Showing the link between value creation and corporate reporting

Corporate reporting enables organisations to communicate with their stakeholders on how they create value in the short, medium and long term. It is essential for building an organisation's brand in society and increasing transparency with its stakeholders.

Besides financial reports, many organisations have started to pay attention to stakeholder demands for non-financial reporting.

We also see increased regulatory activity in this regard for organisations. Capital market regulators are requesting sustainability-related information using different standards and frameworks. The progress achieved within the corporate reporting landscape as organisations focus on their specific sustainability universe of matters marks an important milestone in many jurisdictions.

However, organisations must include an equally important aspect of value creation through corporate reporting, which is providing connections and linkages between non-financial and financial issues with insights for stakeholders that aid their decision-making.

For example, investors regularly search for information to translate the non-financial issues organisations face into reliable financial information for their decision-making. Therefore, more is needed for organisations to report on their financial and non-financial matters to meet this expectation.

It requires organisations to show how non-financial matters impact their financial prospects and fortunes in the short, medium and long term.

It is a comprehensive and connected approach to corporate reporting that highlights the links between non-financial issues and the organisation's financial position or performance and would benefit the investor community.

Investors have often emphasised the need for this type of information because they have found that the long-term viability of an organisation is not assessed through the various reports they produce alone but also through an assessment of how connected non-financial issues are to value creation over the long term.

In the context of a profit-making business, sustainability should result in growth, cost savings and more opportunities in general.

It could also lower investors' transaction costs when engaging with organisations or targets that provide such connected and comprehensive information. It creates an advantage for such organisations in the market.

Akinyemi Awodumila is a Partner at Deloitte East Africa. He is an author who writes and speaks widely on corporate reporting topics.