Burgess COMMENTARY
Yes ... it is now quite well documented that CEOs understand that the value of a company is going to be much more than merely the present value of their future money profits ... it is also going to be influenced by the 'GOODness' of the company in terms of CSR, environmental sustainability, supply chain issues, etc. Andrew Winston's book 'The Big Pivot' reported on this a couple of years back. The challenge is for the CFOs to have an easy effective system of metrics that they can use to report on their company's performance relative to the purpose beyond profit. My impression of GRI, IR, SASB, et al is that they are all trying to design reporting without have an underlying foundation of meaningful measurement, and as a result the reporting is costly and not very reliable. Something better is, I think, possible. Peter Burgess ... http://truevaluemetrics.org
Peter Burgess

Purpose beyond profit: executive opinions on value creation

Share on: Purpose beyond profit

Creating value over the short, medium and long term is more than part of running an effective business; it is the purpose of business. Although this has typically focused on shareholder returns, there has been a shift, meaning companies are now under greater pressure to incorporate considerations from wider stakeholder audiences into their decision-making. The scope of how value creation is measured has also expanded; from, traditionally, a financial exercise, to one that also integrates non-financial information such as customer satisfaction and employee engagement.

Value creation, as well as being core to business performance, is also an integral aspect of corporate reporting. Bringing together financial information with data on intangibles and all value drivers improves business performance and reporting quality; but what do those at the top of business – executives in the C-Suite – think about this? We wanted to find out…

‘The Value of Value: Board-Level Insights’

‘The Value of Value: Board-Level Insights’ is an annual survey of C-Suite members from across the globe which looks into the value of value creation stories inside boardrooms.

This year’s edition - ‘Purpose beyond profit’ – was conducted in partnership with AICPA, CIMA and IIRC, with the aim of gauging executives’ views on how their organisations understand, manage and communicate value creation. The idea is that results can be compared to those of previous editions so we can identify trends and changes in executives’ opinions.

At Black Sun, we are always interested to see how executives respond to questions on , especially now after the launch of the Best Practice Communications Academy. It was fascinating to see, when informed of the benefits that integrated thinking and bring, how members of the C-Suite reacted.

What we see initially

There is strong indication from executives that attitudes concerning business and stakeholder value creation need to change and that organisations must deliver a purpose beyond profit. Shareholder returns will, as expected, remain crucial for business, but other factors, such as meeting customer expectations and inspiring and engaging people, will significantly grow in importance. Working for the longer-term is cited as preferable over the short-term, and doing this is thought to bring significant internal and external benefits.

Executives also believe that bringing financial and non-financial information together enhances business performance and corporate reporting, but many executives say that their organisations lack reliable tools and techniques for doing this. Improved reporting, particularly Integrated Reporting, is viewed by many as a potential driver for future value creation, improved reporting and enhanced business.

This is only the tip of the iceberg and we see many of our findings only generating more questions. What are the potential impacts for both businesses and stakeholders of improved value creation activities? In which ways can frameworks such as Integrated Reporting specifically support change? In summary, the desire to adapt, improve and work for the long-term is there, but questions surrounding how this will happen remain.

Hearing the results

CIMA and Black Sun will be hosting a breakfast panel session on the morning of 7th December at the ICGN-IIRC London 2016 Conference in London. The session will take attendees through key messages and trends from the research, discuss the relevant challenges and opportunities, and offer professional insights into the realm of value creation. The following speakers are confirmed:

• Tim Christen, Chief Executive Officer, Baker Tilly & Chairman, AICPA

• Jonathan Labrey, Chief Strategy Officer, IIRC

• Giorgio Saavedra, Senior Financial Officer/Integrated Reporting Lead, The World Bank

• Chaired by: Tony Manwaring, Executive Vice President – External Affairs, CIMA

Snippets from our research will also be made available through our Twitter page over the next several weeks. To receive these, and hear more from Black Sun, please follow us at @BlackSunComms.

A summary version of the research is available The-value-of-value-research-report-2016.pdf ... here.