Sandy Nessing has responsibility for managing sustainability strategy, corporate stakeholder engagement and annual performance reporting for American Electric Power (NYSE:AEP). She oversees annual production of AEP’s Corporate Accountability Report, including a dedicated sustainability website and companion iPad app (“AEP CAR” in the iTunes store). This is the sixth year AEP has produced an integrated report that combines financial with nonfinancial performance. She facilitates cross-functional collaboration on sustainability issues across AEP to raise awareness of the interdependencies of functions, resources and issues while providing guidance on externalities that could affect business results or operations. She also develops and manages advocacy opportunities and relationships that support AEP’s business strategy.
Christopher Skroupa: How would you define integrated thinking?
Sandra Nessing: Integrated thinking is the ability to connect the dots between financial, social and environmental performance. It requires a commitment at the top, an understanding of your company’s sustainability drivers and a level of candor and transparency. Integrated thinking helps you to align your priorities, is inclusive and helps to create long-term value.
Skroupa: To what extent is integrated thinking a necessary prerequisite for integrated reporting?
Nessing: Integrated thinking is an absolute necessity for effective integrated reporting. It’s an evolution, too. When AEP started reporting its sustainability performance, we were not thinking about those connections. Our focus was on communicating basics – public policy positions, reliability and safety statistics, work force planning, etc. When we started thinking about those things from a risk perspective and considering how investments in new technology would impact customers (good and bad), for example, we started to see a more complete picture. And, by connecting those dots, you are able to identify potential risks as well as opportunities. It also helps to break down silos because people start to see how they are all connected to serving our customers.
Skroupa: What would you consider to be the best approach to getting buy-in from executive committees?
Nessing: These are smart people and they already know that financial and nonfinancial performance is integrated but they never thought of it in terms of reporting before. We would tell one piece of the story to one audience and a different part of the story to someone else. Really, it was through stakeholder engagement and the need for efficiency gains that it became clear to us that integrated reporting was the way to go. The investor relations team found that investors and analysts were zeroing in on specific information in our sustainability report that wasn’t otherwise available to them. They wanted that information to help them make more informed decisions. When we saw that, we made the business case to executive management and received approval to move to a single, integrated report. This is also an example of where value creation was influenced by the external environment.
Skroupa: Have you incorporated external stakeholders into your integrated thinking process?
Nessing: Absolutely. We’ve done it through the process of conducting a materiality assessment of core issues as well as through regular engagement with many different stakeholders. I often hear executives ask “what would our stakeholders think?” when they’re discussing business issues. It’s an input to informed decision-making.
Skroupa: What are the greatest opportunities you can share that came from successful integrated thinking and integrated reporting?
Nessing: Providing a holistic and transparent view of a company’s performance helps to build your reputation and credibility with your stakeholders. It also opens doors of opportunity for collaboration, innovation and efficiency – all of which feed profitability.
On September 21, 2015, Skytop Strategies will present “Symposium on Integrated Thinking: Drivers and Evolving Best Practices,” hosted by Edelman at the New York City office. Continue the discussion with Sandra Nessing and company executives, institutional investors and practice leaders at this full-day symposium, designed to explore how integrated thinking improves company resilience and net performance. To inquire about attending, contact Victoria Billman at email@example.com.