Beyond this, there is a bigger question about the role of corporations in society and their impact on natural capital and communities where they operate. In the IT industry, for example, entire forests are being destroyed in Colombia because the minerals required to manufacture cell phones and computer screens are there.
"It's very costly," says Nelmara Arbex, COO of the GRI. "We are digging deeper and deeper. But because the price of minerals goes up, they just continue to do it. The context where business operates is getting more complex right now."
In this light, it's hard to argue that corporations should not be accountable to stakeholders. "A corporation does not create value in a vacuum," says Krzus. "It relies on society and natural resources to create value."
Breaking Down Silos
But while accountability is a great first step, it's not enough by itself.
"Just telling you that [a company] uses 400 million hectares of aquifer water is meaningless unless you know that ten of their 20 plants are in water-stressed areas," says Eric Hespenheide, Deloitte & Touche LLP's global leader of sustainability and climate change, audit and enterprise risk services. "[Integrated reporting] is driving toward understanding the context in which [a company] is using natural capital, human capital, manufactured capital and financial capital to drive those results."
Ultimately, though, integrated reporting is about integrated thinking.
"It's really about a culture change," says Krzus, who points out that integrated reporting is about breaking down silos that impede communication whether it's between operations and finance, or finance and marketing, within the sustainability group, or between senior executives. "It's really more about change management than it is about integrated reporting.
"We should not emphasize the report as the end result," he adds. "The question is how does a company integrate ESG factors into how they run their businesses so that it goes into the very core of their decision making."
That's exactly what happened at American Electric Power, which published its second integrated report in 2010.
"It ended up helping to break down silos," says Sandy Nessing, AEP's director of sustainability and ESH strategy and design. "People began to see how things were interconnected--something somebody else was doing could help what they were doing. Or, maybe we could do something different together."
At AEP, Nessing says, the facilities managers were the first out of the gate. A LEED consultant was hired to describe a more holistic approach to energy use, water consumption, workplace environment and the like. "You could see the proverbial light bulb go off for every employee around the table," she recalls. "'Wow!'" she says they said. "'We've been wanting to do this for a long time.'"