11 - Reporting on non-financial issues, including CSR

Question 1

Why has non-financial reporting come to the fore in the last 20 years?

Answer 1

There has been a recognition that financial reporting tells only half the story (for a number of reasons)

Question 2

Define narrative reporting

Answer 2

Inclusion of additional non-financial information in annual report, providing wider, more meaningful picture of business, strategy and future prospects

Question 3

Which parts of annual report and accounts are examples of narrative reporting? (2)

Answer 3

• CG report
• Strategic report

Question 4

Is all CSR reporting voluntary?

Answer 4

No, there are certain requirements such as on listed companies re. greenhouse gases

Question 5

2 reasons why companies often report on CSR voluntarily

Answer 5

• Understanding of the power of ESG issues to impact performance and corporate value
• Those not reporting find themselves out of step with global norms

Question 6

What is integrated thinking?

Answer 6

Understanding better the relationships between various operating and functional units and the capitals the organisation uses and effects

Question 7

What does an integrated report communicate?

Answer 7

How an organisation’s strategy, governance, performance and prospects, in the context of its external environment, create, preserve or erode value in the short, medium and long term.

Question 8

4 of the major benefits of integrated reporting

Answer 8

• Greater clarity about relationships and commitments
• Deeper engagement with stakeholders
• Helps shareholders engage in more holistic way, eliminating distinction between shareholders and stakeholders
• Decreases reputational risk

Question 9

What is triple bottom line reporting?

Answer 9

Accounting framework which includes information about company’s social and environmental performance further to traditional financial info

Triple line = financial, social and environmental

Question 10

4 challenges associated with triple line reporting

Answer 10

• Difficult to quantify social and environmental info in a way that it can be aggregated with financial info
• No widely accepted set of standards
• No requirements for social and environmental measures to be audited
• Lack of trust in image presented by companies through triple bottom line reporting

Question 11

4 aims of integrated reporting according to IIRC

Answer 11

• Improve quality of info available to providers of financial capital to enable more efficient allocation of capital
• Promote cohesive approach to corporate reporting
• Enhance accountability and stewardship for broad base of capitals
• Support integrated thinking to focus on creation of value over short, medium, long term

Question 12

What does IIRC stand for?

Answer 12

International Integrated Reporting Council

Question 13

External assurance of CSR initiatives - why?

Answer 13

Obtained by companies to provide a measure of credibility as they are performed by third parties - almost like an audit of CSR info