As we prepared to start working on the 2017 edition on what was to be Ecotone’s third integrated report I wanted to push us to a higher standard with a more formal methodology vs our previous reports where more ad hoc based on a simple (but effective) triple bottom line structure. I wanted to be able to model good reporting to our clients what showed reports that were action based and tied to strategy. I did not want a report that looked pretty that no one would read. After a number of discussions with Bob Willard of Sustainability Advantage, author and speaker on the business case for sustainability, he suggested the International Reporting IR Framework.
The <IR> framework is a set of guidelines to help companies create a comprehensive integrated reports. The focus is on how a company impacts the six capitals -financial, manufactured, intellectual, human, social, natural over various time horizons.
Here’s what I learned:
- It’s a challenging framework.
But to paraphrase Kennedy “we don’t do things because they are easy but because they are hard”. Part of what makes <IR> to challenging is that it is so comprehensive. It’s start with considering the purpose of the business (the why) and the stakeholders (the who), next it covers the governance structure of the organization, then an exploration of the business model, risks and opportunities, and resource allocation. Only then do you get into a detailed accounting of the performance of the company against the six capitals. Finally there is a discussion of report preparation and finally outlook for the future. It’s a lot of ground to cover.
- Data is only half the battle.
Being our third report I thought it would be fairly straightforward as we had put systems in place in prior years to capture the data. <IR> added two challenges: the six capitals required reclassifying a lot of our data but more importantly <IR> focuses on a lot of things beyond performance metrics – they why, how, who and what of the business as outlined in the previous section.
- The Flourishing Business Canvas Helped A lot.
Back in December/January Ecotone participated in a workshop series called Business Design For Success which was focused on helping companies get B Corp Certification, but more importantly it was about the intentional design of businesses to be focused on the triple bottom line. One tool that we used throughout was the Flourishing Business Canvas – an extension of the traditional Business Model Canvas (BMC) but adding a social and environmental layer. In retrospect this went along way to preparing the content for our report. Unlike the BMC, the Flourishing Business Canvas specifically addressed natural capital through sections for ecosystem services, biophysical stocks, and ecosystem actors. It also takes a stakeholder vs shareholder approach. It specifically addresses governance as well as both value co-creation and co-destruction which is inherent in the six capitals model in that everything is interrelated.
- A Framework too Far.
Our original goal for the report was to use The Future Fit Business Benchmark (FFBB) as the evaluation methodology. Future Fit is a new benchmark with uses 23 Do No Harm Goals plus 20 Do Some Good Goals to help evaluate if companies are truly sustainable. But as we started down the <IR> path it seemed like there was a potential to try to do too many things and none of them well. We didn’t want the report to be too long. But FFBB is a great benchmark worthy of its own supplemental report to be issued later in the year.
- Tell a Story.
As mentioned in lesson #3 our data was in pretty good shape, but numbers alone are meaningless – we need to tell the story of our company and how we create value for multiple stakeholders across the six captials. Fortunately <IR> provides an excellent framework for this. Thanks to Barry Martin from Hypenotic for bringing up the issue of “why would someone want to read another report, it must be compelling”. You’ll get to judge for yourself in a few weeks whether we meet this bar!