As companies, investors and regulators develop increasingly sophisticated ways to tell the story of corporate performance, a new sustainability reporting trend has emerged – integrated reporting. Is this simply hot air or a potential ‘game-changer’?
Most companies are some way off true integrated reporting, but pioneers – such as HSBC, Novo Nordisk and Philips – are showing how sustainability risks and opportunities can be ‘hardwired’ into company strategy and reporting.
Jones Lang LaSalle recently collaborated with the Prince of Wales’ Accounting for Sustainability project to demonstrate how a strategy integrating sustainability risk and opportunities, might look, satisfying investor questions such as:
- How is a company reducing its exposure to climate change?
- Is a long-term view being taken on the evolving needs of occupiers and employees?
- Is the link between sustainability, depreciation and obsolescence understood in the real estate portfolio?
In the UK real estate sector, REIT Hammerson leads the way in reporting on the financials underpinning sustainability – covering aspects such as costs and savings from energy efficiency and reduced environmental tax liabilities. Reporting on fundamental sustainability financials is an important part of the integrated reporting jigsaw.
The initiatives and standards to support integrated reporting continue to grow – spearheaded by the International Integrated Reporting Committee (IIRC) and the Climate Disclosure Standards Board (CDSB). We will keep you updated in this blog as these initiatives gather momentum.
Back to the original question – hot air or potential game-changer? It is perhaps too early to say, but it is increasingly apparent that investors are no longer satisfied with simply knowing that companies are doing ‘something’. Instead, we find ourselves in a world of savvy investors, keen to understand how companies have evaluated all forms of risk and opportunity associated with financial and non-financial performance.