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Top listed companies in India have taken up ‘integrated reporting’ (IR) in a big way to narrate their value-creation story, according to a latest analysis by KPMG.
About 20 per cent of the top 100 listed companies by market capitalisation have adopted the IR framework, which focusses on economic, environmental and social factors to get an estimate of the actual impact of value-creation, according to the professional services firm.
It may be recalled that Securities and Exchange Board of India had in February 2017 nudged — not mandated — the top 500 listed companies to adopt IR on a voluntary basis from financial year 2017-18.
Sai Venkateshwaran, Partner and Head – CFO Advisory, KPMG-India, told BusinessLine that investors are starting to look at areas beyond financial performance in evaluating the companies they invest in, with environment, social and governance aspects gaining more prominence in investment decisions.
IR will play an important role in bringing long-term and sustainable value-creation as a core theme on which companies and investors engage with each other, compared to 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,” he said.
New approach
IR — a principle-based, non-prescriptive framework for corporates — is a new approach of corporate reporting that revolves around the organisation’s ability to create and sustain value over the short, medium and long term.
Key finding
Another key finding of the KPMG analysis is that the regulatory push to enhance the corporate reporting on non-financial disclosures has led to 99 per cent of the top 100 listed companies developing a ‘Business Responsibility Report’. Also, with an increase in non-financial disclosures, validating the information by an independent third party has also increased.
Forty-three per cent of the companies undertake external assistance to ensure the credibility of information.
Santhosh Jayaram, Partner and Head — Sustainability and CSR Advisory, KPMG-India, said, “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.”
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