Non-financial Information -A Journey towards Integrated Reporting
The Genesis of Integrated Reporting
“Integrated Reporting is making of a wholesome report combining both financial information as well as non-financial information of a company. In other words, reporting of non-financial information along with financial information gives birth to the model of ‘Integrated Reporting’. Financial information is the data about the monetary transactions of a company that demonstrate the financial performance and financial position of a company. Financial statements generally include the Balance sheet or Statement of affairs, Statement of profit and loss or Income statement, and Cash flow statement. On the other hand, non-financial information is the data about some things which are generally not recorded in the books of account, or it is impossible to quantify them but is very much present in and around the company that exhibit the manner in which a company operates its business activities.”
1. What is Non-financial Information (NFI)?
NFI speaks about other relationship issues in qualitative terms regarding how the company is running and will run. A company’s activities have significant impact on the life of the general public of the present as well as future generations.
NFI is often defined as Environmental, Social, and Governance (ESG) information, referring to the three central components in measuring the sustainability and societal impact of a company. It is referred to as the information about society and the environment and is considered by stakeholders relevant to evaluating the company’s long-term ability to survive and succeed.
Key Qualitative Facets of Non-financial Disclosures:
Contributions to the betterment of society, customer/supplier satisfaction, and community engagement.
Energy and emissions, water consumption, resource efficiency, combating climate change, preservation of biodiversity, and environmental pollution mitigation.
Contributions towards social programmes and projects addressing poverty, health, education, environmental sustainability, and rural/community development.
Product/service sustainability, sustainable procurement practices, and natural resources sustainability.
Transparency, integrity, discipline, commitment, internal control systems, shareholders’ rights, business outlook, and future strategic plans.
Employee satisfaction, occupational safety and health protection, human capital development, training, and equal opportunity policies.
Human rights protection, anti-corruption and anti-bribery mechanisms, and prompt payment of government taxes.
Investments in sustainable technologies, process innovation, and green operational solutions.
2. What is the Significance of Integrated Reporting?
When an annual report of a company includes both financial information as well as non-financial information, we may address the same as an Integrated Report. Integrated Reporting is a process of data collection and formal disclosure on non-financial aspects of corporate activities along with its financial aspects that helps the company measure, understand, and communicate its impacts.
Risk Management & Competitiveness
Non-financial reporting is a vital mechanism to improve risk management and long-term social, environmental, and financial performance and market competitiveness. It provides an effective framework for identifying and navigating future threats and opportunities.
Public Accountability & Trust
Disclosure of non-financial information empowers communities and citizens affected by corporate operations to assert their rights, restore trust in businesses, and hold corporations accountable. This is essential for building societal trust, enhancing reputation, and cementing brand loyalty.
Multi-Stakeholder Paradigm Shift
Present circumstances require a fundamental change in corporate reporting where the focus shifts from serving only financial capital providers to addressing all stakeholders who have an interest in or are affected by operations: communities, employees, suppliers, customers, regulators, Government, and society at large.
Holistic Value Creation
Non-financial reporting makes sense because qualitative ESG factors are equally co-responsible with financial factors for sustainable value addition. Traditional financial information is no longer sufficient on its own to give investors and markets a holistic overview of business performance.
3. Global Scenario Towards Integrated Reporting
Several reporting standards and frameworks have emerged globally for integrated reporting by companies worldwide. Enterprises may utilize these standards individually or in hybrid combinations to articulate their non-financial performance. Prominent global architectures include:
Here, the three guidelines, frameworks, and standards mostly used by companies globally are analyzed in detail:
A. Global Reporting Initiative (GRI)
Established 1997 • Ceres & Tellus Institute • UNEPThe GRI was formed in 1997 by United States-based non-profits Ceres (formerly the Coalition for Environmentally Responsible Economies) and the Tellus Institute, with the support of the United Nations Environment Programme (UNEP). It is an independent international organisation that helps businesses take responsibility for their impacts by providing a global common language to communicate those impacts across environmental, social, and economic factors for all stakeholders.
GRI Standards help organisations understand their outward impacts on the economy, environment, and society, enabling third parties to assess environmental and societal impacts from corporate activities and supply chains.
- (a) Universal Standards: Foundation, General Disclosures, and Management Approach.
- (b) Topic-Specified Standards: Economic, Environmental, and Social disclosures.
Standardized guidelines concerning the environment are contained within the GRI Indicator Protocol Set, covering ESG issues from employee safety and human rights to environmental management. The GRI offers 30 environmental performance indicators across 9 primary categories:
B. International Integrated Reporting Council (IIRC)
Founded 2009 • <IR> Framework 2013 • Prince of Wales A4S & IFACThe IIRC was founded in 2009 by the Prince of Wales Accounting for Sustainability Project (A4S), the Global Reporting Initiative, the International Federation of Accountants (IFAC), and others. It published the landmark Integrated Reporting <IR> Framework in 2013, seeking to communicate how an organization’s strategy, governance, performance, and prospects—in the context of its external environment—create short, medium, and long-term value.
The <IR> Framework operates through a process that starts with integrated thinking, aligning organizational functions in communicating value creation. It is anchored by three structural pillars:
7 Guiding Principles:
- Strategic focus & future orientation
- Connectivity of information
- Stakeholder relationships
- Materiality
- Conciseness
- Reliability & completeness
- Consistency & comparability
8 Key Content Elements:
- Organisational overview & external environment
- Governance
- Business model
- Risks and opportunities
- Strategy and resource allocation
- Performance
- Outlook
- Basis of preparation and presentation
The 6 Distinct but Interrelated Capitals:
C. Sustainability Accounting Standards Board (SASB)
Founded 2011 • 77 Industry-Specific Standards across 11 SectorsThe SASB is a non-profit organisation founded in 2011 to develop sustainability accounting standards. It developed unique standards for seventy-seven (77) industries across eleven (11) sectors, recognizing that sustainability issues manifest differently from one industry to another due to differences in business models, resource dependencies, and operating profiles.
SASB is an ESG guidance framework setting standards for the disclosure of financially material sustainability information by companies to their investors. It identifies issues reasonably likely to impact the financial performance or condition of a company, defining sustainability as corporate activities that maintain or enhance the ability to create long-term shareholder value.
4. Indian Scenario Towards Integrated Reporting: A Decade of Evolution
In India, non-financial reporting began long ago through statutory inclusions such as the Directors’ Report, Management Discussion & Analysis (MD&A) Report, and Corporate Governance Report in corporate Annual Reports, alongside voluntary disclosures. To establish formal regulatory governance over ESG parameters, the Ministry of Corporate Affairs (MCA) and the Securities and Exchange Board of India (SEBI) spearheaded a structured decadal evolution:
Technical Architecture of the BRSR Framework:
The BRSR is structured around disclosures on the nine (9) principles laid down by the NGRBC, accompanied by a comprehensive Guidance Note enabling companies to interpret the scope of disclosures under each principle.
Disclosure requirements under each of the 9 principles are bifurcated into two distinct operational categories:
Must be reported compulsorily by all mandated entities, capturing baseline ESG performance metrics.
Advanced disclosures showcasing aspirational sustainability leadership, broader supply chain stewardship, and deeper societal impact.
Conclusion: A Continuous Journey Towards Global Sustainable Development
Disclosure of non-financial information in integrated reporting by companies in India has significantly increased over time. In fact, it is an ongoing developmental journey that will continue to evolve in line with emerging international circumstances and regulatory standards.
By aligning corporate transparency with international frameworks, Indian businesses are becoming increasingly responsible, proactive, and resilient corporate citizens committed to achieving the UN Sustainable Development Goals (SDGs).