In April, I had the honor of participating at the U.S. event to launch the Consultation Draft for the International Integrated Reporting (IR) Framework. It was exciting to be part of the final leg of launch day, which began in Australia and then circled the globe with events in 12 countries before wrapping up 16 hours later in New York City. (How Paul Druckman remained awake — let alone articulate — for his very long day is a mystery to me!)
As The Clorox Company ushers in a new century today, the 100th anniversary of our founding, it seems especially fitting to help usher in a 21st-century approach to corporate reporting, by addressing the following question:
Why is the transition to integrated reporting important for The Clorox Company?
As I see it, it comes down to four key reasons:
First, IR provides a comprehensive framework to tell our story in a way that better meets the needs of stockholders and other stakeholders.
Four years ago, we embarked on our journey toward IR out of a need to address some pointed questions about our commitment to sustainability with our stakeholders. As we engaged with these stakeholders, we realized they simply didn’t know much about us, and we needed a comprehensive way to tell our story. That “light-bulb moment” led us to move quickly to publish our first standalone corporate responsibility (CR) report on the same day we published our financial annual report. The next year, we combined our financial and key nonfinancial information into one report as our first step toward integrated reporting, and we haven’t looked back. We’re continuing to evolve our integrated reporting strategy and execution, hand in hand with an external assurance strategy for material nonfinancial KPIs, to move closer to our goal of true integrated reporting.
Second, we believe IR can help to better position Clorox with investors.
After we published our first combined report, our largest institutional stockholder called to express interest in and learn more about our new approach to reporting, in addition to getting more background on some of our disclosures. Additionally, SRI and European investors, who more commonly seek a comprehensive view of value creation, are showing sustained interest in Clorox. To address this, our Investor Relations team now includes select nonfinancial metrics in their investor communication materials. It’s in these deeper, one-to-one discussions that we’re more frequently discussing a more comprehensive value-creation story with the investment community.
Third, taking an integrated approach to reporting helps drive integrated thinking.
Cross-functional teams oversee both the road to Integrated Reporting and our external assurance strategies, to ensure integration. Concurrent with reporting about our business in a more integrated way, we’re also thinking in a more integrated fashion day-to-day and that’s helping to drive accountability, innovation and resource allocations in such areas as product and packaging development.
Fourth, being an early adopter of IR reinforces our role as a U.S. leader in evolving best practices for CR and sustainability.
For Clorox, becoming an International Integrated Reporting Council (IIRC) pilot program company was a no-brainer. It seems to us, integrated reporting is the natural evolution of corporate reporting and will one day become the standard. As such, we wanted to participate in the development of the framework to help ensure relevance for Clorox and our industry. And, while we’re still on a journey toward a truly integrated report, we have received positive feedback. As just one example, our first combined report, “Think Outside the Bottle,” received the 2012 Most Innovative CSR Disclosure Policy Award by Corporate Secretary magazine.
As we look beyond Clorox’s centennial anniversary, we’ll continue to focus on creating value for stakeholders by aiming to integrate our financial results with key nonfinancial information. And it’s our hope that, before long, you’ll be able to read about it in a truly integrated annual report.
This post also appeared on IIRC’s blogspot.