In what might turn out to be a seminal moment in the Integrated Reporting (IR) journey, two pioneers in reporting conducted an experiment earlier this year. Bob Eccles and Mike Krzus, co-authors of One Report in 2010, read all the different reports published by Exxon Mobil and compiled their own “integrated report” with the information already disclosed. They published a working paper in March where they discuss the results and speculate about whether an artificial intelligence (AI) bot could be trained to replicate their work.
On April 11, Mike Krzus joined the <IR> US Community to talk about the experiment. He observed that less than 0.5% of companies in the United States are publishing an integrated report. Why is it so hard? Indeed, companies are already disclosing so much information in different places. Wouldn’t it take only a marginal increase in effort to put out an integrated report?
They drew upon seven different reports published by Exxon Mobil pertaining to 2016. And, in about 40 hours, they cobbled together an integrated report, covering all six capitals in the <IR> framework, that Krzus described as “decent.” Krzus added, “If someone did this as their first report, it wouldn’t win any awards. But people would say it’s a pretty good start.”
To Krzus, the exercise disabused the notion that an integrated report is too complex or too costly to produce. “We did this in 40 hours. How hard could it really be for a Fortune 500 company to create an integrated report?” He also noted that every word in the report is already in the public domain, so the report itself doesn’t create additional litigation risk, which is a common point made by those who resist.
Roughly 30 members of the <IR> US Community joined the call. Some feedback focused on just how “decent” the report really was. Did it provide the information needed to make long-term investment decisions? Maybe not, Krzus conceded, but he pointed out: “We had no contact with the company and don’t know that much about the industry.” Any company that wanted to produce its own integrated report would have access to quite a bit more nuance and detail about how they invest in the six capitals. So if Exxon Mobil were to do an integrated report on its own, it would look quite different.
As for the idea that an AI could replicate the human process and produce an integrated report from existing disclosures, there was some doubt over whether a bot would create more noise than signal, by pulling in the wrong data, for example. Krzus said the AI would merely be a means to an end. “The tools would be a best approximation, at best,” he said. “I don’t want anybody to think that what we did or that the prospect of a tool is the answer. The answer is to get the companies to do it for themselves.” The AI might be a means of convincing more companies to act, when they see the results for themselves, see that investors are reading it, and decide that “decent” is not good enough for them.
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