The way in which organizations create value has evolved. Historically, the goal was to create wealth for investors. But that focus is expanding to include value for people, society, and the environment. The increased focus on sustainability and environmental, social, and governance (ESG) issues shows that society is starting to question the basic reason for a business’s existence.


The growing emphasis on and interest in ESG reporting standards by such organizations as the International Sustainability Standards Board and the U.S. Securities & Exchange Commission (SEC) mean that corporate reporting characterized by a focus on financial performance and a lack of information on corporate strategy and nonfinancial performance is becoming less fit for the purpose of adequately informing stakeholders. We’re seeing growing pressure and regulation to require more and different information to improve transparency. With this movement, the holistic perspective of the organization’s relationship to the external environment is becoming increasingly important.


From a governance perspective, a company’s board of directors isn’t representing shareholders if it fails to consider the impact of social and environmental factors as well as the (economic) tangibles and intangibles that contribute to the ability to sustain the enterprise. A board that relies on financial data alone will be missing key elements needed to carry out its responsibility. Likewise, the management accountant who fails to identify the factors contributing to the sustainability of the organization isn’t providing management with a full picture of both the organization’s value and the breadth of risks that need to be addressed in maintaining and enhancing that value. Applying integrated thinking can help in both these instances, helping to move an organization to sustainable business management.




For many companies, the movement toward greater transparency around ESG issues and sustainable business management begins with integrated reporting. Integrated reporting is the presentation of an organization’s performance that integrates financial and other information related to sustainable value creation. A benefit of integrated reporting is connecting the company’s mission; corporate governance; and its financial, social, and environmental performance to help internal and external users make better decisions and focus on long-term value creation, all while providing greater transparency to external users so they can better evaluate the actual operation and performance of the organization in the short, middle, and long term.


Consider what the company Intel has done. Beginning with fiscal 2018, Intel directly incorporated a discussion of the six capitals of the Integrated Reporting <IR> Framework—financial, manufactured, natural, human, intellectual, and social and relationship—into its Form 10-K. The company devotes a page to each capital, discussing its strategic importance and use.


Integrated reporting doesn’t have to follow the <IR> Framework. The lack of standardization can be confusing and challenging. According to The Reporting Exchange, there are more than 2,200 ESG reporting provisions by regulators across more than 70 countries, more than 1,400 key ESG indicators, and more than 1,100 organizations involved in the development of ESG frameworks and initiatives. A company might use multiple frameworks and standards and assemble multiple reports.


While the reporting frameworks and metrics vary, what most have in common is an external focus—both in reporting externally and in addressing external users of information. A common underlying issue among these frameworks is their ignoring of the internal focus. 


Yet incorporating an internal focus is important because ESG gets to the heart of why an organization is in business, its impact on the world, how it aligns its business model with the needs of society, what is reported, and how it engages with its people and its stakeholders in general. Simply being reactive to the ESG transformation creates the risk that the organization adapts old value-creation models that can’t meet the concerns of its stakeholders and the organization’s long-term needs. It’s also likely the organization will fail to identify and manage material risks and find itself out of step with its stakeholders.


So, while compliance and controls are important issues, there must be other reasons that integrated reporting and the movement to report ESG factors alongside and connected with traditional financial measures is growing. Taking the discussion out of the external reporting sphere, what’s in it for business? What are the benefits to the company for implementing processes that meet these new reporting expectations? And more importantly, how does it impact organizations?


Ultimately, these questions point to sustainable business management. IMA® (Institute of Management Accountants) describes sustainable business management as “operating in a way that recognizes that resources are limited and valuable.” It requires managing resources “in a way that sustains and builds value for all stakeholders that contribute to an organization.”




Sustainable value creation takes more than reimagining the reporting function. It also means potentially reenvisioning strategy and a resultant business transformation. That brings us to the need for integrated thinking. Integrated thinking is about identifying, executing, and monitoring business decisions and strategies for long-term value creation (see “What Is Integrated Thinking?”).


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In order to move integrated thinking forward within an organization, it’s important to improve the visibility of the challenges and opportunities by linking different stakeholders across the company into the conversation. One of the most common pitfalls that can trip up even the most sophisticated and well-prepared organizations is when important dialogue occurs in silos. True leaders and strategic management teams understand that involving as many participants from different departments as possible creates a more diverse team, better solutions, and more robust use cases. By embracing integrated thinking, these siloed pitfalls can be avoided and ultimately bridge integrated reporting to sustainable business management.


This also means that blindly following reporting guidelines isn’t necessarily in line with the principles of ESG, sustainable business management, or integrated reporting. As Gerald Ratigan explained in “The Ethics of ESG” (Strategic Finance, April 2022), there’s also a responsibility to create credibility when reporting on ESG issues. This means there would be a need to take a step back and view the organization holistically to see not only how the information should be reported (and have all the elements related to reliability of the information) but also to take an integrated view of the organization to actually help decide what should be reported. And since we’re broadening the scope of stakeholders to include internal consumers (management) of the information, it will be important to be able to connect the various silos that might exist into one integrated view.


A keyword describing the process taking place with integrated thinking is “connectivity,” which was one of the guiding principles of the original <IR> Framework. Connectivity is what allows silos to be broken down. This increased connectivity between the different silos shows that value creation, by definition, is multidimensional and thus requires integrated thinking. This means that it affects decision making by management. Table 1 contains several examples of integrated thinking in action. Although each of these case companies shows a different path or focus to integrated thinking, the core message is the same: One can’t focus on just the financial impact anymore, nor can an organization consider the different capitals separately. The interconnectivity between the capitals, their trade-offs, and the overall value creation of the organization is undeniably linked. As these use cases show, integrated thinking connects integrated reporting, which fulfills the external stakeholders’ needs, and sustainable business management, which has management as one of its most important stakeholders.


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Integrated thinking can be accomplished by developing accounting and reporting practices that go deep into the organization’s operations to identify the points of integration that occur as the business model unfolds, but it requires understanding, measuring, and connecting a comprehensive set of relationships and performances to the organization’s purpose or mission. It’s the need to understand the connections across the multiple drivers of the value chain that puts management accounting professionals at the heart of value-creation efforts and affords them an opportunity to exert greater influence.




Sustainable business management requires relevant and reliable data. Digital transformation involves ever-larger amounts of information and data flowing in and out of organizations. In such an environment, it can be argued that information and the ability to effectively leverage it form the core of new competitive advantages in the global business landscape. The challenge is for management teams and boards to identify issues that impact the sustainable value of the company and then develop metrics that will lead to better risk management and performance.


This creates an opportunity for management accountants. Consider the data used when sailing a ship. Directional readings come from a compass, while latitude or longitude data comes from a sextant. It’s data from tools. But that data alone isn’t enough to steer a ship to its intended destination. The data must be interpreted and combined with knowledge about the winds, currents, and predicted weather. As management accountants develop their skills and build their repertoire of strategic business competencies, they can share their holistic view of business and the interrelation between financial and strategic business decisions to communicate the importance of creating and establishing a value-creating, data-driven organization. In other words, they can help steer the ship.


In August 2022, the International Financial Reporting Standards Foundation released version 1.0 of its Integrated Thinking Principles. Among the items addressed within these principles are the need for risk and opportunity assessment, performance measurement, governance, assurance, and ethical behavior. These concepts also map directly to the IMA Management Accounting Competency Framework, indicating that management accountants can lead the search for comprehensive performance by suggesting pragmatic solutions to monitor, improve, and communicate the ways in which such an inclusive business purpose may be converted into added value for stakeholders.


Within the finance organization, management accountants can act as designers and enablers of an integrated process of thinking, measuring, and reporting that facilitates conversations and fosters the development of innovative solutions that are characterized by multiple backgrounds and points of view. See “Getting Started” for some examples of the actions that management accountants can take.


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Value-creation reporting is now here. While most corporations aren’t yet required to provide sustainability reporting, the information is still worth providing. It’s critical to help inform decisions for a wide range of stakeholders, ranging from employees to policy makers, and from customers to investors—and it must be provided in a way that’s useful to consumers of the information. Regular communication with all functional areas of an organization, combined with keen understanding of business processes, information systems, and IT governance, puts accounting and finance professionals in a unique position to advise about these issues.


To be successful, however, you must have more than awareness of the concepts needed to become an integrated thinker. To be a bridge builder to help your organization move from integrated reporting to sustainable business management, you first need to build the critical skills and knowledge to contribute to the business processes, understand their underlying information systems, and be well-versed in identifying and evaluating risks and controls.

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