One of the principals for ofi’s strategic plan is to focus on long-term value.
This depends in part on the active management of non-financial capitals, which we report against in our annual reports. These capitals are not universally assessed in current reporting frameworks, despite driving a significant portion of a company’s market value, so we challenged ourselves to re-imagine business reporting.
Olam first began reporting against these capitals in its 2017 Annual Report. A task force has been setup since to evaluate ofi’s approach to multi-capital accounting and establish a numerical link to sustainability using multi-capital accounting methodologies. This led to the development of the Integrated Impact Statement (IIS).
In 2018, Olam piloted the initial IIS tool with three business units – Dairy (Russia), Cocoa (Côte d’Ivoire) and Palm (Gabon) – covering Natural, Social and Human capital. The tool was independently validated and shared with experts for their input and refinement. In 2021, we performed a monetary valuation of material natural capital (NC) impacts and dependencies by assigning an approximate monetary impact value. The outcomes are illustrated in our NC Profit and Loss statement (NC P&L) and NC Balance Sheet (NCBS) under the IIS (Integrated Impact Statement).
In 2019, a dedicated Finance for Sustainability (F4S) department was created to further develop the multi-capital accounting methodologies, to act as a centre of excellence and to help embed capitals accounting within the organisation. F4S will leverage the expertise of Finance and Accounting to help address the most pressing supply chain sustainability issues. To enhance business decision-making, the IIS is also being deployed at profit centre level.
F4S will uncover hidden costs and benefits not previously reported, support the leveraging of sustainable financing to address the most pressing supply chain sustainability issues and help support the business to “be the change for good food and a healthy future”. Our vision is to be a best-in-class business partner, responsible for maximizing long-term intrinsic value for all our stakeholders using non-financial drivers of value.
We believe the IIS (Integrated Impact Statement) will positively change and differentiate the way we operate and with whom. We are better informed about our Natural, Social and Human capital impact and can provide actionable management information to better understand key impact areas (by farmer group, by country, by product and devise more appropriate plans to address externalities and enhance positive impacts. ofi endeavours to become a resilient and more reliant partner for all our stakeholders by ensuring the creation of long-term value.
The IIS (Integrated Impact Statement) takes a systems approach that captures the complexity and reality of today’s diverse and intertwined “eco-agrifood” systems, providing a holistic picture to business decision-making, avoiding the risks and limitations inherent in simplistic metrics such as “productivity per hectare”, which ignores Natural Capital stocks, flows, outcomes and impacts. The IIS approach will increase business resilience, allowing ofi to make changes on the ground, to mitigate the risks associated with carbon taxes, biodiversity loss or procurement concerns. Uncovering these risks and opportunities will enable us to better prepare and respond to the challenges of tomorrow.
“Sustainability is at the heart of ofi. The IIS gives finance and business teams the needed numerical link between actions on the ground, as well as their impact and dependency on the Capitals. This will help in both improving the understanding of the Capitals and in taking necessary steps toward increasing the long-term value for the company.”
Rishi Kalra, Executive Director and Group Chief Financial Officer
In collaboration with The Capitals Coalition, Ria Bakshi, Head of Sustainability Accounting, Reporting & Impact for ofi, shares more about the pathbreaking work the Finance for Sustainability (F4S) department has spearheaded in the Non-Financial Capital Accounting sphere, and how this is woven into the organisation’s business decision-making process in a simple, meaningful and transparent manner. This is all showcased in two courses that are free* to enrol on Coursera:
The objective of these courses is to transition from accounting for profit to accounting for business value delivered for people, the wider society, and the planet. It seeks to ignite businesses to contribute, collaborate and create methodologies which value impact from a lens that is not calibrated to just financial implications.
*Coursera charges a fee to receive the course certificate for completion.
F4S will internalize externalities via our product platforms, supporting strategic financial business decisions and influencing significant stakeholders, bringing finance and sustainability concepts together.
With no formal framework for measuring these capitals, we needed a better way to measure, quantify and report our long-term “invisible” value. F4S will create partnerships and collaborations to grow this mindset.
We use a common numerical language – where applicable – that everyone can understand, evaluate and articulate. IIS allows ofi to explain the impact of our actions on the ground to all internal and external stakeholders.
Whether you’re interested in enquiring about our practices or partnering with us, we want to hear from you.
