Firms take up ‘integrated reporting’, narrate story of value-creation with disclosure on eco, social factors

In February 2017, the Securities and Exchange Board of India (Sebi) had suggested (it was not mandated) that the top 500 listed companies adopt IR on a voluntary basis from financial year 2017-18.

India’s top listed companies have taken up ‘integrated reporting’ (IR) to narrate their value-creation stories, says an analysis by KPMG, as reported in The HinduBusinessLine online.

According to KPMG, 20 per cent of the top 100 listed companies by market capitalisation have adopted the IR framework. 

The IR framework focusses on economic, environmental and social factors to get an estimate of the actual impact of value-creation.

In February 2017, the Securities and Exchange Board of India had suggested (it was not mandated) that the top 500 listed companies adopt IR on a voluntary basis from financial year 2017-18.

BusinessLine quoted Sai Venkateshwaran, Partner and Head – CFO Advisory, KPMG-India, as saying that investors have begun to look at areas beyond financial performance in evaluating the companies they invest in. Environment, social and governance aspects are becoming prominent in investment decisions.

Going by the report, it appears IR is set to play an important role in bringing long-term and sustainable value-creation as a core theme for companies and investors to engage with each other, rather than the current excessive focus on short-term performance.

“This will also help in improving corporate governance, in general, as boards focus on the objective of better governance for long-term value-creation,” the report quoted Sai.

IR is a principle-based, non-prescriptive framework for corporates and is a new approach to corporate reporting. It  revolves around the organisation’s ability to create and sustain value over the short, medium and long term.

The KPMG analysis found another key trend – that the regulatory push to enhance corporate reporting on non-financial disclosures has led to 99 per cent of the top 100 listed companies developing a ‘Business Responsibility Report’. Further, with an increase in non-financial disclosures, validating the information by an independent third party has also increased.

The KPMG report said that 43 per cent of the companies undertake external assistance to ensure the credibility of information.

The BusinessLine report quoted Santhosh Jayaram, Partner and Head — Sustainability and CSR Advisory, KPMG-India, as saying, “Non-financial disclosures are becoming an important part of corporate reporting to articulate the complete story of value-creation.

“Disclosures around climate change, sustainable development goals, human rights, etc, are increasingly seen in the corporate reporting of Indian companies. Assurance on the non-financial disclosures are also increasing.”

https://www.thehindubusinessline.com


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