Integrated reporting, according to Professor Robert Eccles, “is an explanation of a company’s financial and nonfinancial performance in the context of its strategy, which helps investors determine its ability to create value over the long term.”
“Integrated reporting is an opportunity for shareholders and other stakeholders to gain a more holistic understanding of a company internally as well as by shareholders and other stakeholders.”
Integrated reporting is an opportunity for shareholders and other stakeholders to gain a more holistic understanding of a company internally as well as by shareholders and other stakeholders.
In addition to being on the faculty at HBS, Eccles chairs the Board of Directors of the Sustainability Accounting Standards Board (SASB), a non-profit founded in 2011 with the mission of establishing corporate reporting guidelines for environmental, social and governance (ESG) impacts. One of the key pillars of SASB is the integration of financial and sustainability information in one report; another is the tailoring of reporting requirements to each industry, to ensure a focus on issues that are material to investors.
“There are challenges,” Eccles admits. “For example, unlike financial reporting, which has sophisticated management control and IT systems, nonfinancial information can be more challenging to pull together — and the CFO is not always comfortable working with nonfinancial information.” On the investor side, while the percentage of assets using ESG criteria has grown rapidly, most mainstream investors have been slow to incorporate nonfinancial information into their decision-making.
Eccles frequently collaborates with George Serafeim, Assistant Professor of Business Administration (see profile). They have co-authored a number of articles on corporate sustainability and integrated reporting, developed and taught a doctoral seminar on “The Role of the Corporation in Society” and an executive education program on “Innovating for Sustainability,” and hosted an academic conference on “Sustainability and the Corporation: Big Ideas.”
“George is an economist and I’m a sociologist,” says Eccles, “so we bring two very different but complementary perspectives together. He thinks a bit more about markets and I think a bit more about institutions. We share a common interest in helping companies develop more sustainable strategies, helping investors take a longer-term perspective, and together helping to create a more sustainable society.”