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Date: 2022-06-30 Page is: DBtxt001.php txt00008574

Reporting Sustainability

The Trilemma of Reporting


Peter Burgess

The Trilemma of Reporting

Image credit: GRI

Reporting companies find themselves in a colorful landscape of codes, frameworks, indicators. Many of these companies — not only SMEs — are concerned and overburdened by this complexity. Many discussions are summed up with one thing many agree on: the need for “alignment” of the different frameworks or approaches suggesting principles or indicators.

What I see is that the experts in the corporate reporting field very quickly enter a quite technical level of capitals, indicators, assurance-potentials ... But isn’t the question: What exactly needs to be aligned — and for what purpose? In these discussions it came to my mind that any attempt at alignment in this field needs to address three cornerstones — which I see as the “Trilemma of Reporting”:


All agree on the importance of Materiality. However, not all understand exactly the same thing. Is it about impact on or impact by a reporting entity? Who should (and could) assess materiality? Could and should there be something like a mandatory core of issues set by regulation?

There is a broad understanding that a fixed, or even mandatory set of material aspects would not be helpful and feasible for different sectors in order to include the results in internal strategic steering processes. Critics could argue that this leads to an “anything goes” situation and currently one can already see a “race to flexibility” in the evolving frameworks. In terms of the relevance of a materiality process, I would argue, that we need this “freedom of materiality” in order to find the most value-adding approach for a company’s decision making processes. This leads us to the question of …


There is an assumption that reported information of a company needs to be “comparable” to information published by other reporters. This assumption is based on a presumption as to what disclosures information users want to compare and for what purpose — or what I would call ‘decisions on preferences’: What level of comparability is needed for that exercise? What level is feasible? Do we want to compare transparency or performance?

The overall answer for the time being is: It depends to a large proportion on the recipient who decides on preferences. Which leads us to …


Many discussions try to find an answer to the question: Who wants to know what? Do different stakeholders want to know different things? How to inform investors — what to tell employees or society? We might sharpen these questions to: Who cares?

I think that whatever stakeholder or shareholder a reporter addresses — he or she wants to influence the recipients’ decision on preference. Then we should be clear what we intend different audiences to do with that information - meaning what action we want to see: More investment from investors? More licensing from society?

This shows: What kind of information or focus a report wants to achieve differs with regard to target audiences.

Is the way out of the trilemma an aligned, one-way exit or a diverse grid of exits? To think about the exit we need to think about the purpose of reporting. In my view this is twofold:

Externally — to show (be transparent, open to stakeholders in order to get their license or investment) and Internally — to steer (make use of the information you have, and sometimes even more so make use of the information you don´t have — to steer the reporting entity). The external purpose is different from the internal (although the internal ought to be reflected in external reporting). The Trilemma of Reporting shows many differences and a diversity of requirements and rationales of corporate reporting — this suggests that there is no silver bullet.

We need principles, such as those set out in the International Framework. We need indicators and we obviously need an intelligent but necessarily individual use of these elements for “impactful” reporting. A single standardized ‘tick-box’ approach would result in a more bureaucratic exercise, mainly discussed in the legal departments of reporting companies. We need to think of reporting addressing different understandings of materiality and different needs of information. This way forward might reduce comparability, but shouldn’t companies be better compared by their performance than by their reports?

Thorsten Pinkepank is Director of Corporate Sustainability Relations at BASF [Read more about Thorsten Pinkepank]

by Thorsten Pinkepank
November 3, 2014
The text being discussed is available at
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