by Carol Adams
Breakfast session on the second day of the ICGN-IIRC conference and I was looking forward to some deep insights on ‘How the c-suite sees long-term value creation’. The discussion started with the highlights of some AICPA-CIMA-Black Sun-IIRC research presented in a stiff fold up brochure with lots of white space and big numbers. Numbers like: “93% agree that corporate reporting is critical to capturing the value creation story”; and, “89% agree that business must deliver PURPOSE beyond PROFIT”. No surprise there, given the questions posed. People don’t like to ‘disagree’ with statements they think may be perceived as inappropriate. (I’m reminded of polls just prior to the US election and the Trump voters who didn’t come clean about their voting intentions.) More interestingly, as Jonathan Labrey pointed out, “79% agree a longer-term perspective on strategic planning would improve value creation potential” but only 24% feel that corporate reporting is fulfilling external information needs. The speakers, including the World Bank integrated reporting lead, Giorgio Saavedra, gave their insights into the changes they see taking place.
Survey numbers such as these are widely quoted as ‘evidence’ of change at Board level, and they have their place, in influencing views, but it is the ‘anecdotes’ which really tell us how, and the extent to which, change takes place. Academic input would greatly add to the credibility of survey results, but more importantly, provide a rigorous framework for case study research examining how these changes take place. It is this sort of work that can really inform approaches to changes in corporate reporting practice and policy. Deeper research can challenge views, examine what has influenced them and investigate effective processes for change. The IIRC’s calls for greater credibility in integrated reporting warrants rigorous research and meaningful presentation of its findings. Change requires more than unspecified ‘tools’ (a term used frequently in discussions like this).
An issue with many of the survey findings we are seeing (apart from the questions asked) is the sample selection. Information on the position or level of experience of participants and on the size and industry of the companies they work for and their geographical location, is very relevant in interpreting the research results and their implications.
The discussion finished with an assessment by one panel member that there are ‘more good people than bad people in the world’ and therefore integrated reporting should happen. A nice thought to close on. But in reality there are major forces of inertia such as: the powerful influence of institutions and institutionalisation; the role of individuals in organisations and how to change their cognitive framing; and, the quest for organisational legitimacy. Further, it is not sufficient to increase the take up of integrated reporting –existing integrated reporters need to increase their credibility.
Headline survey results may influence views, but must be balanced with more rigour and depth to responsibly change practice and policy and improve the credibility of corporate reporting. We can learn much from influential and rigorous reports such as ICAS’s Skills, Competencies and the Sustainability of the Modern Audit and Making Corporate Reports Valuable or the research reports commissioned by the IIRC, ACCA and IAAER.
I was lucky enough to be invited to speak at the recent Integrated Thinking and Reporting in Practice conference in Rome organised by Professor Cristiano Busco and sponsored by CIMA. There was a lively panel discussion about the nature of academic research into integrated reporting. Bob Laux from Microsoft said academic research needed to be less rigorous and more relevant. Whilst I understand the frustration about the perceptions of relevance, it should not, and need not, be a trade-off with rigour.
The Sustainability Accounting, Management and Policy Journal currently has a call for papers for research and viewpoint articles on The academia-practice gap: Driver for progress or indicator of ivory tower? Contributions are welcome from academics, practitioners and policy makers.