Corporate reporting in today’s environment is like a puzzle whose pieces are spread across the table waiting to be fitted together to form a clear picture. While disclosure rules and audit standards still dictate strict and relatively uniform financial reporting requirements, expectations for big-picture corporate reporting have become more complex and open-ended. This results primarily from the introduction into the company narrative of factors referred to collectively as “ESG” (environmental, social and governance practices) or “sustainability” (the ability to create value over the long term). Corporate reporting about these topics (which are sometimes characterized as “non-financial” or “extra-financial”) is now deemed by institutional investors—and increasingly by issuers—to be essential for an accurate picture of a company’s culture, risk profile, financial health and long-term outlook. While financial reporting at many companies is still largely a compliance exercise, how a company should “tell its story” now opens the door to nearly unlimited possibilities.

(more…)