Deutsche Börse and Deutsche Bank follow BASF down integrated reporting route

Combined financial/sustainability reporting now practised by six major German companies.

At least five more German companies, including stock exchange operator Deutsche Börse and banking giant Deutsche Bank, have decided to follow the example of chemical giant BASF in publishing a so-called integrated report – that is one that combines financial information with progress on sustainability.

BASF’s first integrated report – which mostly provided detail on its environmental impact – was for its 2007 business year. Since then, Deutsche Börse and software firm SAP have issued integrated reports for their 2012 business years. More such reports are now expected from Deutsche Bank, Munich’s airport operator and energy firm Energie Baden-Württemberg (ENBW).

Daniel Schmidt, Head of Sustainability Operations at SAP, also said he thought German drug and chemicals giant Bayer was a candidate, but added that it had not yet joined the business network of the International Integrated Reporting Council (IIRC). Based in London, the IIRC develops and oversees integrated reporting standards for listed companies.

Schmidt’s remarks came at the launch of a new best-practice guide to integrated reporting unveiled by Deutsche Börse. Among the guide’s recommendations are a “top-down” approach – ie a commitment by the firm’s management to the idea – the importance of quantitative data and understanding investors’ exact needs for information on sustainability.“Sustainability and transparency play an important role in company valuations and are a decisive factor in investment decisions,” said Martin Reck, managing director for cash markets at Deutsche Börse. “As part of our improved capital market communication we are therefore providing an orientation guide and show how companies can report on sustainability issues using simple techniques.”

Henning Gebhardt, Head of European Equities at Deutsche Asset and Wealth Management (DeAWM), agreed that sustainability was becoming crucial in investment decisions, noting that if an investee refused to provide transparency on sustainability, DeAVM had no choice but to divest. Gebhardt’s comment was echoed Ingo Mainert, a managing director at Allianz Global Investors (AGI), who said things were no different at his firm.

The press conference comes just a few days after RI reported that several well-known responsible investors, including PGGM, CalPERS and USS Investment Management, told the IIRC that one of the fundamental ideas behind integrated reporting, namely the notion of non-financial capitals, was, in their view, “unworkable”.

Link to Deutsche Börse’s best-practice guide