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ShiftCentral / Seeking competitive advantage from Integrated Reporting

Seeking competitive advantage from Integrated Reporting

Financial, economic, and social impacts: elements of integrated reporting. 

Financial performance was once the sole yardstick for corporations as they planned growth strategies and managed operations, but leading global businesses have begun to focus on performance across a larger spectrum of financial and non-financial areas in order to gain and hold competitive advantage. Organizations are shifting towards sustainable business models and seeking the most effective means to measure and manage all aspects of corporate performance.  

Monitoring and analyzing how corporate peers and competitors are approaching these shifts can uncover best practices and provide essential data for benchmarking. 

Novo Nordisk, a Danish multinational pharmaceutical company and the largest producer of insulin in the world, has long been considered a leader in sustainability – but what sets it apart from its peers? Although there are multiple facets of Novo Nordisk’s sustainability efforts, what really stands out is its dedication to integrated reporting as well as its approach to engraining sustainability into its strategic decision-making.  

Integrated reporting is the practice of reporting financial, economic and social performance together rather than addressing them separately. 

Sustainability is becoming increasingly important for organizations across industries and environmentalism is emerging as a key component of business competitiveness.  Executive decision-makers are starting to reconsider how to create and measure value as consumer power is directed increasingly toward purpose-driven businesses and investors turn their financing power towards more climate-friendly investments. 

Seeking competitive advantage from Integrated Reporting

These developments coincide with heightened expectations for corporate transparency, which demands that organizations be more open with consumers and regulatory bodies about the impact their business activities have. Forward-thinking companies such as BASF and Puma are exploring how they can develop long-term value by taking stock of economic, social and ecological impacts. Integrated reporting provides an avenue through which companies can not only increase transparency but take stock of environmental and social impacts, generating important data that can help improve operations, increase accountability and improve decision-making. There are clear indications of the benefits of more effective non-financial corporate reporting and correlations have been made between environmental, social and governance (ESG) strategies and improved commercial performance.  

Novo Nordisk has integrated sustainability into its very ethos, recognizing that economic, social and environmental issues shouldn’t be considered in individual silos and need to be embedded throughout corporate decision-making. Susanne Stormer, Global Director, Corporate Sustainability, explains that “Novo Nordisk seeks to have a strategy to be a sustainable business, not just a sustainability strategy.” It has not only ingrained sustainability into its corporate culture, but also incorporated economic, social and environmental perspectives into its market proposition.  

In 2014, the company became one of the first and only companies to publish an environmental profit and loss statement, bringing to light the material impacts the company has on the natural world and placing an economic value on the ecosystem services upon which the company relies, as well as the environmental benefits and negative impacts its business activities generate. Novo was also the first company to complete a Future-Fit self-assessment and have the results independently assured. The company publishes a single integrated reportdemonstrating that action on environmental and social issues doesn’t hinder financial performance and can improve the bottom line. As Cora Olsen, Global Lead on Integrated Reporting at Novo Nordisk, said, you “can’t reduce impact without calculation.” She adds: “evaluating performance this way ultimately gets better results.”   

Novo Nordisk’s approach to integrated reporting and sustainability serves as a template for others looking to set themselves apart by developing stand-out reporting measures. 

As new standards for reporting and sustainability accounting emerge, how will you stay abreast of major developments in the rapidly evolving field of sustainability? If you are interested in learning more on Integrated Reporting, please contact us now and reinforce your organization’s position with actionable intelligence.