Beyond Financial Results: the Integrated Reporting Framework

A company’s performance is no longer just about financial numbers. It includes a host of other factors such as sustainability, corporate governance and overall its ability to be viewed as a responsible corporate citizen. Companies therefore, for the past couple of decades generate annual reports as well as sustainability reports. Also, some countries have other reporting requirements such as Business Responsibility Report (BRR) required in India, which was mandated for top 500 companies by Securities and Exchange Board of India (SEBI) in 2015.

Current forms of business reporting have many nagging issues as many companies still believe that reporting is a compliance issue and not one that involves a focus on communication to key stakeholders. Different strands of reporting have also evolved separately, with new additions being constantly made to the reporting guidelines. The volume of information is therefore increasing and lengthy documents are leading to obfuscation of critical information. Since all information is not available in one document, it has lead to difficulties in analysis and does not really give a complete picture to all stakeholders which in addition to investors are, customers, suppliers, employees and society at large. For example, critical linkages between strategy and risk, financial and non-financial performance are many times unclear. Diverging disclosure practices in different countries also inhibit stakeholders from understanding and comparing the information they need for decision making.


This is possibly why the Integrated Reporting format was conceived a few years back. Integrated Reporting brings together material information about an organization’s strategy, governance, performance and prospects. This is done in a way that reflects the commercial, social and environmental context within which it operates. It provides a clear and concise representation of how an organization demonstrates stewardship and how it creates and sustains value. According to International Integrated Reporting Council (IIRC), “all organizations depend on various forms of capital for their success. It is important that all such forms of capital are disclosed to stakeholders to enable informed investment decision making.” IIRC has categorized the forms of capital as, Financial capital, Manufactured capital, Intellectual capital, Human capital, Social and relationship capital and Natural capital. IIRC has established guidelines for the creation of a comprehensive report.

A circular has been released by SEBI that encourages Top 500 BSE listed companies to use Integrated Reporting as a framework to improve the quality and relevance of the information.It says, “Integrated Reporting may be adopted on a voluntary basis from the financial year 2017-18 by top 500 companies which are required to prepare BRR. The information related to Integrated Reporting may be provided in the annual report separately or by incorporating in Management Discussion & Analysis or by preparing a separate report (annual report prepared as per IR framework).”

This is a huge change not just in terms of reporting but reflects how companies need to think about responsible growth. According to an independent consultant, Vrushali Gaud, “While the concept is new, its time has come. Integrated reporting requires companies to internalise interdependencies between business and sustainability to make business reporting more clear and relevant.” With this circular, SEBI has initiated a process for companies to move out of their current reporting formats and integrate reporting with business decisions.

Written by: Namrata Rana and Utkarsh Majmudar