INTEGRATED CORPORATE REPORTING: A STUDY WITH REFERENCE TO INDIAN BANKING SECTOR

Dr. Kingshuk Adhik ri Assistant Professor, Department of Commerce, Assam University, Silchar, India Email: adhikari.au@gmail.com Pr!". Nikhi# Bhus n D$% Professor, Department of Commerce, Assam University, Silchar, India Email: nikhil.b.dey@gmail.com &s. Ni' shr$$ B r( n Research Scholar, Department of Commerce, Assam University, Silchar, India Email: nbnitashree@gmail.com ABSTRACT The concept of sustainable development re uires the business houses to become socially responsible, and to communicate their social activities by means of sustainability report alon! "ith financial report# Inte!rated reportin! is the future phase of corporate reportin! and its main purpose is to provide all sorts of material information reflectin! the commercial, social and environmental conte$t "ithin "hich it operates# It is distin!uished from the current corporate reportin! practice in respect of capital ste"ardship, future focus, timeframe of the report, !reater transparency, more responsive to different sta%eholders, uality and si&e of the report and technolo!y# In India, ban%in! companies have a !reat role to play in sustainable development because it is the most trusted avenues of investment of fund by investors# Indian ban%s sho" their interest in inte!ratin! sustainability into their business models but because of absence of mandatory provisions re!ardin! CSR practices they are far behind from the international level# Indian ban%s are the catalysts of the inclusive !ro"th of the economy and it is advisable to adopt the ne" concept of reportin! because of its conse uential benefits for its o"n and nation's interest# Indian re!ulators of reportin! practices "ill also have to play an affirmative role to ma%e its successful implementation in the Indian ban%in! sector assumin! that it "ill "or% only "hen it is mandatory# Key words( Sustainable Development, Corporate Reportin!, and CSR practices#

In'r!du)'i!n In recent days, there has been an emergent concern of social, environmental and ethical reporting along with financial reporting because corporate reporting is undergoing a change towards the concept of sustainable development. Financial information reported through financial statements covers financial performance and risk; it is, however, insufficient by itself to provide all the information that users now need for rational and high uality decision!making. "aving this backdrop, there is a need to develop new comprehensive and condensed reporting practice considering the diverse needs of heterogeneous groups of stakeholders and integrating the wide range of financial and non! financial factors determine the value of an organisation. #anks and Financial institutions are the important drivers of inclusive growth of the economy. $hey are to contribute to sustainable development by way of their compliance of integrating environmental, social and corporate governance aspects into their business strategy. In regard to the significant role of banks in sustainable development, % & &hakrabarty, '#I deputy governor stated that a bank can be a burden on society when it makes too much of a profit or when it makes very little money. )*hen they ma%e too much money, it is the customers "ho are payin!# *hen they ma%e losses, it is the ta$payers+ money "hich is bein! used for a bailout,# In addition, he stressed the need for banks to integrate sustainability into their core business operations ( -Charity is not sustainability, this is "hat "e have to understand# Inclusive !ro"th is not possible "ithout sustainability,# (oreover, )tefan "elming, &ountry *irector of +I, India stressed, - .an%s and financial institutions are important multipliers for promotin! responsible business behaviour# Inte!ratin! sustainability in Indian ban%s is an important driver# .an%s can create a mar%et demand for businesses to inte!rate environmental, social and corporate !overnance aspects.. In'$gr '$d R$*!r'ing + Th$ "u'ur$ *h s$ !" )!r*!r '$ r$*!r'ing In /ugust 0121, IF/& 3International Federation of /ccountants4, the +lobal 'eporting Initiative 3+'I4, and the 5rince6s /ccounting for )ustainability 5ro7ect were collaborated to establish an International Integrated 'eporting &ommittee 3II'&4 to oversee the development of global integrated reporting standards and guidelines. It is a powerful, international cross section of leaders from an impressive list of organi8ations, including the International /ccounting )tandards #oard 3I/)#,4 Financial /ccounting )tandards #oard 3F/)#4, 9nited :ations Environmental 5rogramme Finance Initiative, 9: +lobal &ompact,
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&arbon *isclosure )tandards #oard 3&*)#4, International ;rgani8ation of )ecurities &ommissions 3I;)&4, <<F, and the <orld #usiness &ouncil for )ustainable *evelopment 3<#&)*4. $he mission of the II'& is -to create a !lobally accepted Inte!rated Reportin! frame"or% "hich brin!s to!ether financial, environmental, social and !overnance information in a clear, concise, consistent and comparable format# The aim is to help "ith the development of more comprehensive and comprehensible information about or!ani&ations, prospective as "ell as retrospective, to meet the needs of a more sustainable, !lobal economy,# A))!rding '! 'h$ In'$rn 'i!n # In'$gr '$d R$*!r'ing C!un)i# ,IIRC /, -Inte!rated Reportin! is a ne" approach to corporate reportin! that demonstrates the lin%a!es bet"een an or!ani&ation's strate!y, !overnance and financial performance and the social, environmental and economic conte$t "ithin "hich it operates# .y reinforcin! these connections, Inte!rated Reportin! can help business to ta%e more sustainable decisions and enable investors and other sta%eholders to understand ho" an or!ani&ation is really performin!,# $hus, the concept of integrated reporting refers to the integrated representation of material information about an organisation=s strategy, governance, performance and prospects in a way that reflects the commercial, social and environmental conte>t within which it operates. It provides a clear and concise representation of how an organisation demonstrates stewardship and how it sustains value. Pr!s*$)'i-$ "r ($.!rk !" In'$gr '$d R$*!r'ing nd i's *r$s$n' s' 'us ;n 20th )ept 0122, International Integrated 'eporting &ouncil 3II'&4 published its discussion paper -To"ards Inte!rated Reportin! ?communicatin! value in the 01st century,. $he discussion paper identified si> key elements determining the content of an integrated report and these are mentioned below: ;rganisational overview and business model; ;perating conte>t, including risk and opportunities; )trategic ob7ectives and strategies to achieve these ob7ectives; +overnance and remuneration; 5erformance; Future outlook.
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$he above key content elements are based on the five guiding principles identified by the II'&, which are as follows: )trategic focus; &onnectivity of information; Future orientation; 'esponsiveness and stakeholders inclusiveness; / total of 02@ responses to the *iscussion 5aper from organi8ations and individuals in over A1 countries were received. $he II'&=s 5ilot 5rogramme is made up to test the principles, content and practical application of integrated reporting and develop the International Integrated 'eporting Framework. $he 5ilot 5rogramme comprises of over BC businesses across the globe from the corporate to public sectors; and an Investor :etwork with 0C institutional investors. $he International Integrated 'eporting &ouncil 3II'&4 has planned to publish the world=s first Integrated 'eporting Framework by the end of 012A. Pr$s$n' s)$n ri! !" Sus' in /i#i'% R$*!r'ing /% Indi n B nks :on!financial reporting is e>tremely important for financial institutions, such as, banks because they are the highly leveraged institutions dealing with public money and public confidence. "ence, there is a greater responsibility for value creation for banking organisations. $hese institutions are socially responsible through the activities of other businesses that rely on them. $herefore, despite the relatively indirect nature of their environmental and social impacts, banks need to e>amine the effects of their lending and investment decisions2. /pparently, banks are socially responsible in the following respects $o e>pand their missions from profit ma>imisation to a vision of social and environmental sustainability; $o prevent and minimise the environmentally and D or socially detrimental impacts of their portfolio and operations; $o take up full responsibility for the environmental and social impacts of their transactions; $o become accountable to their various categories of stakeholders, transparent to stakeholders through robust, regular and standardised disclosure and responsive to
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http:DDrbidocs.rbi.org.inDrdocsD)peechesD5*FsD:F'I1E1E22F.pdf , /ddress by *r %. &. &hakrabarty, *eputy

+overnor, '#I at :ational &onference on - :on!Financial 'eporting and 'isk (anagement for Financial Institutions in India. on Fune E, 0122 at (umbai.

stakeholder needs for specialised information on banks= policies, procedures and transactions. T /#$ 0: Present Status of integration of sustainability information by Indian banks
Serial No. Company Name Level not 2 0 A @ C E B J K 21 22 20 2A 2@ 2C 2E 2B 2J 2K 01 /llahabad #ank /ndhra #ank />is #ank #ank of #aroda #ank of India #ank of (aharashtra &anara #ank &entral #ank of India &ity 9nion #ank &orporation #ank *ena #ank Federal #ank "*F& #ank I&I&I #ank I*#I #ank Itd. Indian #ank Indian ;verseas #ank IndusInd #ank I:+ Gysya #ank Fammu and %ashmir #ank rated% 0 2 A 0 2 0 A 0 1 A 0 A 0 A 0 0 2 2 A A Level not rated% 0 0 A 0 0 0 A 2 1 0 A 0 0 A 0 A 0 2 A A Level not rated% 1 A 1 1 1 0 A 1 1 1 0 0 0 A 2 2 0 2 0 2 Level not rated% 1 2 H 1 H 1 A 1 1 1 0 H A A H 1 0 0 0 H Farmer=s welfare, Gocational $raining, Finance to under!served areas and people Gocational $raining, 'ural *evelopment, &ommunity <elfare Education, &ommunity <elfare, &hildren 'ural development, <omen=s empowerment, Gocational training &redit &ounselling, Gocational $raining 'ural *evelopment, Iivelihoods training, /griculture and farming 'ural *evelopment, <omen=s empowerment, Education and employment Education, 'ural development, Gocational $raining ! 'ural *evelopment, "ealthcare, Gocational $raining Gocational $raining and Education, +irl &hild, 5overty alleviation &redit &ounselling, &ommunity <elfare, &hildren Education, &ommunity <elfare, 5overty Eradication Education, &ommunity <elfare, 5overty Eradication Environment 5rotection, 'ural *evelopment, &ommunity <elfare 'ural development, 5overty eradication, )ports <omen, 'ural *evelopment, 5overty alleviation Environment, Energy, &hildren &hildren, Education, &ommunity welfare Environment, "ealthcare, Education )reas of Sustainability 2 ! "# $ 2 & "# $ 2 ' "# $ 2 ( "# $ Information

02 00 0A 0@ 0C 0E 0B 0J 0K A1 A2 A0 AA A@ AC AE AB

%arnataka #ank %arur Gysya #ank %otak (ahindra #ank Iakshmi Gilas #ank ;riental #ank of &ommerce 5un7ab :ational #ank )outh Indian #ank )tate #ank of #ikaner and Faipur )tate #ank of India )tate #ank of (ysore )tate #ank of $ravancore )yndicate #ank 9&; #ank 9nion #ank of India 9nited #ank of India Gi7aya #ank Les #ank

2 2 0 2 A 0 2 0 A 0 A 0 2 A 0 2 A

2 1 2 H A A 2 0 A 0 0 0 2 A H 1 @

1 1 1 2 2 A 1 2 0 2 0 0 1 A H 1 A

1 H 1 1 1 A H 1 1 1 1 1 1 0 H 1 H

&ommunity welfare, *isaster 'elief "ealthcare, *isaster 'elief, Education "ealthcare, Energy, 5overty eradication Education, "ealthcare, Environment &ommunity *evelopment, 'ural development, Gocational training &ommunity <elfare, Gocational training, 5overty Eradication 'ural *evelopment, Education, Environment Education, *isaster relief, Gocational $raining Education, +irl &hild, 5overty Eradication +reen #anking, /griculture as a thrust area, 'ural *evelopment Environment, "ealthcare, &hildren 'ural *evelopment, Education, &ommunity <elfare 'ural *evelopment, Gocational $raining, &ommunity <elfare 'ural development, &ommunity welfare, 5overty eradication 'ural *evelopment, <omen, &ommunity <elfare 'ural *evelopment, &ommunity <elfare, "ealthcare 'esponsible #anking, &ommunity <elfare, Environment

)ource: &ompiled from 2armayo!'s3 report 011B, 011J, 011K and 0121
1N!'$: %armayog is an organi8ation based out of (umbai, India. It is the only organi8ation in India to produce &)' lists. It provides networking platform for ordinary citi8ens and :+;s to engage with each other and with government, media, corporates and institutions, etc. $he %armayog website has over E111 pages of information, covering 011M social and civic issues, an all India :+; directory of 2C111, including 2111 in (umbai.

$able 2 depicts that Indian banks have improved their non!financial reporting practices over the period but they are still far from satisfactory because no single bank has yet been able to touch level C i.e. the highest level of &)' activities. In 011K, only Les bank had reached to level @ but it has again dropped down to level A in 0121 and most of the banks are in the level 0. $he core thrust areas of their social activities are rural development, women empowerment, poverty eradication, community welfare, education and employment, vocational training, children welfare, health care, responsible banking. $here are only few
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banks, which report their activities on triple bottom line principles0. In this direction, "ossain 3011J4, )harma 301224 and #ihari 301204 studied and found that Indian banks are far behind in disclosing voluntary items. (oreover, most of the Indian banks do not mention sustainability information e>plicitly on their websites. $here is hardly anything mentioned regarding their sustainability practices. $hus, it means that they have of lack of bank6s participation in corporate social responsibility activities. For e>ample, I&I&I #ank well known for its social activities has no clear visible link on its website regarding I&I&I foundation or its support of government programs to improve the livelihoods of people. )#I is the biggest commercial bank in /sia and it commands more than one!third of India=s banking resources. "owever, it also does not reveal any kind of sustainability information in its website. $he primary limitation investigated in conte>t to the reporting of social activities, is the absence of uniform standards laid for such reporting, inade uate norms regarding non! financial reporting system and the low pressure from the :+; sector in India when compared to other countries. Pr!/ /#$ I(* )' !n Indi n B nking S$)'!r In India, as sustainability reporting is still very much in its infancy and the system of sustainability reporting is not so yet developed as of financial reporting, )o it will be challenging to fit together two distinct concepts of reporting.
9ntil it is clarified, it will be tricky for the firms to determine value considering both

uantitative and ualitative factors together.

It will not be easy to structure the integrated strategy and get it reported within short period, as it will re uire lots of preparation for integrating material financial and non!financial information into one report in a systematic manner and management may need enough time for constructing future courses of activities.

It will be a big challenge on the part of the management to disclose business outlook and at the same time to maintain certain secrecy for competitive advantage.

It can lower operating cost incurred on financial and sustainability reports between data collection, design, audit etc.

9nder N$riple bottom line principle= of reporting, a business entity is e>pected to supply information on its financial, social, and environmental performance. $he term is used to capture the whole set of values, issues and processes that companies must address in order to minimise any harm resulting from their activities and to create economic, social and environmental value. $his involves being clear about the company=s purpose and taking into consideration the needs of all the company=s stakeholders. It is known as accounting framework having three dimensions, popularly referred to as A 5s: people, planet, profit.

#y means of improved disclosure, banks can attract financial capital from the prospective investors and intellectual capital though retaining talent employees.

&hance to reduce reputational risk by enhancing customer royalty, brand, and reputation and credit risk by taking right decision about loan disbursement provided their institutional clients honestly disclose their both financial and non!financial performance.

/s under the approach, all the detailed information will be available in the website bank management will not be re uired to spend time completion of uestionnaires, surveys and other re uests for information.

/s the teams of finance and sustainability are re uired to perform their 7obs in association 2

it is an opportunity to bring coordination in the activities of different responsibility centres for the sake of organisational as well as social interest.
/s the Indian banks have already been technologically advanced it will not be difficult for them to implement the integrated reporting, which is, technology featured reporting system.

C!n)#usi!n It may be stated that self!interest along with e>tended interest is the road map for the sustainable development. ;ne organisation is made up of various forms of capital namely intellectual, financial, organisational, natural, and social capital. $herefore, the organisation is inclined to discharge its responsibilities toward the providers of capital by way of robust disclosure of its all sorts of activities. In this regard, integrated reporting is welcoming step towards this end. "owever, the present framework of it has certain loopholes and need further modification. (oreover, as Indian banks are the catalysts of the inclusive growth of the economy it is advisable to adopt the new concept of reporting because of its conse uence benefits for nation=s interest. Indian regulators of reporting practices vi8. '#I, )E#I and I&/I will have to play key role to make its successful implementation in the practice in order to reap the opportunities to be reinforced by it. (oreover, integrated reporting is only for those concerns who assume their responsibilities towards sustainable economic development. )o it must be mandatory instead of voluntary disclosure so as to leaving less scope to escape for less sustainability aware concerns. R$"$rn)$s:

2. #ihari, ).&. 301204. &orporate )ocial 'esponsibility for )ustainable *evelopment. The Indian .an%er, B3J4, /ugust, pp. A0!AJ.
2. &hakrabarty, %. &. 301224. :on!Financial 'eporting and 'isk (anagement for Financial

Institutions in India. Presented at the 4ational Conference, (umbai, Fune E. 'etrieved from Ohttp:DDrbidocs.rbi.org.inDrdocsD)peechesD5*FsD:F'I1E1E22F.pdfP A. +andhi, $. /nd L. *alvadi 301204. $riple #ottomline 'eporting Iet=s +ive / 5ush. Indian 5ournal of Accountin!, Gol. HIII 304, Fune, pp.E2!EB. @. "ossain, (. 3011J4: N$he E>tent of *isclosure in /nnual 'eports of #anking &ompanies: $he &ase of India=, European 5ournal of Scientific Research, 0A3@4, ECK!EJ1. 'etrieved fromO http:DDwww.euro7ournals.comDe7sr.htmP C. 5rince=s &harities 301204. Integrating!'eporting!and!Integrated!$hinking. 'etrieved fromOwww.accountingforsustainability.orgDwp!contentDuploadsD0120D1BD/@)! Integrating!'eporting!and!Integrated!$hinking.pdfP E. )harma, :. 301224. &)' practices and &)' 'eporting in Indian banking sector. International 6ournal of Economics and .usiness 7ana!ement, 2304, p.EC. B. www.globalreporting.org J. www.icicibank.com K. www.karmayog.com 21. www.sbi.co.in 22. www.theiirc.org

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