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Integrated thinking – aligning purpose and the business model to market opportunities and sustainable performance

CIMA’s global academic research programme has recently published an excellent executive summary of research undertaken mainly by Professor Cristiano Busco on the subject of Integrated thinking.  The research, which comes from a number of case studies, seeks to understand how organisations align purpose and the business model to market opportunities and sustainable performance and, in particular, how the finance organisation helps understand, enhance and report strategies for long-term value creation.

The organisations studied included ENI Energy, ABN AMRO Banking, Aegon Insurance, Generali Insurance, Gold Fields Mining, Monnalisa Fashion and SASOL Energy.  Responses to Busco’s question about the key motivations of these organisations to adopting more integrated thinking and reporting practices fall into three categories:

  • Improved connectivity – 'to describe in an integrated way how the organization achieves its strategic objectives'; 'provide linked information to multiple stakeholders'.
  • Compliance – 'compliance to corporate governance trends, international reporting trends'; 'compliance to the King Code of Corporate Governance (South Africa)'.
  • Better communicate value creation – 'to effectively convey how the company creates and distributes long term value while considering its impact on society and the environment'; 'demonstrates the non-financial value created'.

There were a number of challenges along the way that the organisations needed to overcome which included:

  • Getting the sustainable development data to the same standard as the financials.
  • The mind shift and practical change to processes, systems and reporting 'this is not quick and painless'.
  • Finding meaningful attestable indicators that support non-financial objectives.
  • Redefining sustainability – 'many still see it as a social investment and being green'.

However, the organisations studied all quoted significant benefits to adopting a more integrated way of decision making and reporting. The most common key benefit was an improvement in the understanding of what is material to long term value creation within an organisation. Closely followed by enhanced awareness and understanding of the needs of all the organisation’s material stakeholders.

Providing practical assistance to those wanting to improve the degree of integrated thinking and reporting within their organisation this research paper sets out ten recommendations to aid the design and management of effective processes of integrated thinking and reporting. You will have to read the paper to find out Busco’s top tips!  However, there are three quotes from the paper that really capture the essence of why integrated thinking and reporting is seen by many as the best way forward for long term business success:

'We started from the premise that any communication is effective only when it reaches its target in a simple way and is useful for them in a practical tangible way….today we use the Integrated Annual Report proactively on a daily basis with our customers, to communicate our value creation journey in a way that everyone can understand'.

'The implementation of integrated thinking and reporting has definitely improved general focus and prioritisation of areas of governance, value generation and stakeholder importance that are now measured more accurately and increasingly form part of performance KPI structures'.

'Continuous engagement with stakeholders enabled us to understand what is important to them; we realised how stakeholders perceive value, opportunities and risks, and we try to plan and manage our company accordingly'.

The paper highlights the key role that the finance organisation can play in the adoption of integrated thinking and reporting practices and this executive summary is essential reading for those interested in taking on this challenge. 

Professor Cristiano Busco is Professor of accounting and integrated reporting at the University of Roehampton Business School and LUISS Guido Carli University in Rome. He is also the inaugural chair of the IIRC Academic Network support Group. His co-authors were Fabrizio Grana from LUISS University and Paolo Quattrone, Chair in Accounting, Governance and social innovation at the University of Edinburgh Business School. CIMA's General Charitable Trust funded the research project on which this report is based.

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