Over the past year, I have often been asked, “How is Integrated Reporting different from Corporate Social Responsibility (CSR) Reporting?” That’s a tricky question, because they can be very similar, or almost identical. CSR or Sustainability Reports can be very well done and incorporate many of the facets that make up an Integrated Report. A CSR Report may capture measurements year-over-year to give insight on the performance of programs; it may even tie dollar values to initiatives. The best way to define the difference is that an Integrated Report analyzes the most material CSR activities to highlight risks and opportunities, focusing on those that are most important to its stakeholders and shareholders. In contrast, a CSR Report is a broader overview of corporate sustainability efforts and programs. Smithfield Foods Inc. illustrates this difference through their recent reports. The company shifted from a CSR Report to an Integrated Report in 2012. To help their stakeholders understand the difference, they specifically highlighted that the new Integrated Report included their 10-K. The Integrated Report also includes information on value creation, risk management, a financial summary, and return comparisons – all of which were excluded from earlier reports labeled as CSR.
Some companies, however, are testing the waters before completely shifting their reporting model. Coca-Cola developed both a Sustainability Report for 2011-2012 and an Integrated Report for 2012. Key differences between the reports are as follows:
- The Sustainability Report reflects KPIs that the company has addressed, along with information regarding their initiatives and programs. It provides a big picture view of all sustainability-related initiatives in a GRI compliant format.
- The Integrated Report addresses issues that Coca-Cola has identified as material to investors and other key stakeholders. The report identifies and prioritizes these issues through a series of stakeholder engagement tactics, and goes beyond simply highlighting the relevant initiatives, to strategically addressing the risks and opportunities that the key issues present. It also includes a sustainability financial review and additional governance information.
At this stage in the game, there is no right or wrong as to whether companies should shift their CSR Reports to look more like Integrated Reports, or create an Integrated Report in addition to their existing CSR Report. The answer typically depends on the company, their current CSR report, their desired goals of Integrated Reporting, and what presents the most value-add. I would recommend companies conduct a formal assessment to determine what reporting structure will work best for their business and stakeholders. Within all this gray area one thing is crystal clear; many of the benefits that Integrated Reporting provides will not be realized through a standard CSR report alone. And in that way at least, we can say there is definitely a difference between the two.
If you are interested in discussing more about your organization’s reporting structure, don’t hesitate to contact me.