Integrated Reporting, Sustainability Reporting and Corporate Social Responsibility Reporting
Integrated reporting, sustainability reporting and CSR reporting test narrative and non-financial disclosure.
Core rules
- Integrated reporting (IIRC framework) explains how an organisation creates value over time using six capitals: financial, manufactured, intellectual, human, social and relationship, and natural. Guiding principles include strategic focus, connectivity, stakeholder relationships, materiality, conciseness and reliability.
- Sustainability reporting: BRSR is mandatory for the top 1,000 listed companies by market capitalisation under SEBI LODR. It has nine principles and is split into essential and leadership indicators. IFRS S1 and S2 provide a global baseline; GRI remains widely used.
- CSR under Section 135: companies meeting thresholds must spend 2% of average net profit of the preceding three financial years. Unspent ongoing-project amounts go to an Unspent CSR Account within 30 days and must be spent within three financial years; other unspent amounts go to a Schedule VII fund within six months. Impact assessment applies to large projects.
Worked example
Average net profit for three years is ₹10 crore, so the CSR obligation is ₹20 lakh. If ₹12 lakh is spent and ₹8 lakh relates to an ongoing project, transfer ₹8 lakh to the Unspent CSR Account within 30 days.
Traps
- Treating CSR spend as a deductible business expense.
- Confusing BRSR applicability with all companies.
- Reporting only financial capital in an integrated report.
- Omitting the reason for CSR non-spending.