Guest post from Mark Rolfe, FCCA, Leader - Financial Performance Management, IBM Business Analytics
Non-financial reporting, such as Sustainability and CSR reporting, is an area of reporting that has expanded substantially in recent years.
Disclosure can be either mandatory or voluntary. Mandatory sustainability disclosures can occur within financial filings such as Annual Reports, 10Qs and Management Reports; or non-financial reports such as Health and Safety reports or Emissions reports. Voluntary disclosure often takes the form of Corporate Social Responsibility (CSR) reports.
The Carbon Disclosure Project (CDP), whilst voluntary, has already been adopted by many leading global organizations as the standard in environmental reporting. CDP produce an annual index ranking participating organizations (including many of the world’s largest).
The concept of integrating financial and non-financial reporting continues to gain momentum around the world. Organizations such as the Global Reporting Initiative (GRI) and the Accounting for Sustainability Project (A4S), which formed the International Integrated Reporting Committee (IIRC), are working to establish globally-accepted reporting standards that meet both financial and non-financial reporting needs. GRI reporting database includes a wealth of information on companies reporting -
The compliance burden was the driver of many companies’ actions initially, but leaders are already seeing the opportunities in terms of competitive advantage, enhanced brand, and industry leadership. The white paper “Driving Performance through Sustainability” published by IBM Institute for Business Value identified these as key differentiators between innovators and others. See graph below:
It is increasingly the case that forward-thinking organizations are working to better understand, analyze, optimize and de-risk their reliance on limited resources rather than just report to comply with legislation.
Challenges to Sustainability Reporting (and other Non-financial Reporting)
Sustainability reporting provides challenges that are familiar to Finance departments and to IBM Business Analytics:
Data collection – often manual and time consuming - from around the organization
Report production – usually a manual and complex process involving many contributors, often using a combination of MS Word, Excel and Email
Report process visibility – often difficult to know the status of a report in the process, mainly due to manual report production and dependency on MS Word, Excel and Email
Report transparency – often limited audit trail, version control and ability to trace data directly to its source, adding additional time to validate manually to prevent errors.
In order for an organization to gain the most opportunity from Sustainability Reporting, they need a solution to remove such challenges and streamline their report production process.
How can IBM help?
IBM Cognos Disclosure Management (with TM1 for Data Aggregation) is a complete solution for these challenges associated with Sustainability and Non-financial reporting. It streamlines the report production process and removes the challenges that are all too familiar to Finance and other departments responsible for reporting.
It ensures that every number in the final report links directly back to the data source, ensuring that there are no conflicting numbers anywhere in the report, and changes to a source number automatically cascade through the report. The solution enables narrative to be managed in the same centrally-controlled environment as the data, even enabling dynamic changes to narrative as a result of data changes, e.g. late adjustments.
Report contributors continue to work in MS Word, Excel and PPT with the added security of the solution. It also increases their ability to collaborate by allowing multiple people to contribute to a report simultaneously.
Example: GHG report table in Cognos Disclosure Management
Workflow enables visibility across the reporting process, identifying who is responsible for each part of a report as well as the completion status.
In addition to linking directly to the data source, a full audit trail with version control, plus automatic validation increases report transparency and greatly reduces process time and risk of errors.
The IBM solution is ideally suited for Sustainability Reporting. Its efficient and effective collection of activity data and automation of the manual reporting process enables it to easily become an integrated part of existing processes. It streamlines these existing reporting processes to reduce time spent on the repetitive manual tasks, increase control and reduce the risk of errors.
Organizations are seeing increased potential from for competitive advantage, enhanced brand, and industry leadership from high-quality Reporting of both Financial and Non-financial Information. IBM Cognos Disclosure Management for Sustainability Reporting will enable this to be achieved efficiently and effectively.