward a comparable framework for CSR reporting. point in the development of corporate They plan to present this global initiative to the G-20 Meeting in Paris in 2011. reporting.” * The IIRC has been created to respond to the need for a — Jane Diplock, Chairman of the New Zealand concise, clear, comprehensive and comparable global Securities Commission and Executive Committee Integrated reporting framework that is structured around of the International Organization of Securities an organization’s strategic objectives, its governance and business model, and a framework that integrates both Commissions (IOSCO) material financial and non-financial information. the same way that financial reporting is a requirement for allThe objectives for an integrated reporting companies. At the 2010 UN Sustainable Stock Exchanges eventframework are to: in China, delegates focused on how stock exchanges and key • Support the information needs of long-term investors stakeholders can improve CSR disclosure and performance by showing the broader and longer-term consequences of listed companies, either through voluntary exchange-led of decision making initiatives or regulation. The conclusion of the meeting was that there is a strong business case for stock exchanges to strengthen • Reflect the interconnections between environmental, CSR disclosure requirements. Starting on June 1, 2010, all 450 social, governance and financial factors in decisions that companies listed on the Johannesburg Stock Exchange are affect long-term performance and condition, making required to publish an “integrated report” or explain why they clear the link between sustainability and economic value are not doing so. Market evidence already exists that indicates the value that investors, analysts and other stakeholders place • Provide the necessary framework for environmental and on important non-financial information (e.g., environmental, social factors to be taken into account systematically in social and governance or “ESG” data) which gives a more reporting and decision making comprehensive view of an organization’s performance. Recently, • Rebalance performance metrics away from an undue more than 250 of the world’s largest institutional investors, emphasis on short-term financial performance representing more than $15 trillion in combined assets under management, demonstrated their commitment through the PRI • Bring reporting closer to the information used to invest in companies that follow good sustainability and ESG by management to run the business on a practices. As we can see, these are several of the many reasons day-to-day basis for companies to “go green” and produce integrated reports with the ultimate goal of becoming socially responsible andSource: International Integrated Reporting Committee (IIRC) accountable to all stakeholders. Integrated Reporting Meets CollaborationAll these organizations collectively have a huge influence on One of the questions facing companies who decide to take oncorporate behavior and policy makers. From Southwest Airlines integrated reporting is “who is and how are we going to do theto Walmart, companies of all types and sizes are voluntarily additional work required to produce these reports?” Existingcommunicating integrated information to stakeholders about external reporting teams for most major companies are alreadytheir business’ impact on the environment. Stock exchanges stretched thin simply meeting their existing compliance reportingare starting to incorporate mandatory CSR disclosure standards requirements. The CSR reporting process brings with it many new
  4. 4. stakeholders, contributors and reviewers. And, if simply getting Liv is also an accomplished writer and commentator, havingthe reports done isn’t enough, report accuracy and process been a co-author and contributing author on several bookstransparency has never held a higher premium than it does in a among them, XBRL for Dummies, and the Governance, Risk“post-Enron” world. Ensuring that integrated reports are accurate and Compliance Handbook. Her articles and commentary haveis critical. been published in leading business journals, including the Harvard Business Review and Strategic Finance. Prior to joiningFortunately, there is now a solution available that can make AccountAbility, Liv was an Executive Advisor to WebFilings, athe addition of Integrated reporting “smooth sailing” for privately-held US company that offers web-based software forthose charged with the task and streamline the existing SEC financial reporting.compliance reporting process for the reporting team aswell. Using WebFilings’ unique cloud-based software, entirereporting teams can collaborate in real-time creating, editing About AccountAbilityand reviewing documents. The software’s intuitive and familiar AccountAbility is a leading global organization providinginterface combines and integrates word processing and innovative solutions to the most critical challenges in corporatespreadsheet editing capabilities in a single application with responsibility and sustainable development. Since 1995process controls specifically designed for complex, finance- AccountAbility has been helping corporations, non-profitscentric reports. It’s the perfect solution to help companies and governments embed ethical, environmental, social, andembrace integrated reporting. governance accountability into their organizational DNA.With WebFilings’ “one active document” architecture, multiple AccountAbility’s unique value proposition brings togethereditors in multiple locations can collaborate on a single leading-edge research, widely-recognized standards anddocument, eliminating all version control issues — and ensuring strategic advisory services to deliver practical solutions for theirthat all team members are always working on the current clients. For more information about AccountAbility, pleasedocument every time. Another key feature is the sophisticated visit www.accountability.org.“linking” tools that enable source values and text to be changedonce and automatically trigger updates to all impacted data About WebFilingsand text throughout the document — helping to ensure theaccuracy of report data. Add to this the software’s integrated WebFilings is a privately-held Los Altos, California and Ames,EDGAR HTML conversion and intuitive XBRL search, compare Iowa-based company that offers the first and only end-to-endand tagging toolset, and you’ve got a one-stop shop for your solution for external financial reporting. The company developsIntegrated reporting needs. and markets a fully-integrated, cloud-based solution dedicated to meeting SEC reporting requirements. With WebFilings,The trend is clear. The momentum is evident. Progressive reporting teams collaborate in real-time on their financial reportscompanies need to take a serious look at adding integrated from accounting close through SEC acceptance — includingreporting to their corporate reporting process. integrated EDGAR HTML conversion and XBRL mapping and tagging. As a result, WebFilings reduces the time, risk, and costsAbout the Author associated with the entire external reporting process. For more information, please visit www.webfilings.com.Liv Watson, Director and Global Head of Research andDevelopment at AccountAbility, is a highly-regarded expert * “The Prince’s Accounting for Sustainability Project.” The Prince of Wales — The Prince’s Accounting for Sustainability Project. August 1, 2010. Web. February 21, 2011in corporate governance, financial reporting, and XBRL. She isone of the original developers of the XBRL standard, as well as afounder of the XBRL International consortium. Liv has also servedin several leadership positions related to the XBRL standard,including as a member of the International Accounting StandardsCommittee Foundation (IASCF) Advisory Committee and theXBRL International Steering Committee. e: info@webfilings.com w: webfilings.com p: 888-275-3125 © 2011 WebFilings LLC | wp0311a