This report, by the Impact Investing Institute in partnership with Deloitte, highlights that while progress in impact reporting practice is being made, the challenges to effective impact reporting practice are great. Without significant action from progressive keystone players, the rate of change in impact reporting practice will be insufficient to meet society’s global challenges including the climate emergency.
Measurement and reporting influences behaviour but, as this report acknowledges, it is only a single, albeit important, part of a necessary systematic transformation. The development of impact investing and impact reporting has the potential to enable the capital market system to be transformed to meet society’s need for a sustainable future. Let us be clear that in our view impact reporting is about system transformation not incremental transparency.
In July 2018 the Financial Reporting Council revised the UK Corporate Governance Code, setting out as principle 1A on leadership: “A successful company is led by an effective and entrepreneurial board, whose role is to promote the long-term sustainable success of the company, generating value for shareholders and contributing to wider society.” The small word “and” is the key to transforming an old system based on a model solely of shareholder primacy to a new system reflecting a model of stewardship on behalf of all stakeholders. Impact reporting is the means by which stakeholders can hold boards to account for their contribution to wider society.
The technology focus of this report provides insights and ideas for progress. On reflection it seems surprising that the incredible developments in mechanisms for disclosing information both to and by society have not yet been reflected in corporate reporting. At a public level, the internet has democratised information, but the publication, distribution and accessibility of corporate information still reflects earlier technologies. One possibility is that the focus on the primary audience being shareholders has led to paper and .pdf still dominating. Future thinking about better reporting being for shareholders and wider society may in time be seen as the tipping point of capital market transformation.
We commend this report and thank the participating organisations, the individuals who volunteered their time and expertise, and of course the Deloitte team led by Sam Baker who were and are exceptional.
Olivia Dickson and Paul Druckman
Co-Chairs Better Reporting
Social Impact Investing Implementation Taskforce (now the Impact Investing Institute)