Module 3: Comprehensive Reporting Practices 12 Hrs

• Global Reporting Initiatives, Integrated reporting (6 Types of Capital),

Management commentary (Future outlook, competition etc.)
Syllabus
• Global Reporting Initiatives, Integrated reporting (6 Types of Capital),
Management commentary (Future outlook, competition etc.)
• 
Global Reporting Initiatives
• GRI is an independent international organization that has pioneered
sustainability reporting since 1997. 
• GRI helps businesses and governments worldwide understand and
communicate their impact on critical sustainability issues such as
climate change, human rights, governance and social well-being. This
enables real action to create social, environmental and economic
benefits for everyone. The GRI Sustainability Reporting Standards are
developed with true multi-stakeholder contributions and rooted in
the public interest. 
Sustainability reporting
• A sustainability report is a report published by a company or organization
about the economic, environmental and social impacts caused by its everyday
activities. A sustainability report also presents the organization's values and
governance model, and demonstrates the link between its strategy and its
commitment to a sustainable global economy.
• Sustainability reporting can help organizations to measure, understand and
communicate their economic, environmental, social and governance
performance, and then set goals, and manage change more effectively. A
sustainability report is the key platform for communicating sustainability
performance and impacts – whether positive or negative.
Who should report?
• Sustainability reports are released by companies and organizations of
all types, sizes and sectors, from every corner of the world.

Thousands of companies across all sectors have published reports

that reference the GRI Standards. 
Global Sustainability Standard Board
• The Global Sustainability Standards Board (GSSB) is responsible for setting
globally accepted standards for sustainability reporting. 
• The GSSB operates under a Terms of Reference to oversee development of
the GRI Standards according to a formally defined due process.
• The GRI Standards are developed and approved by the GSSB, with the
intention of being applied on a globally consistent basis, thus providing
stakeholders with the ability to compare the impacts of various reporting.
• The GSSB members represent the best combination of technical expertise,
diversity of experience and multi-stakeholder perspective, and perform their
work according to a formally defined due process, exclusively in the public
interest. (15 members in the Board)
GRI - Sustainability reporting
• ​The GRI Sustainability Reporting Standards ( GRI Standards ) are the first and
most widely adopted global standards for sustainability reporting. They feature
a modular, interrelated structure, and represent the global best practice for
reporting on a range of economic, environmental and social impacts.

• The practice of disclosing sustainability information inspires accountability,

helps identify and manage risks, and enables organizations to seize new
opportunities. Reporting with the GRI Standards supports companies, public
and private, large and small, protect the environment and improve society,
while at the same time thriving economically by improving governance and
stakeholder relations, enhancing reputations and building trust.
Benefits
• Internal benefits for companies and organizations can include:
Increased understanding of risks and opportunities
• Emphasizing the link between financial and non-financial performance
• Influencing long term management strategy and policy, and business plans
• Streamlining processes, reducing costs and improving efficiency
• Benchmarking and assessing sustainability performance with respect to laws, norms,
codes, performance standards, and voluntary initiatives
• Avoiding being implicated in publicized environmental, social and governance failures
• Comparing performance internally, and between organizations and sectors
Benefits
• External benefits of sustainability reporting can include:
• Mitigating – or reversing – negative environmental, social and
governance impacts
• Improving reputation and brand loyalty
• Enabling external stakeholders to understand the organization’s true
value, and tangible and intangible assets
• Demonstrating how the organization influences, and is influenced by,
expectations about sustainable development
 GRI Sustainability Reporting Guidelines
• The GRI Sustainability Reporting Guidelines (the Guidelines) offer
Reporting Principles, Standard Disclosures and an Implementation
Manual for the preparation of sustainability reports by organizations,
regardless of their size, sector or location.
• The Guidelines are presented in two parts:
• Reporting Principles and Standard Disclosures
• Implementation Manual
Guidelines
• The first part – Reporting Principles and Standard Disclosures –
contains Reporting Principles, Standard Disclosures, and the criteria to
be applied by an organization to prepare its sustainability report ‘in
accordance’ with the Guidelines. Definitions of key terms are also
included.
• The second part – Implementation Manual – contains explanations of
how to apply the Reporting Principles, how to prepare the
information to be disclosed, and how to interpret the various
concepts in the Guidelines. References to other sources, a glossary
and general reporting notes are also included.
 PRINCIPLES FOR DEFINING REPORT CONTENT
• Stakeholder Inclusiveness
• Sustainability Context
• Materiality
• Completeness
• PRINCIPLES FOR DEFINING REPORT QUALITY :-
• Balance
• Comparability
• Accuracy
• Timeliness
• Clarity
• Reliability
Standards
• GENERAL STANDARD DISCLOSURES
Ÿ Strategy and Analysis
Ÿ Organizational Profile
Ÿ Identified Material Aspects and Boundaries
Ÿ Stakeholder Engagement
Ÿ Report Profile
Ÿ Governance
Ÿ Ethics and Integrity
5.2 SPECIFIC STANDARD DISCLOSURES
Ÿ Disclosures on Management Approach
Ÿ Indicators
https://www.globalreporting.org/standards/gri-standards-download-center/
How entity can use GRI Standards?
• The GRI Standards help organizations’ understand their outward impacts: on
the economy, environment, and society. This increases accountability and
enhances transparency on their contribution to sustainable development.
• Organizations can either use the GRI Standards to prepare a sustainability
report in accordance with the Standards. Or they can use selected
Standards, or parts of their content, to report information for specific users
or purposes, such as reporting their climate change impacts for their
investors and consumers. 
• GRI 101: Foundation is the starting point for reporting. GRI 101 takes
organizations through the reporting process and gives detailed guidance
on how to use the Standards. 
List of Standards
• This Glossary includes definitions for the
following GRI Standards:
• GRI 101: Foundation 2016
• GRI 102: General Disclosures 2016
• GRI 103: Management Approach 2016
Economy
• GRI 201: Economic Performance 2016
• GRI 202: Market Presence 2016
• GRI 203: Indirect Economic Impacts
2016
• GRI 204: Procurement Practices 2016
• GRI 205: Anti-corruption 2016
• GRI 206: Anti-competitive Behavior
2016
• GRI 207: Tax 2019
Environment
• • GRI 301: Materials 2016
• • GRI 302: Energy 2016
• • GRI 303: Water and Effluents 2018
• • GRI 304: Biodiversity 2016
• • GRI 305: Emissions 2016
• • GRI 306: Waste 2020
• • GRI 307: Environmental Compliance 2016
• • GRI 308: Supplier Environmental Assessment 2016
Society / People
• GRI 401: Employment 2016
• GRI 402: Labor/Management Relations 2016
• GRI 403: Occupational Health and Safety
2018
• GRI 404: Training and Education 2016
• GRI 405: Diversity and Equal Opportunity
2016
• GRI 406: Non-discrimination 2016
• GRI 407: Freedom of Association and
Collective Bargaining 2016
• GRI 408: Child Labor 2016
• GRI 409: Forced or Compulsory Labor 2016
• GRI 410: Security Practices 2016
• GRI 411: Rights of Indigenous Peoples 2016
• GRI 412: Human Rights Assessment 2016
• GRI 413: Local Communities 2016
• GRI 414: Supplier Social Assessment 2016
• GRI 415: Public Policy 2016
• GRI 416: Customer Health and Safety 2016
• GRI 417: Marketing and Labeling 2016
• GRI 418: Customer Privacy 2016
• GRI 419: Socioeconomic Compliance 2016
Integrated Reporting
• An integrated report is a concise communication about how an
organization’s:
• Strategy
• Governance
• Performance And
• Prospects
• in the context of its external environment It leads to the creation of
value over:
• Short , Medium And Long term
IIRC • The International Integrated Reporting Council (IIRC) was created
to respond to the need for a concise, clear, comprehensive and
comparable integrated reporting framework.
ROLE OF IIRC
• The role of the IIRC is to:
• develop an overarching integrated reporting framework setting out the
scope of integrated reporting and its key components
• identify priority areas where additional work is needed and provide a plan
for development
• consider whether standards in this area should be voluntary or mandatory
and facilitate collaboration between standard-setters and convergence in
the standards needed to underpin integrated reporting; and
• promote the adoption of integrated reporting by relevant regulators and
report preparers.
IR Framework
• The IR Framework establishes 'guiding principles' and 'content
elements' that govern the overall content of an integrated report.
• The IR Framework is aimed at the private sector, although could be
adapted for use by charities and the public sector.
• The key users of an integrated report are deemed to be the providers
of financial capital. However, the report will also benefit employees,
suppliers, customers, local communities and policy makers.
• The Framework is principles based
Guiding principles for IR
• Strategic focus and future orientation – An integrated report should provide
insight into the organisation’s strategy; how it enables the organisation to
create value in the short, medium and long term; and its effects on the
capitals
• Connectivity of information – An integrated report should show a holistic
picture of the factors that affect the organisation’s ability to create value
• Stakeholder relationships – An integrated report should provide insight into
the nature and quality of the organisation’s relationships with its
stakeholders
• Materiality – An integrated report should disclose information on matters
that significantly affect the organisation’s ability to create value
Contd.
• Conciseness – An integrated report should be concise
• Reliability and completeness – An integrated report should be
• balanced and free from material error.
• Consistency and comparability – The information in an integrated
report should be comparable over time, and comparable with other
entities.
Content of Integrated Report
• Organisational overview and external environment – ‘What does the
organisation do and what are the circumstances under which it operates?’
• Governance – ‘How does the organisation’s governance structure support its
ability to create value in the short, medium and long term?’
• Opportunities and risks – ‘What are the specific opportunities and risks that
affect the organisation’s ability to create value over the short, medium and
long term, and how is the organisation dealing with them?’
• Strategy and resource allocation – ‘Where does the organisation want to go
and how does it intend to get there?’
• Business model – ‘What is the organisation’s business model and to what
extent is it resilient?’
Contd.
• Performance – ‘To what extent has the organisation achieved its
strategic objectives and what are its outcomes in terms of effects on
the capitals?’
• Future outlook – ‘What challenges and uncertainties is the
organisation likely to encounter in pursuing its strategy, and what are
the potential implications for its business model and future
performance?’
• Basis of presentation – 'How does the organisation determine what
matters to include in the integrated report and how are such matters
quantified or evaluated?'
Value creation process
• Identifying the purpose of organization - Vision and Mission – External
environment (economic conditions, technology, societal issue,
environment)
• Responsibility of governance – creating a structure
• Business model
• Internal and external outcomes
• Continuous monitoring
• Mitigate and manage risks
Fundamental Concepts of Framework
• An integrated report explains how an entity creates value over the
short-, medium- and long-term. To this extent, a number of
fundamental concepts underpin the IR framework. These are:

• The capitals
• The organisation’s business model
• The creation of value over time.
Capital
• The capitals are stocks of value that are increased, decreased or transformed through the
activities and outputs of the organization.
• The capitals identified by the IR Framework are financial, manufactured, intellectual,
human, social and relationship, and natural.
• Financial Capital – Pool of funds available for use in production – Debt, Equity, Grant etc
• Manufactured capital – Manufactured physical objects – Buildings, Equipment etc
• Intellectual capital – Patents , copyrights etc.
• Human capital – People’s competencies, capabilities and experiences etc
• Social and Relationship capital – Common values, behaviors, Key stakeholder relationships
etc.
• Natural capital – Renewable and non-renewable environmental resources – Air, water etc
Business Model for Value Creation
• Central to integrated reporting is the overall impact that a business
has on the full range of capitals through its business model.
• The business model is a business' chosen system of inputs, business
activities, outputs and outcomes that aims to create value over the
short, medium and long term.
• An integrated report must identify key inputs, such as employees, or natural
resources. It is important to explain how secure the availability, quality and affordability of
components of natural capital are.
• At the centre of the business model is the conversion of inputs into outputs through business
activities, such as planning, design, manufacturing and the provision of services.
• An integrated report must identify an organisation’s key outputs, such as products and
services. There may be other outputs, such as chemical by-products or waste. These need to
be discussed within the business model disclosure if they are deemed to be material.
• Outcomes are defined as the consequences (positive and negative) for the capitals as a result
of an organisation’s business activities and outputs. Outcomes can be internal (such as profits
or employee morale) or external (impacts on the local environment).
Value creation
• Value is created over time and for a range of stakeholders. IR is based
on the belief that the increasing financial capital (e.g. profit) at the
expense of human capital (e.g. staff exploitation) is unlikely to
maximize value in the longer term. IR thus helps users to establish
whether short-term value creation can be sustained into the medium-
and long-term.

• https://dabur.com/digital-annual-report/about-the-report
Positive Benefits of IR
• Boards are taking ownership of integrated reports and taking a lead in
articulating the value creation process
• Across sectors companies are considering and reporting on the use
and affect across various capitals through quantitative metrics and
narratives.
• Annual reports are better connected and show how strategies and
business model are creating value. 
• Effective use of infographics and web technology has improved user
engagement and quality of presentation
Management Commentary and Value Creation
• The IFRS Practice Statement (PS) Management Commentary provides a
framework for the preparation and presentation of management commentary on
a set of financial statements.
• Management commentary provides users with more context through which to
interpret the financial position, financial performance and cash flows of an entity.
• It is not mandatory for entities to produce a management commentary.

• https://www.iasplus.com/en/standards/other/management-commentary
Definition
• "A narrative report that relates to financial statements that have been
prepared in accordance with IFRSs. Management commentary
provides users with historical explanations of the amounts presented
in the financial statements, specifically the entity's financial position,
financial performance and cash flows. It also provides commentary on
an entity's prospects and other information not presented in the
financial statements. Management commentary also serves as a basis
for understanding management's objectives and its strategies for
achieving those objectives.” – IFRS PS
 Framework for presentation of management commentary
• The purpose of a management commentary is:
• to provide management’s assessment of the entity’s performance, position and
progress
• to supplement information presented in the financial statements, and
• to explain the factors that might impact performance and position in the future.
• This means that the management commentary should include information which
is forward-looking.
• Information included in management commentary should possess the qualitative
characteristics of useful information (as outlined in the Framework). In other
words, the information should be relevant, faithfully represented, comparable,
timely, verifiable and understandable.
Presentation
• Management commentary should be clear and straightforward and
be presented with a focus on the most important information in a
manner intended to address the principles described in the Practice
Statement, specifically:
• being consistent with its related financial statements
•  avoiding duplicating disclosures made in the notes to the financial
statements where practicable
•  avoiding generic and immaterial disclosures.
 Elements of management commentary
• Management commentary should include information that is essential to an understanding of:
• the nature of the business
• management’s objectives and strategies.
• the entity’s resources, risks and relationships
• The results of operations and prospects
• the key performance measures that management use to evaluate the entity’s performance.

• https://www.youtube.com/watch?v=KBd8MutfJEI
CIA
• Prepare and present Sustainability Report of an imaginary company
according to the guidelines set by GRI – Group activity
• Choose a company which applies Integrated Reporting and analyse
the capitals and business model in creation of value – Individual
Assignment
• Choose a company which has published sustainability report using/
applying GRI
• - Identify the various GRI standards that they have applied and give
some input what the standard actually requires in the report
For Exam: GRI Standards and the disclosure
under each standard
• Example:302 – Energy
• Energy consumption within the organization
• 302-1The reporting organization shall report the following information:
• a. Total fuel consumption within the organization from non-renewable sources, in joules or
multiples, and including fuel types used.
• b. Total fuel consumption within the organization from renewable sources, in joules or multiples, and
including fuel types used.
• c. In joules, watt-hours or multiples, the total: i. electricity consumption ii. heating consumption iii.
cooling consumption iv. steam consumption
• d. In joules, watt-hours or multiples, the total: i. electricity sold ii. heating sold iii. cooling sold iv.
steam sold
• e. Total energy consumption within the organization, in joules or multiples.
• f. Standards, methodologies, assumptions, and/or calculation tools used.
• g. Source of the conversion factors used.
Energy consumption outside of the
organization
• 302-2
• The reporting organization shall report the following information:
• a. Energy consumption outside of the organization, in joules or
multiples.
• b. Standards, methodologies, assumptions, and/or calculation tools
used.
• c. Source of the conversion factors used.
Energy intensity
• 302-3
• The reporting organization shall report the following information:
• a. Energy intensity ratio for the organization.
• b. Organization-specific metric (the denominator) chosen to calculate
the ratio.
• c. Types of energy included in the intensity ratio; whether fuel,
electricity, heating, cooling, steam, or all.
• d. Whether the ratio uses energy consumption within the
organization, outside of it, or both.
Reduction of energy consumption
• 302-4
• The reporting organization shall report the following information:
• a. Amount of reductions in energy consumption achieved as a direct
result of conservation and efficiency initiatives, in joules or multiples. b.
Types of energy included in the reductions; whether fuel, electricity,
heating, cooling, steam, or all.
• c. Basis for calculating reductions in energy consumption, such as base
year or baseline, including the rationale for choosing it.
• d. Standards, methodologies, assumptions, and/or calculation tools
used
Reductions in energy requirements of
products and services
• 302-5
• The reporting organization shall report the following information:
• a. Reductions in energy requirements of sold products and services
achieved during the reporting period, in joules or multiples.
• b. Basis for calculating reductions in energy consumption, such as
base year or baseline, including the rationale for choosing it.
• c. Standards, methodologies, assumptions, and/or calculation tools
used.