Much of this is being pushed by the International Integrated Reporting Council, a global coalition of regulators, investors, companies, standards bodies, the accountancy profession and NGOs. IIRC is aggressively pushing for a globally accepted integrated reporting framework, linking arms with the World Business Council for Sustainable Development, the Global Reporting Initiative, The World Bank, Ceres, BSR, the Association of Chartered Certified Public Accountants and others. IIRC will be publishing its Draft Framework in 2013.

One challenge is that the growth and sophistication of sustainability reporting is limited, if not undermined, by the tools companies are using to produce them. According to a 2012 report published by Ernst & Young in partnership with GreenBiz.com, “those tools remain rudimentary, even primitive, compared with those used for reporting on financial measures.” When asked to name the tools used to compile their sustainability reports, most companies cited spreadsheets, centralized databases, emails and phone calls as the principal tools, with about 1 in 4 using packaged software. As integrated reporting catches on, it will push companies to use tools that help them generate higher-quality sustainability data.

Sustainability reporting is not likely to go away — companies have invested too much reputational capital in telling stories and providing detailed information, and stakeholders have come to view them as a minimum requirement of a company’s sustainability commitment. But as integrated reporting ramps up, sustainability reports will need to provide more detailed performance data relevant to broader stakeholders, insight into what is driving changes in metrics, and deeper explanations of management responses to social, resource and pollution challenges.

Says Harvard’s Eccles: “Good companies will see integrated reporting as an opportunity to communicate on and implement a sustainable strategy, which I define as one that creates value for shareholders over the long term while contributing to a sustainable society. But accomplishing this at a global scale means that integrated reporting needs to be a mandatory, not voluntary, exercise.”

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