We scored each of the reports in our sample on a common set of criteria that drew on both the IIRC's guiding principles and key content elements and our own experience helping companies develop sustainability strategy and reporting.
Ultimately, we applied nine criteria — such as discussion of environmental, economic and societal context; financial linkages; and connectivity between past, present and future performance — which we grouped into three categories:
• Strategic focus and forward-looking orientation.
• Connectivity of information.
We should note that our scoring reflects the degree of integration within the reports studied, not a judgment of their overall quality as reports, which was high in many cases. We also believe all companies should be commended for their experimentation and commitment in engaging this new practice, which supports the development of the field as a whole.
We found the most integrated reports typically applied a set of best practices that included:
• Explicitly incorporating environmental, social and governance considerations into the overall strategy and risk analysis of the business.
• Clearly explaining the strategic importance to the business of material ESG issues.
• Describing robust stakeholder engagement.
• Exhibiting forward-looking orientation.
• Describing economic, environmental and societal trends.
• Presenting financial and ESG key performance indicators together.
• Delivering comprehensive and interdependent information.
• Summarizing material issues, KPIs and future targets with easily understood visuals.
While we were encouraged by these practices, it was also clear that much remains to be defined and implemented for integrated disclosure format to reach its full potential. There are several aspects in which most of the reports in our sample are weak and will require further development and experimentation:
• Clearly describing the process by which material issues are identified.
• Quantifying the financial impacts of ESG performance.
• Measuring and reporting supply chain impacts.
Next page: Looking ahead