The need to build organizational capacity for integrated thinking and reporting

2 March, 2017

At BSD Consulting, we firmly believe in the importance of the appropriate allocation of capital to create value over time. To achieve that, we need a shift away from how we currently manage and communicate value to a new approach – one that recognizes the importance of linkages between organizational business models, the capitals and their impact on long-term value creation.

Although the reporting movement has come a long way on providing disclosure on impacts, there is still a big gap in the story that investors are receiving. Currently, financial and pre-financial data are typically reported separately. While improved data is undoubtedly useful, this fragmentation fails to disclose one important aspect – the linkages between the financial and pre-financial capitals and how they are managed. Pre-financial factors such as brand value, customer and employee loyalty and market position are associated with the long-term viability of business models and sustainable growth. Institutional investors and other stakeholders increasingly want to know how well organizations understand these associations and their impact on long-term value creation.

Unfortunately, the current methods of separately communicating financial and pre-financial disclosures do not address this issue.

Integrated Reporting offers organizations a mechanism for demonstrating and implementing an integrated approach for the management and communication of organizational capitals. The International Integrated Reporting Framework was developed by the IIRC to accelerate the adoption of across the world, along with its Training Programme, which aims to develop individuals’ skills and build capacities for organizations to implement an process.

As a global consulting group that provides customized solutions for the management of sustainability issues, we understand the need for building organizational capacities for integrated thinking and reporting within a holistic framework. We were the first organization to join the IIRC as a Global Training Foundation Partner. We believe this partnership offers us the opportunity and the tools to improve the adoption of for the benefit of all stakeholders.

Through the global implementation of our Training Programme, we aim to:

  • Foster Improved Management Practices through Integrated Thinking – a systematic, rigorous examination of an organization’s capitals through an integrated lens, their impacts on and from an organization and their linkages with each other can improve the understanding of risks, opportunities, improve decision-making and allotment of capital and drive change. It can also lead to the adoption of integrated thinking – reporting influences thinking (and vice versa) – the practice of making a deliberate, coordinated effort to connect strategy, governance, performance and outlook, which drives integrated decision-making and actions that consider the creation of value over the short, medium and long term.
  • Improve Communication on Performance through Integrated Reporting – clear, complete and comprehensive communication of organizational practices and performance has obvious benefits for external and internal stakeholders. It allows for more appropriate allotment of investor capital and improves organizational relationships with employees, civil society organizations, consumers, regulators and society as a whole. Improved communication is critical in complementing planning, monitoring and control, starting with connected thinking and improved collaboration between different stakeholders (departments, units, offices) within the enterprise.
  • Facilitate the Creation of Sustainable Value – better management and better communication directly relates to better value for an organization and the environment in which it operates. Additionally, through the application of principles, which promote long-term thinking, the value created can be sustainable and viable for the long-term benefit of an organization and all stakeholders. This is of special interest to stakeholders with material interest in the longer-term impact and visionary leadership of the reporting enterprise involved.

We look forward to achieving these goals through our partnership with the Training Programme, rolling out training courses in Europe, South and North America, as well as China, Australia, South Africa and the United Arab Emirates.