Introduction to Integrated reporting - India The Securities Exchange Board of India (SEBI) recently raised a circular recommending top 500 companies to adopt Integrated Reporting. This is a quick guide that answers the Why? What? How? questions to get Indian companies started with Integrated Reporting.

1. Vrushali Gaud
India edition
Integrated Reporting 101
Introduction to <IR>

2. 1
Corporate Reporting
continues to evolve to
provide relevant
information to readers.
Integrated Reporting is
the next step in this
evolution that
encourages organisations
to communicate how it
creates value in a clear,
concise and cohesive
manner.
Why <IR> ?

3. Why <IR>?
1. Financial summary
2. Management Discussion
3. Directors Report
4. Past performance
5. Compliance focused
6. Verbose and Substantial
2
Lets start with where corporate reporting is today which can be accu-
rately summarised by the survey and discussion conducted by the Inter-
national Financial Reporting Standards and International Accounting
Standards Body. These provide a clear picture on the expectations and
challenges with corporate reporting faced both by prepares (corporates)
and users (investors and analysts). Despite all the progress in communi-
cation, disclosure requirements, regulations and plethora of data there is
dissatisfaction on both sides. Prepares are overloaded with reporting re-
quirements, but users still feel that there is lack of clear and relevant in-
formation. From a preparer perspective the size and number of supple-
ments in an annual report have increased. But the user / reader com-
plains of these reports being merely compliance focused often verbose,
redundant and disconnected.
Clearly there is a gap. Gap between what an organisation actually
does and what it communicates. Gap between what is reported and what
the user of the report wants. Gap which results in inadequate informa-
tion, constrained decision making that affects the way capital is allocated
towards an organisation and within it. Below is a quick overview of the
key gaps observed by users and preparers of corporate reports.
Capturing the total value created
Businesses today creates value in multitude ways, starting from the
investors and owners, but also for the communities, employees and cus-
tomers. Depending upon the stakeholder the value could be monetary, it
could be a particular product or service provided or it could be through
increasing employment providing job security, self worth and improving
the overall standard of living. So clearly the definition of value is far
more multifaceted than that conveyed through financial terms.
A recent survey on market value, shows that in the 1970’s, 80% of a com-
pany’s market value could be traced through to the tangible assets in the
financial statements. Today, less than 15% of a company’s market value
Challenges in Corporate
Reporting

4. 3
can be accounted for by its financial and physical assets. The rest resides
in what is termed as ‘intangibles’ which are factors, such as relationships,
intellectual and human capital, technology assets, goodwill, brand value
and similar. So clearly reporting needs to communicate the full picture,
allowing investors to evaluate how all relevant capitals that a business
uses and affects are incorporated.
Providing relevant information to the user
For a thorough assessment, investors need multiple different elements
which include financial performance, enterprise risks including ESG
risks, governance and sustainability disclosure, and relevant information
on business model and strategy. Traditionally this information is dis-
persed across multiple reports - directors report, financial statements,
sustainability report, BRR and CSR annexure and similar. Financial re-
porting has a singular focus on reporting financial performance, whereas
sustainability reporting focuses on non-financial information on environ-
mental, social and governance performance only. Investors may not nec-
essarily understand how ESG factors add value to the company or im-
pacts risks in the short and long term. There needs to be a cohesiveness
in capturing all aspects and presenting it in an understandable language
to the various stakeholders. Good corporate governance is about the ‘how
of business’. It’s not about putting a measure on or monetising the intan-
gible factors such as trust, reputation, long-term viability. It’s about re-
sponsible business behaviours and processes, and transparency around
these processes, necessary for accountability.
Backward looking and redundant
Annual reports provide an insight into the past performance of an
organisation which typically is a lagging indicator. To make sound deci-
sions, investors need to know where a company is headed and the strat-
egy to get there. Backward looking information is a good starting point
but does not provide the complete picture of long term strategy and out-
look. Moreover the multitude of reporting requirements result in both
redundant information as well as disconnected information. In India, the
business responsibility report is published alongwith the annual report
in the March-April timeframe, whereas the sustainability report has no
definitive requirements and is typically published in December. There-
fore the same company has different reporting timeframes resulting in
the lack of a cohesive and well connected communication.
Inability to connect with next generation users
In today’s hyperconnected world, annual reports are not just restricted
to investors and financial stakeholders. Current and prospective employ-
ees, consumers and clients are all keen to understand what an organisa-
tion stands for and where it is headed. Reasearch shows that responsible
business practices and the vision of a company are critical when millenni-
als choose employers. Corporate report is a critical element of business
communication. But over the years it has become more complex and cum-
bersome for readers to understand. The language, presentation style and
formats severely restricts its ability to connect with the newer generation
of users/readers. Business reports have not kept up with the advances in

5. 4
technology and communications. Data connectivity, graphics, drill down
features, real time trends are all facets that can be used to make reports
more engaging and relevant.
So, how can <IR> help?
All the above gaps make a case for better and streamlined business re-
porting; WHY evolution of corporate reporting is required; WHY <IR> is
one such framework that can significantly help companies realise inter-
nal and external benefits of better corporate reporting. <IR> provides a
framework for organisations to articulate strategy and business model,
as well as link metrics to them, all of which is critical for an organisation
to build trust amongst its shareholders.
Annual
Report
Sustainabiltiy
Report
BRR
GRI
ESG
CDP
Director’s
Report
Financial
Statements
Mgmt Disc
Disclosures
Integrated
Report
It advocates a focus on six capitals that include financial and non-
financial parameters which holistically capture the broader risks, oppor-
tunities that affect short, medium and long term strategy. It encourages
use of technology and design features to better connect data and present
a more relevant and materially important story of the organisation.
Why the move from SR to <IR>?
Sustainability Reporting primarily focuses on how an organisation man-
ages key environmental and social issues (E&S). It is a public disclosure
of which E&S issues are of material importance to the organisation and
how they are managed. These vary based on the sector, geographic loca-
tion, regulatory requirements and multitude of other factors. These can
also be an area of risks or opportunity for the company and can impact
its long term sustainability. A sustainability report is used to communi-
cate company performance on indicators based on relevant E&S issues.
As sustainability reporting evolved, governance related issues such as eth-
ics, executive pay, board structure and similar were also included. GRI
guidelines, SASB, BRR, NVG’s are different approaches used for sustain-
ability reporting.
Integrated reporting takes this evolution further and broader. It is about
furthering sustainability to be connected with the business model and
strategy specifically where it impacts how the organisation manages
value creation in the long term. It is about broadening the internal think-
ing and external reporting to consider both traditional risks and these
wider sustainability risks. <IR> principles go beyond traditional finan-
cial reporting, that can have a narrow focus on financials and past per-
formance. In simple terms an integrated report brings together and con-

6. 5
nects information that sits in separate reports and disclosures to present
a complete story of a organisation.
SEBI pushes for a transition to <IR> in India
Sustainability Reporting in India can be divided into two broad catego-
ries : those that imbibe the principles, are transparent and reasonably
thorough in reporting. These are the top tier ~ 100 companies that go
above and beyond the statutory requirements on ESG reporting. The
next category is those who provide baseline information per regulatory
requirements and may or may not provide a separate sustainability re-
port. Even for those who do provide one, there are shortcomings
• company performance on E&S related indicators is provided but sel-
dom linked back to the broader business model or strategy
• sustainability related risks are not connected back with the short and
long term risk for the business
• separate AR-SR reporting timeframes result in duplication, redun-
dancy and misalignment of information
• most companies look at ESG issues as branding and marketing do-
mains. The focus is more on outward communication and less on ac-
tually understanding and influencing business systems
The SEBI circular on <IR> provides a much needed impetus for both im-
proving the quality of sustainability reporting and getting the naysayers
started on it. A good SR can be the backbone of creating a complete docu-
ment based on the <IR> principles. For those companies who do little or
no sustainability reporting, <IR> provides a good framework to start
looking at key capitals (non-financial aspects) that are critical for busi-
ness.
<IR> encourages companies to look at governance structures starting
from board composition, involvement and responsibility to overall busi-
ness culture and management style. In today’s environment the board
and executive team has to be aligned with long term strategy and deliver-
ables. Transparency and disclosures are also key elements to ensure in-
vestors and society at large are aware of how and where the company is
headed. In this context, the <IR> framework serves as a tool for stream-
lining internal processes and corporate reporting structure for effective
communication with key stakeholders.

7. 2
Integrated Reporting is a
principle based
framework that an
organisation can use to
manage its internal
processes that aid clear
external communication
of the value creation
story in the form of an
integrated report.
What is <IR>?

8. What Is <IR>?
1. Background
2. Framework
3. Integrated Thinking
4. Integrated Reporting
5. Integrated Report
6. Management Tool
7. Reporting Tool
7
Integrated reporting or <IR> is a principles-based framework for corpo-
rate reporting. The aim of the framework is to institutionalise integrated
thinking and reporting about the value created over time by the organisa-
tion. The resulting integrated report is a concise communication about
how an organisation’s strategy, governance, performance and prospects,
in the context of its external environment, lead to the creation of value in
the short, medium and long term.
Over the last decade there has been a gradual shift of annual reports to
include more than just financial performance data. Environmental Social
and Governance (ESG) analysis, sustainability data, disclosures regard-
ing risks and opportunities are being increasingly reported on using
frameworks such as The Global Reporting Initiative (GRI), Business Re-
sponsibility Reporting (BRR), and The Sustainability Accounting Stan-
dards Board (SASB). While this progression has helped increase transpar-
ency, it has also created more silos and redundancy in reporting ele-
ments. Despite this increase in reporting, annual reports do not provide
holistic understanding of the purpose and progress of an organisation.
<IR> Framework was created by the International Integrated Re-
porting Council (IIRC) to overcome the above challenges and in-
crease cohesiveness in corporate reporting. The framework aims to ad-
dress the need for transparency, inclusiveness, and comprehensive infor-
mation that is material to modern business. It is an evolution of the exist-
ing corporate reporting structure to present all facets of value creation in
a business holistically making effective use of technology. <IR> is not ex-
pected to replace either sustainability reporting or financial reporting but
it will enable all reports to feed into one concise document.
The intent of the principles-based approach is to strike a balance be-
tween flexibility and prescription that recognises the wide variation in
individual circumstances of organisations while enabling a sufficient de-
gree of comparability. The <IR> Framework does not prescribe specific
key performance indicators (KPIs), measurement methods or disclosure
of individual matters but provides the practioner flexibility in creating
their reporting content.
IR> as an octopus model
“A good visual representation is comparing the <IR> as the head of the octo-
pus, which is connected to a multitude of arms, each of which is a detailed
report/information source: for instance, the financial statements, sustainabil-
ity report, governance report, social and ethics committee report, risk report,
remuneration report, or other printed or online information.” - IRC of SA
<IR> Framework

9. The Integrated Reporting Framework advocates a value creation model
using the concept of “six capitals”, a set of seven “guiding principles” and
eight “content elements”.
An organisation creates value for itself and others by transforming re-
sources in the context of the external environment it operates in. The
value creation model is fundamental to <IR> and aims to provide insight
on how the six capitals impact and are transformed by the organisation’s
business activities.
Six capitals refers to the different categories of resources that are inputs
used by an organisation to create value. But on the output side these re-
sources are also affected by the business model and strategy. Tradition-
ally reporting focuses mainly on financial resources followed by manufac-
tured and environmental resources. <IR> broadens the focus to intangi-
bles namely intellectual, human, social and relationship resources. To-
gether these are referred to as the six capitals. The degree of relevance of
a specific capital to an organisation depends on various factors such as
the sector, type of process and similar.
The <IR> framework provides 7 guiding principles that can help create a
concise, comprehensive and clear report. These can be used individually
or collectively ensure that reporting is balanced and relevant by drawing
attention to key aspects. Principles of materiality help prioritise key mate-
8

10. 9
rial matters whereas connectivity ties in all the aspects together to form a
complete story.
6 Capitals 7 Guiding principles 8 Content elements
Financial
Strategic focus and future
orientation
Risks and opportunities
Manufactured
Organisational overview and
external environment
Conciseness
Natural Connectivity of information
Strategy and resource
allocation
Social and Relationship Governance
Reliability and
completeness
Human Stakeholder relationships Performance
Intellectual Business model
Consistency and
comparability
Materiality Outlook
Basis of preparation and
presentation
The 8 content elements are aspects that should be in a thorough inte-
grated report. Together they provide information the past performance,
short medium and long term outlook of the company and how it plans of
achieving that outlook. These elements also ensure that integrated report
are consistent and comparable across peer organisations.
Examples of <IR> Journey
A principles based approach allows an organisation flexibility to
pace its adoption and steadily improve its corporate reporting. While
there are numerous examples of quality integrated reports, the ones
listed below are often used as references to get started.
BASF Online Integrated Report highlights good use of <IR> principles
and content elements. Financial and non-financial information is meas-
ured and presented to provide readers a holistic evaluation of its perform-
ance. Using principles of materiality and connectivity. Interactive tech-
nology is used to generate custom charts, trends and compare with previ-
ous performance. The highlight of this report is the graphic on ‘how we
create value’ a comprehensive visual story of the company that includes
input resources, outputs and outcomes linked to the business model, vi-
sion and key metrics.
Coca - Cola Integrated Report links the business model and strategy to
six capitals to effectively present how the company creates value for itself
and stakeholders. The six capitals are articulated with either qualitative
or quantitative metrics. Unique use of a connectivity matrix that con-
nects the ESG dimensions with the strategic pillars that enables readers
to understand how sustainability is linked with the business. Long term
outlook provided for 2020 and performance of key indicators are tracked
towards the 2020 targets.
Tata Steel Annual Report uses the <IR> framework to assess and commu-
nicate how it creates sustainable value across the six capitals. It is one of
the first Indian companies to adopt the framework since its participation
in the IIRC pilot program.

11. 3
How to get started?
While most reporters
and users agree on the
gaps in corporate
reporting, the biggest
challenge is to get started
and address the issues.
The <IR> framework
provides a path to
analyze gaps and
flexibility in approaches
towards better business
reporting.

12. 11
The <IR> framework is principle based, which allows organisations flexi-
bility on how and where to start incorporating it within its internal think-
ing process and external reporting. While there are many different ap-
proaches to embark on the <IR> journey, these key steps can help get
started.
Get Board and Top Management Commitment
Board buy-in is a critical element to build credibility in the process and
the report and to ensure accuracy of information. The elements reported
upon impact the ability of an organisation to create and preserve value
over short, medium and long term, address the legitimate needs and ex-
pectations of various stakeholders. This requires sensitivity and transpar-
ency through out the process which benefits greatly from involvement of
board members.
For an organisation to fully leverage the benefits from the Integrated Re-
porting process, it is important that the CEOs and CFOs and other peo-
ple in positions of leadership are engaged and committed to integrated
thinking. This enables facilitation of a common and unified view of the
organisation’s strategic objectives, opportunities and threats, business
model, and critical success factors - including resources, capabilities and
competences needed to deliver the strategy considering changing circum-
stances and environmental factors and trends.
A senior executive should champion the process and be accountable for
the process and report. Members could be key individuals with a compre-
hensive knowledge of the business or someone with cross-disciplinary
functions or someone from existing financial, annual and internal report-
ing teams with a mind frame to make corporate reporting an all-inclusive
mechanism.
Analyse and Plan
“ Financial leadership should value that the <IR> framework
provides an organisation the flexibility towards disclosures that
are material and within the realms of sharing publicly. The prem-
ise is to present holistic information rather than letting investors
make assumptions regarding the value created by a business. A
comprehensive yet interactive and inclusive stakeholder commu-
nication would simplify and streamline the current reporting
process. In the long term this would reduce redundancy, report-
ing fatigue whilst increasing readership.” - IIRC

13. 12
Conduct a Gap Analysis
Analysis of the existing reporting content in comparison with the
IIRC <IR> Framework. Quality of disclosures, depth of content and avail-
ability of data can be measured against the <IR> content elements and
guiding principles. Gap Analysis should not be restricted to just the an-
nual report, but include sustainability report, CSR and BRR reports, in-
vestor communications and similar information published in the public
forum by the organisation. The all encompassing aspect of the <IR>
framework can seem daunting and so the gap analysis is critical to
• Understand the detail and depth of information gap as well as ac-
knowledge the availability of data that can be used towards building a
good report
• Develop a project plan that can help get started towards both making
quick easy changes to the report and planning for longer term actions
that require internalisation of integrated thinking.
0
20
40
60
80
100
Financial Capital
Manufactured
Capital
Natural Capital
Human Capital
Social and
Relationship
Capital
Intellectual Capital
Reporting on Six Capitals
Benchmark Current
0
20
40
60
80
100
Governance
Organisational
overview and
external
environment
Connectivity of
information
Strategic focus and
future orientation
Stakeholder
relationships
Business model
Materiality
Use of Guiding Principles
Benchmark Current
With top level commitment and gap analysis completed, organisations
can embark on their <IR> journey. While there is no prescribed ap-
proach for a company to get started with integrated reporting, there are
best practices gained from experienced reporters. The approaches pre-
sented below can be used individually or collectively to align the corpo-
rate reporting process with integrated thinking and reporting.
Leverage the Director’s Report
The management discussion section in an annual report provides an
avenue for the organisation to present its story to investors. It can be fur-
ther strengthened through inclusion of outlook, risk management, busi-
ness model and strategy, all of which are critical aspects of the <IR>
framework. While business model is often included, articulation of strat-
egy is an area to leverage. Strategy explains the “how” - how capitals will
be used to create value, how tradeoffs will be managed, risks and mitiga-
tion strategies, opportunities that have risen and similar. The manage-
ment discussion section can be used to not just present broad goals or a
vision but to provide a detailed account of actions and deliverables to
wards achieving that goal.
Integrate sustainability drivers
With the adoption of GRI reporting and BRR mandate, sustainability
performance is well measured and reported on. What is missing is the
linkage between sustainability and business systems? Integrating key sec-

14. 13
tor specific sustainability drivers into the business model and strategy is
one of the key steps to a good integrated report.
Expand focus to multi-capitals
Another approach is to expand the focus to include some or all the six
capitals. <IR> value creation model looks at six capitals - financial, manu-
facturing, natural, human, social and relationship and intellectual capital
that are used and impacted by the organisation’s processes. A combina-
tion of quantitative, qualitative or monetary measures can be used to re-
port on all or the industry or sector specific capitals. The principles of ma-
teriality and connectivity to determine what and how to report on capi-
tals.
Focus on value creation
Value creation could be the thread through the entire reporting process
and communication emphasising how the organisation creates value for
itself and for others over time. Value has two interrelated aspects - value
for the organisation and value for other stakeholders and society at large.
All the individual elements within the integrated report such as business
model, strategy, risk , governance, performance and similar should be in-
cluded in the narrative.
FURTHER READING
The International <IR> Framework
Realizing the Benefits: The Impacts of Integrated Reporting,
CreatingValue: Integrated Reporting <IR> and Investor Benefits
It’s not just about the financials The widening variety of factors used in
investment decision making
CIMA - Discussion on Corporate Reporting
IFRS - Discussion on Financial Reporting
Millennials could be shaping the future of socially responsible investing

15. 14
About the Author
Vrushali Gaud has over a decade of experience working in
Fortune 500, startup and non-profit organisations in the US
and India. A background in operations, account manage-
ment, business development coupled with experience in the
social sector gives her a very balanced approach to sustain-
ability in business. Most recently she worked with CII towards creating a multi-
stakeholder platform which helped increase knowledge and adoption of Integrated
Reporting in India. She is committed to bridging the gap between business and sus-
tainability by learning, sharing and encouraging Integrated Reporting, SROI, CSR
and sustainable business practices in India.
Copyright © 2017 by Vrushali Gaud
All rights reserved. This document or any portion thereof may not be reproduced or
used in any manner whatsoever without the express written permission of the author
except for the use of brief references for the document and, or the author.
Acknowledgement
This document acknowledges and builds on existing research and publications in this
field. Effort has been made to give references and credit where applicable. Please
inform the author incase of changes and suggestions.
Disclaimer
The information presented here is for general guidelines and information only. It is
not intended to be comprehensive or legally accurate. The author is not liable for the
use and application of the information presented.