Be a part of the ‘quiet revolution’ in the way companies measure and communicate non-financial information.
In the last year, a ‘laboratory’ has been exploring the relationship between financial and non-financial performance, and the relevance of corporate responsibility in the dialogue between companies and investors.
The laboratory is one of a number sponsored by the European Commission as part of the European Alliance for CSR. It is led by Lloyds TSB and Telecom Italia - with other businesses and consultancies, a partnership with the European Federation of Financial Analysts, and some of Europe’s leading business schools.
The laboratory on valuing non-financial performance is supported by Gunter Verheugen, vice president of the European Commission.
Its work is timely in the current economic climate. It is demonstrating links between a wide range of environmental, social and governance factors and the financial performance of business through a filter of core non-financial value drivers. It aims to explain causes of the long-term value of companies, and ways that investors can better identify winners and losers based on non-financial performance. The ultimate aim is to develop a European framework for company and investor dialogue.
Verheugen said: ‘One laboratory has particularly caught my attention - on the valuation of financial and non-financial performance. I hope that the work of this laboratory can contribute to a quiet revolution in the way that enterprises measure and communicate their non-financial performance; allowing investors and other stakeholders to use such information in their decision making processes.’
CIMA and report leadership
The laboratory’s focus fits wells with report leadership work published recently by CIMA, with PricewaterhouseCoopers and Radley Yeldar. One of report leadership’s central messages is that corporate reporting of financial and non-financial performance should be more informative and accessible. The effective reporting and disclosure of non-financial information is also a key theme.
Report leadership promotes the use of forward looking information in decision making and resource management in the company. This can lead to better information and analysis being presented to boards.
It looks to align external reporting with management reporting, and uses practical examples of how this might happen. It is important that management actually describes what has taken place, instead of simply presenting the figures in prescribed templates. This allows investors to understand the underlying messages.
Your views
The laboratory has launched an interim consultation report and associated website and is seeking feedback on the framework and the draft principles. To give your comments and recommendations, fill in the quick online questionnaire.
For more information on report leadership, go to the report leadership web page.
January 2009