Part three describes the early stages of a global effort to create integrated reports. But first a little background.

Royal Endeavor
As discussed in part one, the GRI story harks back to the Exxon Valdez oil spill in Prince William Sound in l989. Socially responsible investment pioneer Joan Bavaria, founder of the Boston-based Trillium Asset Management, pulled together a coalition of leading environmental activists and social investors. Christened the Coalition for Environmentally Responsible Economies (later re-branded Ceres), the idea was to ask companies to go beyond the letter of the American law to practice what she called an "environmental ethic."

By early 1998, Ceres became what then-president and GRI-co-founder Bob Massie, now a Democratic candidate for Senate in Massachusetts, calls the "honest broker and custodian of an experiment." Five years later, the GRI, as that experiment came to be called, became an independent entity in Amsterdam. Today the GRI's guidelines for disclosure of ESG data, which have been adopted by more than 2,000 companies worldwide, continue to evolve.

Meanwhile, Britain's Prince Charles has long been interested in sustainability--an interest he has shared with his former personal private secretary, Sir Michael Peat, a former partner as well as grand-scion of one of the founding partners of KPMG. In 2006, the prince launched his Accounting for Sustainability Project, or A4S as it's called. Led by Michael Peat, the idea was to work with businesses, investors, the public sector, accounting bodies, NGOs and academics to determine how to "embed" sustainability into the DNA of how companies manage themselves.

A corollary project of A4S, which was called Connected Reporting, involved developing a framework for companies to connect the dots between various ESG factors and financial issues. Led by Paul Druckman, a former accounting software entrepreneur and now CEO of the IIRC, that framework has subsequently been used by companies such as BASF, Aviva Investors, HSBC and Allianz. (The IIRC was formed as a collaboration between A4S, the GRI and the International Federation of Accountants.)

But these weren't the only people looking to connect the dots. Harvard Business School professor Robert G. Eccles had written books on the need to improve financial reporting. And while he knew about GRI and counted Bob Massie as a friend, he considered stakeholder reporting to be entirely different from his area of concern--reporting to shareholders.

The remedy, Eccles, believed, was a single integrated report targeting both shareholders and stakeholders. "They had to be pulled together," he says, "because ESG issues were becoming increasingly important for shareholder value and for essentially the legitimacy of corporations."

Eccles discussed his idea with others, and learned that Philips Corp., the Dutch electronics and health care company, had been publishing integrated reports for three years. And that United Technologies, the Hartford, Conn.-based industrial conglomerate, was the first company in the Dow Jones Industrial Average to publish one. And that Natura, a Brazilian cosmetics and fragrance firm, was also doing it.

"There was no way that [these three companies] knew about each other," Eccles says. "They were in different countries, different industries. Nobody had written a book. And all of them had done it for the same reason--sustainability.

"When an idea's time has come, " he continues, "it pops up in different places at the same time."

Integrating Ideas
Eccles, along with former Grant Thornton partner Michael Krzus, began researching their book, One Report: Integrated Reporting for a Sustainable Strategy, which was published in March 2010.

The books posits that financial reporting is out of date not only because the financials don't account for intangibles like intellectual property, reputation, brand, or the value of a company's organizational relationships, but also because complexity and excessive detail obscure transparency.