Robert Eccles, Professor of Management Practice at Harvard Business School, has been a driving force on the topic of reforming corporate sustainability reporting over many years.
Ethical Corporation CEO Toby Webb asked him, in an email Q&A, about what’s happening today, and what the future may hold for integrated sustainability reporting.
Q: Where does your interest in integrated reporting come from?
Bob Eccles: I have been studying and trying to change corporate reporting for over 20 years. It started with a 1995 paper I published in the Sloan Management Review with Sarah Mavrinac called “Improving the Corporate Disclosure Process.”
In this paper, based on a survey of companies, sell-side analysts and investors, we showed that the market was interested in nonfinancial information but that companies, by their own admission, weren’t reporting much of it.
I then published two books written with various partners at PwC that provided further evidence of the need to supplement financial reporting with information on nonfinancial factors that were leading indicators of financial results, such as product development, customer satisfaction and the development of intangible assets.
In these books, I also suggested an “action strategy” for how corporate reporting could be improved. The first book (2001) was called The ValueReporting Revolution: Moving Beyond the Earnings Game and the second (2002) was Building Public Trust: The Future of Corporate Reporting.
While these books were well-received in concept, very little changed. Both of these books were focused on shareholders and treated environmental, social and governance (ESG) sustainability issues as a somewhat separate, but legitimate, exercise.
I then got busy with other things and didn’t think much about corporate reporting until after returning to HBS. In 2009, I started thinking about corporate reporting again but this time with a much more explicit focus on sustainability.
The world had changed in terms of the effects of globalization, increasing scientific data about the effects of climate change, and a continuing series of global financial crises.
I had changed as well and, with Mike Krzus, I wrote the book One Report: Integrated Reporting for a Sustainable Strategy, which was published in 2010. We had the germ of the idea of “integrated reporting,” although we weren’t originally calling it that. But in doing our research, we learned about companies doing integrated reporting—like Natura, Novo Nordisk, Philips and United Technologies—and it all came together.
The idea of integrated reporting had popped up simultaneously in practice and academic theory independently of each other, showing that it was an idea whose time had come.
The fact that our book came out about the same week that Southwest Airlines published its first “Southwest Airlines One Report” was further evidence of this. I didn’t know Southwest was working on this, and they didn’t know I was writing a book until they received it in the mail.
Next page: The state of integrated reporting today
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