Interview : Philippe Peuch-Lestrade

Exit the traditional financial report: enter the integrated report! Far from simply reporting financial results, this explains and lays out the company’s strategy, and reconciles financial and non-financial results. Business strategy consultant Philippe Peuch-Lestrade was one of the pioneers of this approach back in the 1990s.

Philippe Peuch-Lestrade
Expert comptable et commissaire aux comptes

“It’s not a matter

of financial versus

non-financial: it’s all

just performance.”

In the early 1990s, your message about the environment must have fallen on somewhat deaf ears…

People didn’t understand why I was talking about it. This was true of public and private players alike. But as I was one of the managing partners of Arthur Andersen [now EY – Ed.], they thought I might have a point… And little by little I convinced them. Around the world environmental teams were being set up, and were subsequently expanded to include CSR. But they started off in the wrong direction, focusing on philanthropy and communication – which came to be known as “greenwashing”. It wasn’t on the right track, but the train had started up, at least.

In your view, does the truth about a company’s performance lie in “integrated thinking”?

Yes. Without integrated thinking, there is no company. A company must have a direction and know where it is going. Everything it does illustrates a way of thinking. “Integrated” thinking is about the need for a company to think like an individual person. When formulating this way of thinking, there’s a need to base it on a certain number of things that are part of its environment.

For a company, it means taking its entire ecosystem into account; for individuals, it means factoring in all their interests and motivations. If I want to move house, I’ll think about the price of the property, its location, the comfort it can provide, the way I can decorate it, how far it is from the shops, and so on. To make an assessment, I’ll make a whole list of requirements in their order of importance.

You could say it’s about thinking both more broadly and more deeply?

Exactly. There are two dimensions: breadth involves the themes we cover, while depth means looking forward. Integrated thinking means incorporating more criteria, as long as they are meaningful. Many companies often spend time on issues that are not important. Like public authorities, they are bogged down in short-term management, because every minute some situation comes up and they have to justify themselves.
As Robert Eccles says in his book “One Report”, we need to unify and bring together in a single process all the information that contributes to business performance, and explains long-term value creation. This is what integrated thinking is all about: thinking that is based on the widest possible range of documentation, comprehensive documentation that is constantly bijective between financial and non-financial aspects. It’s not a matter of financial versus non-financial: it’s all just performance, and it’s vital to correlate the two.”

And bring it all together in an integrated report?

Spot on! There is no thinking if it is not made explicit. When we talk about “integrated reporting”, we mean firstly “integrated thinking” and secondly the “integrated report”, i.e. the publication of this thinking. It’s the chicken and the egg: there is no thinking if it isn’t documented, and if your thinking provides no information, it’s useless. We have to report on it.

It’s all part and parcel of ‘responsible capitalism’. And responsible capitalism is capitalism that accounts for what it does and applies what it learns.

Read the complet interview

Integrated thinking is about the need for a company to think like an individual person.

Philippe Peuch-Lestrade