Integrated Thinking - A Key to Superior Value Creation
Society has become more informed and less tolerant since the advent of the internet and social media, particularly in light of increasing concerns over climate change, social inequity and injustices, corporate scandals and the 2008 global financial crisis.
This has contributed to society’s trust in key institutions reaching crisis point, according to a survey of over 33,000 respondents globally. Those companies that fail to consider their impacts on society and the environment will see an impact on their value through loss of trust, reputation and customers. Reputation can have a significant impact on company value as research in this area found that, for the average FTSE 100 Company, a 1% decline in reputation can knock about £266 million off a company’s market value.
Driven by concerns that organisations’ corporate reporting processes fail to adequately address social and environmental issues in a meaningful and transparent way, Integrated Reporting (IR) has emerged as a key development. IR is defined as a process founded on integrated thinking which results in a periodic integrated report by an organisation about value creation over time, and related communications regarding aspects of value creation. IR, through the process of integrated thinking, offers the potential to shift corporate mind-sets towards alignment of proﬁt maximisation with wider societal and environment wellbeing and provides the opportunity for organisations to respond to the United Nations Sustainable Development Goals. IR is currently adopted globally by 1,750 organisations and many of these organisations are starting to realise the benefits of a more integrated approach.
My own research of seventeen UK FTSE 100 early adopters of <IR>, based on an analysis of their reports and 36 interviews with leading executives in the areas of finance, sustainability, legal and communications, found that integrated thinking led to enhanced decision-making and/or more focused organisational performance through broader consideration of impacts and value creation. For many, particularly for those who have commenced their IR journey in the last 2/3 years, it is too early to assess financial impacts. However for very early adopters, longer term benefits have been seen through increased focus on social and environmental impacts. One example is provided by Novo Nordisk, a leading global health-care company that found that adopting integrated thinking led to innovation and programs to improve diabetes care in China which realised wider societal impacts through improving physician education and patient outcomes whilst at the same time increasing sales and market share.
Fiona Robertson will be a key note speaker on the topic ‘Integrated Thinking - The Key to Superior Value Creation’ of at the online 3rd Good Governance Colloquium on 20th May 2020, which is hosted by world renowned expert on governance and integrated reporting, Judge Professor Mervyn King. If you would like to register for this event, please click here.
A precis of this event can be downloaded here
View the Video Presentation below
Fiona currently works as a senior lecturer in accounting and finance at Leeds Beckett University. She is also an associate director of The Centre for Governance, Leadership and Global Responsibility where her research interests include Integrated Thinking and Reporting. She passionately believes that the focus of corporate leaders should be in the best interests of the long-term health of an organisation, which requires the recognition that the three dimensions of sustainable development, the economy, society, and the environment, are indivisible and integrated.