A belated Happy New Year to all of you and all the best for a great 2016. My first e-mail of this year is about two items directly related to integrated reporting, a conference in Santiago, two interesting articles, and two new pieces by Georg Kell.
The first item about integrated reporting is a recent study by KPMG called Creating Value: Integrated Reporting <IR> and Investor Benefits
. Here is a summary of the report from the Introduction:
“Drawing on the latest research, this report serves to highlight the increasingly compelling evidence on the value of <IR> for investors, exploring its benefits for them and the information they deem important. The research complied largely comprises investor surveys on their views of <IR> and wider information that goes beyond pure financial data, although studies are also included that demonstrate the value of <IR> in terms of the performance of the company.”
The second item is a Chinese animation on integrated reporting prepared by the De Tao Group Masters Academy
, an organization I’m working closely with in China to spread the word on integrated reporting in the world’s fastest-growing economy. The animation Integrated Reporting: Just for Decision Makers
was produced in order to help spread awareness of integrated reporting in China in an easily consumable way. It will support work being done there by the International Integrated Reporting Council
and the various things we are doing to leverage the Chinese translation of my most recent book on integrated reporting, The Integrated Reporting Movement: Meaning, Momentum, Motives, and Materiality
(with Michael P. Krzus and Sydney Ribot). The animation is hosted on a platform called QQ which is conveniently available both inside and outside of China. However, like most Western Internet platforms, there are a few short commercials at the beginning which will give you a little taste of China.
Conference in Santiago
On January 6-7, I participated in “The Future of the Corporation: Business for Society Conference” in Santiago that was organized by the ESE Business School
of Universidad de los Andes
and the International Academy of Management
. This conference brought together leaders from the Chilean business, investor, and government sectors, together with civil society represented by NGOs and experts on the role of business society from around the world. There were a number of excellent speakers but I was particularly taken by a speech given by Cardinal Peter K. A. Turkson, President of the Pontifical Council for Justice and Peace, called “Moral Challenges to Business and Society.” I wrote about it on my Forbes.com column in a piece titled “Why Is Good Governance Important?
” All of the speakers, including Cardinal Turkson, were asked to do short videos summarizing their talk at the conference and they are available here
Since the conference, Pope Francis wrote a letter to The World Economic Forum
, “The Pope and The World Economic Forum
,” that was delivered by Cardinal Turkson. The Cardinal also gave a speech, “Catholicism and the Environment: Reflections on Laudato si’
,” at the International conference for Catholic Bishops in Lisbon on January 22, 2016. In all of these addresses there are strong themes about the integrated nature of social and environmental issues, the importance of jobs and work, the need to make sure that technology is used properly, the harm extreme consumerism does to people and the planet, and the need for all of us take personal responsibility for creating a sustainable world.
This has caused agnostic me to start reflecting on the role the world’s religions can play in sustainable development. I must admit, I’ve never thought about this before and it is a subject about which I have a lot to learn.
The first article is from The New York Times: “S.E.C. is Criticized for Lax Enforcement of Climate Risk Disclosure.
” The article points out that “Evidence that climate change issues are already affecting big companies continues to mount.” As a result, “The S.E.C. is now reviewing what it requires companies to disclose, and it could introduce new rules this year. As part of the public comments process, some groups have suggested that the S.E.C. specify that companies address issues such as climate-related legal proceedings, or so-called stranded assets — oil and gas reserves that may never be used.” That’s the good news. Here’s the bad news: “But for now, the S.E.C. has no plans to require companies to be more forthcoming than they are now about climate change.” Should the S.E.C. decide to become more proactive here, this will obviously have a noticeable impact on companies’ disclosures and the value of investors’ portfolios.
The second article is from the Financial Times (so you need a subscription to see it): “Quants are the new ethical investors
.” This article notes that “Quantitative, or rules-based, investment uses a set formula to manage a portfolio, exploiting a perceived inefficiency in the market. More and more quantitative analysis is supporting the hypothesis that failure to integrate ESG factors into investment decisions is one such inefficacy, and quant managers are looking to take advantage.” As this practice spreads, ESG factors will become an increasing part of mainstream investing.
Posts by Georg Kell
In Looking Ahead: The Enemy is Us
, Georg Kell, Founding Executive Director of the UN Global Compact
and Vice Chairman of Arabesque Partners
, points out that “The ability to shape a brighter global future is entirely in our hands” but that “We are capable of doing horrible things to ourselves and to others, and so each one of us needs to embark on “a personal journey to overcome the dark side of our heritage may take many forms.”
In Low Trust-High Demand for Ethical Leadership
, Georg begins with the observation that “Despite enormous progress in areas such as health and poverty reduction across many regions of the world over recent years, there is currently much uncertainty - if not anxiety - about what our future holds. And this is over and above the state of the economy.” He concludes that “Reinventing governance to better serve the interests of the majority and aligning market forces with societal priorities requires ethical leadership in politics and business alike. As trust is low and gaps are widening, the call is out for ethical leaders to take charge. The search is on for leaders who do not celebrate wealth but who have a strong sense of fairness and justice, who know the difference between right and wrong and who understand that the forces which connect us are stronger than the forces that divide us.”