Integrated Reporting and Sustainability（7）

ACCA P1考試：P1

Advantages

Makes transparent the organisation's decisions that explicitly consider effects on the environment and people, as well as on financial capital.

More informed decision-making as decision-makers can quantify tradeoffs between different aspects of sustainability.

Improved relationships with key stakeholders and improved riskmanagement through consultation.

Specific commercial advantages (e.g. competitive advantage with customers suppliers and providers of finance).

Enhancement of reputation and brand. May result in attracting and retaining employees with sustainable values.

Disadvantages

There are currently few standards for measuring these effects.

Usefulness and comparability, as there is a significant range of disclosure (content and quality).

The difference between the economic bottom line and the financial bottom line is often blurred.

Increase in annual reporting costs with disproportionate costs for smaller entities.

Potential exposure to risk and liability relating to the reliability of the report's content (unless audit is mandatory).

Potential bias in voluntary presentation (e.g. including only favourable information).

Such indicators can distil complex information into a form that is accessible to stakeholders. (Organisations report on indicators that reflect their objectives and are relevant to stakeholders.)

One difficulty in identifying and using indicators is consistency in an organisation, over time and between organisations at any point in time (important for benchmarking).

2.3.2 Balanced Scorecard Methodologies

The balanced scorecard was developed by Kaplan and Norton (1996/97) to improve established performance measurement systems, which are focused mainly on financial performance and conventional physical and tangible assets.*

As a broader approach, it also takes into account customers, processes and organisational learning. It incorporates the value of intangible and intellectual assets (e.g. high-quality products, motivated employees, and satisfied and loyal customers).

It complements financial measures of past performance with measures of the drivers of future performance. The objectives and measures of the scorecard are derived from the organisation's vision and strategy.

*The term "balanced" refers to a balance between external measures (for shareholders and customers) and internal measures (of critical business processes, innovation and learning and growth). The measures are balanced between the outcome measures (the results from past efforts) and the measures that drive future performance. The scorecard is balanced between objective, easily quantified outcome measures and subjective, somewhat judgemental, performance drivers of the outcome measures.