Non-financial reporting – a burden or a blessing?
Non-financial reporting – a burden or a blessing?
Wed 30 Sep 2020
The last fifteen years have been marked by a toughening of regulations related to non-financial communications. The teams producing them can feel burdened by the responsibility and not fully understand the purpose – which can make the long hours of work required very painful. How can you shift this perspective? And how can you take advantage of regulation-induced changes to move things forward? Read on…
Making non-financial reporting a company management tool
As the end of your financial year draws near, your teams are fully operational, working on producing all the financial reports on time which form the backbone of your business. These legal and regulatory requirements will also guide you as you undertake the project of publishing non-financial information.
Given the long hours of work that they require, teams aren’t always enthusiastic to see these tasks set to return on a reoccurring basis: multiple spreadsheets, indicators that are complex and sometimes hard to understand for external stakeholders, confusion over the actual purpose of the reports… But do things have to be this way?
Regulations related to non-financial communications have become more and more stringent. One of these regulations, on the duty of vigilance, mentions the importance of consultation with stakeholders as being an integral part of the development of the plan to implement. If lawmakers take this route (which is likely), companies will soon have to make a decisive choice: continue to be subject to regulations and the burdens they impose, or give new momentum to their CSR initiative by updating their approach to compliance.
Whether it’s to motivate your teams or make your strategy more dynamic, all issues converge and give rise to the following question: where should CSR issues be positioned within a company’s performance? Broadly drawn from change management professions, certain innovative methods enable you to shift from a process that’s imposed on you to a practice that you want to engage in. But, most importantly, these methods manage to turn non-financial reporting into both an actual management tool and a performance lever for your business, supported by strong stakeholder engagement and driven by excitement.
Case study on how regulatory requirements can provide a great opportunity for reinventing a company
Let’s go back to 2015, to the port of Bonneuil-sur-Marne in France. This port was considered an unwelcome neighbour, so Haropa (a port authority) started the conversation about how to improve it. Following a perception survey conducted with some thirty organisations in the region, internal and external perspectives about the port revealed the necessity of getting the site involved with its surroundings. Simultaneously, the port’s teams had to meet their regulatory requirements and produce a sustainable development planning document.
Bolstered by the findings shared during the perceptions study, Haropa decided to work collaboratively on its sustainable development planning document: workshops and consultation visits were organised with external stakeholders, a collaborative effort with experts was initiated and a community was gradually created and came to life around the project. Three years later, the planning document was approved by the board of directors and the dialogue continued quite naturally among other organisations to carry out the joint development of the port and its territory.
Another, equally significant result: the creation of five themed observatories whose sole aim is to track the management indicators from the planning document. Among them, environmental associations, partner communities and port businesses shared the information and kept the planning document alive themselves.
The port of Bonneuil-sur-Marne example teaches us three lessons.
- Regulatory requirements provide a foundation for creating new and exciting ways of working collectively. Because external stakeholders are involved as the final recipients of the reports, it’s possible to engage them earlier when key indicators are defined and monitored. Moreover, because the reporting is recurrent, this practice lends itself particularly well to the creation of a community that, if only the desire to organise it exists, can fine-tune or even build new indicators making it possible to:
• Meet expectations that have been expressed.
• Find the right balance between the company’s goals and different expectations.
• Enhance the value creation process in the publications.
- Putting humans back in the centre of the CSR process automatically gives it all the meaning it deserves. Behind the figures, there will now be an entire community taking the path of social and environmental responsibility. Through the reporting of non-financial information, the concrete actions accomplished by teams and the company’s positive impact on its ecosystem and its territory are highlighted.
- Reporting is just as much about the process as it is about the end report. The goal of reporting? To measure and report on the company’s performance, and to create and share values internally as well as for stakeholders.
Four key steps to success
To successfully carry out this internal change, most organisations and companies have created a committee of stakeholders whose success depends on four key factors:
- Creating a group that’s truly representative of the diversity of the organisation’s challenges.
- Finding the right balance between independence and interaction with the company’s governing bodies.
- Collaboratively creating the committee’s rules. This includes the frequency of meetings, meeting agendas and methods of communication.
- Agreeing to third-party, neutral facilitation. This is the only way to guarantee conditions which allow for the freedom of expression which will result in robust and credible discourse required for a strong committee.
Organisations can get support to give new momentum to their CSR initiative by identifying stakeholders, creating committees, defining management indicators to measure concrete impacts and consolidating non-financial data. In doing all of this, organisations will benefit from increased efficiency and credibility, thanks to stakeholder involvement.
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