What is the role and importance of public relations professionals in fostering integrated reporting (IR) practices in corporations and other organizations?
This was the theme of my 2012 Bledcom paper, highly influenced by an earlier conference paper by Benita Steyn and Estelle de Beer, “The Strategic Role of Public Relations in the Process of Integrated Reporting” (republished on PR Conversations).
In this guest post I outline my paper’s most important concepts.
Defining IR guiding principles
In 2011, the IIRC published a discussion paper “Towards Integrated Reporting: Communicating Value in the 21st Century,” which proposed a draft International Integrated Reporting Framework.
It also defined five guiding principles* that underpin the preparation of an integrated report, plus six key content elements** such reports should include.
*Five guiding principles of integrated reporting>
1. Strategic focus.
2. Connectivity of information.
3. A future orientation.
4. Responsiveness and stakeholder inclusiveness.
5. Conciseness, reliability and materiality.
“Why is the integrated reporting process so important to the public relations profession?” asked Toni Muzi Falconi, in a December 2010 Stockholm Accords post (on the site hosted by the Global Alliance). As Muzi Falconi explains it, any communicative organization (whether private, social or public) strives to undertake a conscious effort to deliver and discuss with its stakeholders an ongoing, continuing, multi-channel and tailored-to-diverse-stakeholder interests reporting activity.
What’s necessary to achieve this is for the organization to integrate its financial, hard and soft assets and governance reporting with its economic, environmental and social reporting.
As Muzi Falconi concludes, “effective and sustainable stakeholder policies…imply a communicative process that sees listening and reporting as a parallel, interrelated and converging process.”
Finally, Muzi Falconi asks whether the public relations profession “will be up to the challenge?”
What relevance can PR professionals bring into the IR process?
My paper does not answer Muzi Falconi’s question (primarily because it does not deal with whether we will be up to the challenge); rather, it elaborates on the arguments of what relevant inputs PR professionals can bring into the IR process regarding the key characteristics of our existing (corporate communication) functions in organizations, as seen through the lens of the reflective paradigm developed by Susanne Holmström.1
What are the key benefits of integrated reporting (IR)?
From the organization/company point of view, IR has a twofold role:
- It is an important tool for expressing an organization’s attitude and orientation towards sustainability issues and corporate responsibility in relation to different—external or otherwise—stakeholders.
- More importantly, it is a continuous process and serves as guidance for the corporation to establish, maintain and constantly improve a comprehensive, long-term sustainability orientation.
This means that integrated external reporting is impossible without integrated internal management.
The key benefits of IR include:
- Greater clarity and a better understanding about the relationships between financial and non-financial performance.
- Better management decisions.
- Deeper engagement and lower reputational risk.
The role of late, modern PR: strategic reflection
In examining IR as a possible 21st century solution for corporate reporting (not to mention a business-as-usual approach), and in defining the role PR might have in establishing, implementing and improving such reporting, one must take into account one of the theories/paradigms that define public relations’ role in this century.
Let’s begin from the standpoint that PR practice is (as indicated by Steyn and de Beer), “…increasingly moving away from its 20th century focus on communicating predetermined messages to specific target audiences, in an effort to persuade them to align their attitudes/behaviours more closely to those desired by the organization.”
Instead, new conceptualizations, public perceptions and day-to-day practice of public relations in the first decade of this century include the European societal/reflective approach.
In this paradigm, regard the role and approach of public relations as strategic reflection—i.e., providing top management with a societal perspective by interpreting the expectations, interests, concerns, fears etc., of organizational and societal stakeholders regarding the strategies, goals and functioning of organizations.
In other words, public relations is moving away from playing a mere tactical role, towards a strategic one at the top management or societal levels, thereby assisting organizations in achieving a balance between economic and social goals.
The four basic organizational characteristics of PR
As seen from Holmström’s reflective paradigm perspective, these four basic organizational characteristics form the sense, integrate and communicate (SIC) synthesis. The characteristics include:
1. The poly-contextual understanding2 of the environment.
2. A specific approach and practice of reflective interrelations where environment is seen to be respected.
3. An internal clarification of company’s identity, role, responsibility and function in society.
4. An internal and external communication of organizational identity, role, responsibility and function.
Sense, integrate and communicate (SIC) synthesis
The above four organizational characteristics can be summarized and schematically presented in the triangle form of the SIC synthesis of the reflective paradigm:
Sensor function: reflects the organization in the larger societal context and increases its poly-contextual sensitivity through establishing reflective interrelations.
Integration (leadership) function: the focus is on value and identity policies, which means an integration of reflection (gained through poly-contextual sensitivity) in the organizational strategy and decision processes.
Communication function: communicating the reflective corporate self-understanding.
First step of analysis: PR functions vs. IR guiding principles
During the research phase, I checked for possible overlaps between the key characteristics/functions of PR (as seen from the reflective paradigm perspective) on one side and those of IR guiding principles on the other.
My Bledcom paper summarizes the results in a detailed table. For this post I offer a simplified list:
1. Each of the five IIRC Guiding Principles is covered by a primary or secondary (supporting) public relations function.
2. The “Strategic Focus” guiding principle is covered by the “Integrate” (as the primary) and “Sense” (as its supporting) functions.
3. The “Connectivity of information” guiding principle is covered by the “Sense” and “Integrate” functions.
4. The “Future Orientation” guiding principle is also covered by the “Sense” and “Integrate” functions
5. The “Responsiveness and stakeholder inclusiveness” guiding principle is covered by the “Communicate” and “Sense” functions.
6. The “Conciseness, reliability and materiality” guiding principle is covered by the “Communicate” and “Integrate” functions.
Note: There is a high level of overlaps between key functions of late modern PR practice (as seen from the reflective paradigm’s perspective) on one hand and the five guiding principles of IR on the other.
None of the guiding principles remained uncovered by the PR functions and vice versa for IR.
Second step of analysis: PR functions vs. IR content elements
Some interesting findings emerged, the principal being that the “Communication” function of PR is not directly covered by any of the key content elements of IR—although the significance of this function was confirmed during the analysis of overlaps between PR functions and IR guiding principles.
**Analysis of the six key IR content elements
- Organizational overview and business model.
- Operating context, including risks and opportunities.
- Strategic objectives and strategies to achieve those objectives.
- Governance and remuneration.
- Future outlook.
Why is that?
Perhaps we need to have a new look at PR (from an IR perspective)?
Perhaps we need to have a new look at PR (from an IR perspective)?
The reasons for this call to action are well known to the PR academic community.
It involves developing a new explanation (or model) of the PR functions when viewed from the IR perspective.
The key challenge for public relations in the integrated reporting arena is overcoming the notion that our function is limited to outward or external communication (i.e., “information distribution”), which in practice means mainly one-way communication, with the objective of persuading stakeholders about a company’s positive, “sustainable” image.
This paradigm shift or new model faced by PR professionals entering the IR process relates back to the question posed by Muzi Falconi about whether our profession will be “up to the challenge of integrated reporting.”
Some ways going forward in meeting the challenge lie in providing constructive critiques of not only our own work, but that of others—including top management—and decisions.
When necessary, this means providing an uncompromised redirection of each person and every action involved in the IR process that does not meet the basic—PR and IR!—standards of transparency, materiality, reliability and conciseness.
1 “The Reflective Paradigm of Public Relations” by Susanne Holmström. In van Ruler Betteke & Verčič, Dejan’s Public Relations and Communication Management in Europe: A Nation-by-Nation Introduction to Public Relations Theory and Practice. Berlin, New York: Mouton de Gruyter.
2Definition: Poly-contextuality can be explained as a change from narrow, unambiguous, mono-contextual perspectives to broad, open, so-called poly-contextual perspectives. This has huge implications for the relationship between organization and environment. Poly-contextuality opens up attempts at mutual respect and consequently to practices such as stakeholder engagement and partnership. Susanne Holmström, “Society’s Constitution and Corporate Legitimacy” Roskilde University
Mojca Drevenšek, M.Sc., is consultant and partner at Consensus Communications for Responsible Society, Slovenia. She works in the field of sustainability communications, primarily with clients in the energy and environmental sectors. Integrated reports are a more recent business development and passion, with Mojca working to explain and influence organizations on why integrated reporting goes beyond producing a joint annual plus sustainability report.
She holds undergraduate degrees in marketing communications and business law and achieved a master’s in science degree in sociology. Her master’s thesis paper was entitled, “The Importance of Trust in Environmental Risk Communication,” for which she was awarded THE European Public Relations Education and Research Association’s (EUREPRA) Jos Willems Award in 2005. Other published work includes a chapter in Citizenship, Environment, Economy (edited by Andrew Dobson and Angel Valencia Saiz, 2006) and co-authoring a Slovenian handbook on community relations.
Photo by Guillermo S: Árbol del Tule/Del Tule Tree (Taxodium mucronatum), Oaxaca. Creative Commons Attribution. Visit Guillermo S’s Flickr stream.