The apparent panacea for the problems of corporate responsibility and sustainability reporting will probably not do the job, argues Mallen Baker

The growing profile around integrated reporting is a good thing. It will take us into places on sustainability reporting we probably wouldn't have gotten to otherwise. But there's some wishful thinking going on that probably won't be part of the reality.

Let's just recap. We currently have financial reporting. Well established. Clear audience. Clear set of rules. For what it captures (an incomplete picture) it captures well.

And we have CSR / Sustainability reporting. Newly arrived and evolving. Multiple audiences. Vaguely expressed and debatable rules. It captures something important, but not yet well enough.

And now we have a move for integrated reporting. Bringing the two together.

Now the smarter commentators are making clear even at this early stage that it is not enough simply to bring the two documents together. That's not the point.

It's about joining up the information given to help people understand the company. Investors need to know about all the non–financial aspects that affect the long term prospects for the company. If they understand these things, it will help them to interpret the figures better. It will help them to make informed predictions about future performance. And that's the holy grail.

But it's also about helping give other stakeholders a clear picture about the whole company. And that's the tricky bit, because ideally these communications will take the form that those stakeholders can use – not the form of a one–off annual report with lots of numbers in it.

Therefore, the advocates of integrated reporting urge tailored communications aimed at the needs of specific stakeholders. Reporting should be seen as an ongoing communication process, not just a one–off once, or even four times, per year.

I agree with these advocates. If I work with any company on reporting (and I won't work with many) then it is because they want to look seriously at how they communicate with – particularly direct – stakeholders.

But I don't believe that's the way it's going to happen.

Why? Because it takes a lot more time and focus. It takes real empathy and creativity. It requires you to know what the message is for employees, what for customers, what for suppliers, what for local communities. It is like doing four reports in four different languages whereas before you did one in your own language.

And those stakeholders are not demanding that you do it. Just like nobody was asking for an iPhone until they saw one. You have to see it first to know that you want it.

More likely, it will happen exactly the way we're all saying it shouldn't. Companies will just merge reports. The good ones might produce a short brochure aimed at other stakeholders, but they will focus on one–off reports, and they will bring them together.

That will still be a good thing.

Why? Because it will force them to be clear about the target audience for their report. They may still decide to use the GRI indicators, but the origin of that framework – a single report aimed at multiple different audiences – will no longer apply.

This will be a document for shareholders, financial and business commentators, government agencies and regulators. These people – who are culturally used to getting information from reports – will use the data to construct a story about the company.

The fact that it is a document for shareholders will sort out some sheep from goats, as far as the choice of information and indicators are concerned. Companies will need to be clear why this information is about the health and future viability of their business. It will become more strategic in scope.

I want to be clear, this is not my preference. I will still want to hang around with companies that are serious about communicating with key stakeholder audiences.

But I do see this situation as preferable to the current status quo. Reports that pretend to address the needs of all stakeholders are not sustainable because they are always vulnerable to the charge that they are launched into a vacuum of indifference.

Of course, there is still everything to play for. Standards get shaped by what people do, not by what theorists imagine. The early wave of companies embracing integrated reporting will largely have the ability to define it. That is the opportunity and responsibility.

Interested in this subject? Integrated reporting will be one of the main sessions at Ethical Corporation's popular Reporting Summit – taking place on 25th/26th November. www.ethicalcorp.com/reporting