Valid and reliable measurements for sustainable non-financial reporting

Abstract

The discrepancy between the high importance of intangibles and the general inability to measure and account for these types of assets constitutes a growing challenge for business and society, in particular within the framework of Non-Financial Reporting. Traditional financial reporting typically does not provide good predictions of future financial performance. The malfunctioning of risk capital markets partly depends on the lack of reliable information on intangibles. Thus, measurements of intangibles must be significantly improved. The information on intangibles needs to be based on the right measurements, it needs to be comparable (i.e. based on common guidelines, or even standards), and it needs to be verifiable and understood by the users. This paper reviews the situation with reference to measuring intangibles for non-financial reporting. It comments on various related research projects and R&D activities initiated by accounting organizations. It emphasizes the possible importance of various Best Practice measurement programs, such as ACSI and EPSI Rating. Finally, it identifies a number of requirements to be fulfilled to achieve and operationalize the relevance and reliability of stakeholder measurement.

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