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By John Maddocks, CIPFA Technical Manager – Sustainability
While financial reporting is increasingly complex and, for many, increasingly impenetrable, there is at least one reporting model moving in the opposite direction. The Accounting for Sustainability Connected Reporting Framework was developed a few years ago and provides a reporting model that is firmly grounded in the need to provide concise, joined up and useful information.
The word ‘concise’ is absolutely critical. Rather than providing the reader with pages and pages of complex information, the aim should be to carefully think through the key drivers, measures and messages to report on. This takes time, at least initially. It is far easier to churn out a lengthy report rather than to condense it down to the essential points buried in there somewhere.
The good news is that recently developed sustainability reporting guidance produced by HM Treasury and the Scottish Government draws on the connected reporting framework and promotes a concise form of reporting with a very small number of key non-financial indicators linked to relevant financial information, along with a brief narrative addressing performance, current activity and future action.
While public sector organisations already report on various aspects of their activity, including social, economic and environmental aspects, they do not always pull this together in a way that presents the reader with a useful overview of the organisation, its activities and its direction. A sustainability report is not the whole solution but can be an important component of providing a more rounded picture of the organisation.
The importance of sustainability to understanding an organisation’s impact, and to improving strategic planning and implementation and stakeholder communication, is increasingly accepted. Organisations are expected to show that they recognise the challenges that face them, and to set out their strategies for dealing with them. Organisations do not exist in isolation, and performance cannot be measured solely through traditional accounting measures.
An approach is needed that is flexible enough to enable organisations to continue to identify and report on potentially critical sustainability impacts that are particular to their activities. And ensure that they report on those aspects of sustainability considered of importance across various sectors.
CIPFA’s publication Producing a Sustainability Report builds on the connected reporting approach and provides a template for public service organisations wanting to produce a concise, connected sustainability report as an aid to driving strategy and improving performance.
The Charities and Social Enterprises information stream aims to provide a wide range of practical information especially in relation to their involvement in delivering public services.