Integrated Reporting,Quality of Management,and Financial Performance |
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| Authors: | Cécile Churet Robert G Eccles |
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| Institution: | 1. CéCILE CHURET Cecile Churet is a Sustainability Investing Client Specialist in RobecoSAM's Sustainability Investing Research & Development department. In this position, she serves as a bridge between institutional clients looking for new ways to integrate financially material ESG factors across all asset classes and RobecoSAM's and Robeco's capabilities. In her previous role as Senior Analyst & Sustainability Advisor, she supported investment teams within the Robeco group in integrating sustainability insights into fundamental analysis and investment decisions. She also covered the industrial engineering and transportation sectors from a financial and sustainability perspective and has been responsible for assessing the quality of corporate reporting, with a special focus on integrated reporting, since 2009. Prior to joining RobecoSAM in 2008, Cécile was an SRI Analyst at HSBC Global Asset Management in London, responsible for the implementation of the PRI strategy. She also spent more than four years at the World Business Council for Sustainable Development (WBCSD) in Geneva, working with corporates on new business models for low‐income consumers. Cécile has a BSc in Government & History from the London School of Economics (LSE).;2. ROBERT G. ECCLES is a Professor of Management Practice at the Harvard Business School. He is the Chairman of the Sustainablity Accounting Standards Board and a member of the International Integrated Reporting Council. |
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| Abstract: | Interest in integrated reporting continues to grow as its proponents cite a number of significant benefits to both companies and investors. But given the still‐early stages of development of this new management practice and the relative paucity of data, establishing empirical confirmation of these claims is difficult. Using RobecomSAM's proprietary database of over 2,000 companies surveyed during its annual Corporate Sustainability Assessment (CSA), the authors discuss the extent and recent growth of integrated reporting, and its likely effects on important indicators of both ESG quality of management and financial performance. The authors begin by reporting that although only 12% of the companies in the survey dataset practiced some form of integrated reporting in 2012, that number represented a 50% increase from 2011. The authors also report a strong relationship between integrated reporting and ESG quality of management, which some studies suggest has become a useful indicator of the overall effectiveness of management in creating value over the long term. This relationship is particularly strong in certain sectors, notably healthcare. At the same time, the authors find a relationship between integrated reporting and financial performance for two sectors—healthcare and information technology—though not for the population as a whole. The authors suggest that this apparent lack of effect may be attributable to a time lag between integrated reporting's contribution to better ESG quality of management, and the eventual reflection of such management in financial performance. |
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