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While Philips uses its website to supplement information in its integrated report,22 the company does much more than provide additional information. It weaves interactive elements throughout the site to connect with visitors in a more visceral way than narrative and numbers can accomplish alone, while simultaneously gathering data about the kinds of people using the site. Visitors to the Philips annual report website are greeted by a request to identify which constituency they represent. The selections include customer, shareholder, financial analyst, sustainability analyst, employee, supplier, nongovernmental organization (NGO), portfolio manager, journalist, job seeker, or student. Philips also provides an "other" category with space to enter a brief description.

The use of video to engage a visitor has been a humanizing feature on the Philips website since it published its first integrated report in 2008. The 2012 website includes video commentary from the chief executive officer (CEO), chief financial officer (CFO), and Chief Human Resources Officer. The Message from the CEO brings the traditional CEO Letter to life; a visitor can hear the CEO's passion and commitment. The CFO's review of financial performance provides texture that the corporate Balance Sheet and Statement of Income cannot offer. Similarly, the Chief Human Resources Officer delivers remarks on how Philips is driving structural and cultural change.

An example of using animation creatively, "Interactive charts" encourage visitors to design their own presentations of Philips' performance. Seven charts are available—Balance Sheet, Statement of income, Profitability, Cash flow, Key figures per share, Employees, and Sustainability. Each allows manipulation based on several different properties. For example, the Statement of income charts provide sales and different computations of earnings for five years for the Group or individual business segments.

The report download center23 offers a visitor several choices for accessing report information. While one may download the entire annual report, the visitor can also compile a personalized report by selecting individual sections. Philips also provides three prefabricated reports: Analyst selection, Sustainability selection, and Employee highlights.

SAP 24

Containing the only report available exclusively online, SAP's website does an excellent job of organizing integrated reporting content (Table 8.14). Because

TABLE 8.14 "The International <IR> Framework" and SAP's Corporate Reporting Website

"The International <IR> Framework" Content Element

Path on SAP website

Business model

Strategy and resource allocation Risks and opportunities Outlook

Performance; Business Activity Performance; Vision, Mission and Strategy Performance; Risk Report Performance; Outlook


of its logical structure, for example, "The International <IR> Framework" Content Elements related to the Guiding Principles of Strategic focus and future orientation are relatively easy to find.

Materiality is a separate section accessed from the "About This Report" tab. The materiality discussion provides a link to Stakeholder Engagement, an integral part of the process to determine materiality.

One of the most significant features of SAP's 2012 Integrated Report25 is the interactive graphic connecting financial and nonfinancial performance. The graphic depicts three economic indicators, four environmental indicators, and seven social indicators (Table 8.15) and shows the relationships between them.

SAP's approach allows the reader to click on an indicator to display its relationship to other factors. For example, clicking on the environmental indicator, total energy consumed, displays a link to an economic indicator,

TABLE 8.15 SAP Connecting Financial and Nonfinancial Performance

Economic Indicators

Environmental Indicators

Social Indicators


GHG Footprint

Employee Engagement

Operating Margin

Total Energy Consumed

Business Health Culture Index

Customer Success

Data Center Energy

Employee Retention

Renewable Resources

Women in Management

Social Investment

Capability Building

Employer Ranking

Data Source: SAP Integrated Report 2012. "Key Facts: Connecting financial and non-financial performance,", accessed April 2014 (site discontinued).

The Performance Implications of Employee Engagement

FIGURE 8.1 The Performance Implications of Employee Engagement

Source: SAP Integrated Report 2012, "Connecting Financial and Non-Financial Performance," (site discontinued).

operating margin, and to an environmental indicator, greenhouse gas (GHG) footprint. The environmental indicator, data center energy, is identified as the direct driver of total energy consumed. Similarly, Figure 8.1 illustrates this for employee engagement. No other company website we studied illustrated its interdependencies between financial and nonfinancial factors to the same degree.26

A first step in a process toward quantitative valuation of the relationships between financial and nonfinancial performance as contemplated by the International <IR> Framework,27 this graphic representation demonstrates SAP's understanding of how different dimensions of financial and nonfinancial information are related to each other.28

Further, the SAP Integrated Report 2012 includes an Independent Auditors Report29 and an Independent Assurance Report.30 The Independent

Auditors Report provides a traditional opinion on the company's consolidated financial statements. The Independent Assurance Report provides both limited and reasonable assurance on selected sustainability information.31 Limited assurance is provided on SAP's application of the AA1000 AccountAbility Principle Standard (2008) and on selected qualitative claims and quantitative indicators on sustainability performance. Reasonable assurance is provided on the indicators for Business Health Culture Index, employee engagement, employee retention, women in management, GHG footprint (Scope 1 and 2 as well as selected Scope 3 emissions including business flights and employee commuting), renewable energy, total energy consumed, and customer success.

The fact that SAP's reporting website is one of the most sophisticated we studied is not surprising given that it is a technology company. Yet its website features are based more on the exercise of integrated thinking than sophisticated technologies, and virtually everything their website contains could be easily replicated by any company of significant size. Important as a reporting website is, however, it is only one way information technology can be used to improve integrated reporting and in the process, foster integrated thinking.


1. From the Fortune magazine methodology: Companies are ranked by total revenues for their respective fiscal years ended on or before March 31, 2013. All companies on the list must publish financial data and report part or all of their figures to a government agency. Figures are as reported, and comparisons are with the prior year's figures as originally reported for that year. Fortune does not restate the prior year's figures for changes in accounting. (Source: Fortune, July 8, 2013) Procedure: Using the Global 500 rankings as the data set, we created a checklist of items to look for and record. The websites were viewed over a period of time (Oct. 2013-Feb. 2014) and the data was recorded on paper and entered into an Excel spreadsheet for later analysis.

2. Revenues and market capitalization downloaded from Bloomberg LP and calculated in U.S. dollars as of December 31, 2012.

3. Revenues were summed to produce a total aggregate revenue and world market capitalization downloaded from Bloomberg LP and calculated in USD as December 31, 2012. Market capitalization is in trillions.

4. Preliminary data gathering was done with over 100 sites, including known integrated reporters, the big pharmaceuticals, and a sample of the Fortune 500 before we settled on the Fortune Global 500 as our target population.

5. This chapter would not have been possible without the indefatigable efforts of Barbara Esty, Senior Information Research Specialist in the Knowledge and Library Services Department at Harvard Business School. Over many months of hard work, starting in October 2013 and ending in February 2014, she single-handedly coded up the Global 500 websites, spending hundreds of hours immersed in this effort. Barbara was also deeply involved in the analysis and interpretation of the data. To this day she remains, in our view, the world's foremost expert on corporate reporting websites. After preliminary data gathering to determine which website features we wanted to collect and the Global 500 was selected as our company set, we developed a score sheet to record the findings. The score sheet was created to maintain consistency when looking at a site. For each feature, the score sheet identified the feature, how the feature would be scored, a place to record the score, and any additional comments. While recording these on paper knowing that they would need to be entered into a spreadsheet may seem redundant, this provided an extra check for items which were missed or required a second look due to website complexity. Further, the flexibility of the form allowed for the recording of textual data that we were unsure of how to score at the onset of data collection. Each website was approached in the same way, starting at the home page, looking at the general attributes of the site, which include treatments of multiple languages, use of social media, videos, etc. We then clicked to the investor relations section and sustainability pages. The appearance of a feature was recorded if clearly visible on the site or through a simple search of the site. The feature needed to be part of the text on the webpage, not in documents found through links on the webpage.

6. eMarketer. "MOBILE SOCIAL PLATFORMS IN CHINA: Marketing Challenges and Opportunities, December 2013, system/attachables/main/MuL0ylpwdFtw6WpVw4U/origin al/Mobile_Social_ Plateforms_in_China.pdf?1389666464, accessed May 2014.

7. Very few Global 500 companies do not have an English version of their website. However, for those who do not, Google's Chrome browser provides a translation feature that allows for basic navigation and understanding of the website's contents.

8. Ideally for a dataset of this size we would aim to automate the process, both for time and for consistency. However, successful web scrapping relies on seeking specific items that we did not know at the onset. Rendering a complete copy of a website is difficult due to not only the sheer volume of pages of text and images but also the complex arrangement of files that comprise the site. Lastly, we wanted to be respectful of each company's website's terms of use, which in most cases limited the amount of material that can be copied and stored for future use. While there are no doubt some individual coding errors given the number of websites reviewed (a careful eye only goes so far and items can be missed), given the aggregate way in which we are analyzing the data, we do not believe any errors have a material effect on the analysis. A double check occurred when transferring data from paper to spreadsheet—if something was missing or appeared odd, it was rechecked. 9. Ideally, we would have had these categories defined in the beginning, but it took the process of manually gathering the data from the websites to have them emerge. Due to the variety of website features, category labels, and functionality, the data elements the categories grew organically through observation. To base the list of data collection points from a small sample would have biased the set. To determine the final list of categories to inventory, a preliminary list of data points was created and through viewing a set of integrated reporting companies, large pharmaceutical companies, and a subset of the Fortune 500 list. Items were added based on the frequency or uniqueness of when items appeared, such as the years of an annual report archive or games.

10. By "connectivity" we are referring to a website property, not "connectivity of information" as defined by "The International <IR> Framework."

11. Detail on the meanings of each category is included in Appendix 8A.

12. We generally follow the scoring framework employed in Thomson Reuter's Asset 4 ESG database ( documents/ASSET4_ESG_Methdology_FAQ_0612.pdf). Individual items are typically scored 1 (Yes) or 0 (No) depending on whether or not we find that item in the company's website. These individual item scores are aggregated to provide a raw score for each company in each of the 7 categories. Each company's raw score in each category is then converted into a z-score measuring the raw score as a number of standard deviations from the mean across all companies in that category. Z-scores make it easier to identify differences among companies when there is less variation of scores across companies and also give greater weight to atypical scores. In the latter case, for example, a company will typically score higher for having a particular item on its website if relatively few companies have that item than if many companies have the item. Finally, the z-scores are normalized by ranking them on a scale of 0 to 100.

13. Our website analysis was composed of the top 40 non-South African companies plus Novo Nordisk and SAP. There were 13 companies—AEGON, Banco do Brasil, BASF, CEBU Holdings, Chubu Electric Power, Eni S.P.A., Maersk, Nokia Corporation, Philips, Société Générale de Surveillance (SGS) Switzerland, Statoil ASA, UBS, and YIT OYJ—that published a self-declared integrated report and were named in the Global 500. Self-declared integrated reports were from Global Reporting Initiative, Sustainability Disclosure Database, GRI [Excel] Reports List,, accessed April 2014. See Appendix 8A for the details of website coding and our scoring criteria.

14. For more background on integrated reporting at Novo Nordisk and Philips see Eccles, Robert G. and Michael P. Krzus. "Novo Nordisk: A Commitment to Sustainability." Harvard Business School Case 412-053. (Revised January 2012). Eccles, Robert G. and Daniela Saltzman. "Integrated Assurance at Philips Electronics N. V." Harvard Business School Case 412-054, January 2012. (Revised May 2013.)

15. The website characteristics of Novo Nordisk, Philips, and SAP were evaluated using the same scoring methodology as we used for the Global 500.

Financial Transparency

Sustainability Transparency



























16. Novo Nordisk. Sustainability, Annual Report 2012, novonordisk .com/sustainability/online-reports/online-reports.asp, accessed March 2014.

17. Novo Nordisk. Sustainability/Interactive Challenges, novonordisk .com/sustainability/games/interactive-challenges.asp, accessed April 2014.

18. asp, accessed April 2014.

19. The importance of the patient in the Novo Nordisk culture is based on the Novo Nordisk Way, principles dating back to the 1923 founding of the company. Two of the principles are: "Our key contribution is to discover and develop innovative biological medicines and make them accessible to patients throughout the world" and "Growing our business and delivering competitive financial results is what allows us to help patients live better lives, offer an attractive return to our shareholders and contribute to our communities." Jakob Riis, executive vice president of Marketing & Medical Affairs, brings that point to life in the 2013 Annual Report saying, "Our goal is to make a difference to patients. . . ." Novo Nordisk. Novo Nordisk Annual Report 2013, www, accessed May 2014, pp. 4 and 25, respectively.

20. Consolidated financial statements refers to consolidated balance sheet, statements of income and cash flows, and notes to financiáis.

21. The company's shares held by management are in the report section "Shares and capital structure" beginning on p. 44. Management's interpretation of accomplishments and results in 2012 is in the report section "2013 Performance and 2013 outlook" on p. 6. The consolidated statements of all types of performance are under "Consolidated financial, social and environmental statements," beginning on page 55. What assurance has been given on the report is described under "Assurance" on page 109. Novo Nordisk annual report 2012, asp, accessed April 2014.

22. Philips. Annual Report 2012, index.aspx, accessed March 2014.

23. Philips Annual Report 2012. Downloads, annualreport2012, accessed April 2014.

24. Our analysis and discussion of SAP's integrated reporting content is based on the SAP Integrated Report 2012, which is no longer available. SAP's Integrated Report 2013 may be found at, accessed May 2013.

25. SAP Integrated Report 2012. home.html, accessed March 2014 (site discontinued).

26. SAP Integrated Report 2012, "Connecting Financial and Non-Financial Performance," (site discontinued).

2 7. For more discussion about connecting financial and nonfinancial performance see "The International <IR> Framework", Section 3B, Connectivity of information, paragraph 3.8, Financial information and other information. For example, the implications for: expected revenue growth or market share of research and development policies, technology/know-how or investment in human resources; cost reduction or new business opportunities of environmental policies, energy efficiency, cooperation with local communities or technologies to tackle social issues and revenue and profit growth of long-term customer relationships, customer satisfaction, or reputation. International Integrated Reporting Council. "International <IR> Framework",, accessed April 2014.

28. For more discussion of SAP's integrated report see Eccles, Robert G., and George Serafeim. "A Tale of Two Stories: Sustainability and the Quarterly Earnings Call." Journal of Applied Corporate Finance 25, no. 3 (Summer 2013): 66-77.

29. SAP Integrated Report 2012. Independent Auditor's Report, www . 012 /en/to-our-stakeholders/independent-auditors-report.html, accessed April 2014 (site discontinued).

30. Ibid.

31. The terms "reasonable assurance engagement" and "limited assurance engagement" distinguish between the two types of assurance engagement a practitioner is permitted to perform. The objective of a reasonable assurance engagement is a reduction in assurance engagement risk to an acceptably low level in the circumstances of the engagement as the basis for a positive form of expression of the practitioner's conclusion. The objective of a limited assurance engagement is a reduction in assurance engagement risk to a level that is acceptable in the circumstances of the engagement, but where that risk is greater than for a reasonable assurance engagement, as the basis for a negative form of expression of the practitioner's conclusion. Source: International Auditing and Assurance Standards Board. International Standard on Assurance Engagements (ISAE) 3000, "Assurance Engagements Other Than Audits or Reviews of Historical Financial Information," ifac .org/sites/default/ffles/publications/files/BOO 5%2 02013%2 0IAASB%2 OHand book%20ISAE%203000_0.pdf, accessed April 2014.

A. Methodology for Website Coding

THIS APPENDIX describes the scoring methodology used to evaluate the websites of the Global 500 companies. We developed a unique scoring framework and Table 8A.1 presents the selected features, why they were chosen, and how data were collected. Website features were grouped into categories for scoring. Category names and our definition of each category follow:

- Financial transparency. These items assess how much financial information is provided and how easy it is for the user to find.

- Sustainability transparency. These items measure how much sustainability information is provided and how easy it is for the user to find.

- Interactivity. These items assess the degree to which the user is able to engage with the website.

- Connectivity. These items assess the degree of integration in the reporting of the company's financial and nonfinancial performance.

- Utility. These items assess the availability of tools and formats provided to aid understanding and analysis of the company's data.

TABLE 8A.1 Website Coding Categories and Features

Website Coding Categories and Features

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