Multi-capital reporting in India

Transcription

1 Integrated Reporting Multi-capital reporting in India

2 Background Accounting practices have evolved through centuries 1 can 2 3 Integrated Reporting approach that can help investors understand the 4 Six Capitals companies 4 multi-capitalism in their internal thinking and external 1. (2017). Intangible Asset Market Value Study, Oceantomo. 2. (2018) Global Investor Survey: Anxious Optimism in a complex world, PwC 3. (September, 2014). Corporate Performance: What do investors want to know, PwC 4. integratedreporting.org 5. (2017, February 6) Integrated Reporting by listed companies, Securities Exchange Board of India Circular CIRCULARSEBI/HO/CFD/CMD/CIR/P/2017/10 2 PwC

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4 6 Intellectual capital is a new key element that broadly includes organisational knowledge-based intangibles such as intellectual property (like patents, copyrights, and licenses), investment in R&D and innovation. Financial capital Manufactured capital Intellectual capital Social and relationship capital Human capital Human capital is a competitive intangible asset. It embodies competencies, capabilities and experience. It is an opportunity to value the diverse cultural attributes and strengths of employees and people associated with the organisation. Social and relationship capital of the organisation with other institutes, with communities, groups of stakeholders and the society at large. Natural capital Natural capital includes all renewable and non-renewable environmental resources and processes that provide goods or services which includes air, water, land, minerals, forest, biodiversity and eco - systems. 6. (2013, March). Capitals: Background Paper on <IR>, IIRC. 4 PwC

5 20% Technology and Telecom 20% Finance and Banking 15% Automotive 20% Industrial 15% Consumer Goods 10% Pharma 7. (2013, December) International Integrated Reporting Council, The international <IR> framework, IIRC. Integrated Reporting - Multi-capital Reporting in India 5

6 Reporting across capitals such as: 8 8. (2017, February 6) Integrated Reporting by listed companies, Securities Exchange Board of India Circular CIRCULARSEBI/HO/CFD/CMD/CIR/P/2017/10 6 PwC

7 Natural capital* 80% 80% 75% 60% 60% 60% 55% 55% 50% 40% 35% 35% 20% 10% GHG emissions Energy consumption Renewables and energy conservation Water withdrawal by source Water recycled and reused Waste management Reduction of GHG emissions Energy intensity GHG emission intensity Water discharge by quality and destination Material utilisation Emissions of ozone-depleting substances (ODS) Biodiveristy Leed and green building Integrated Reporting - Multi-capital Reporting in India 7

8 Intellectual capital* Human capital* 95% 95% 95% 80% 75% 75% 65% 55% 55% 60% 45% 35% 40% 25% 20% R&D spend Collaborations Patents filed New product introductions Propreitory processes, software, knowledge Awards for innovation New product revenue Health & safety Training programs Hiring and turnover Employee grievance Gender diversity Employee engagement Freedom of association Employee satisfaction 8 PwC

9 100% 95% 95% 95% 85% 75% Details of programs Customer satisfaction CSR spend Stakeholder engagement Beneficiaries reached through CSR programs Sustainable sourcing perspective opportunities Integrated Reporting - Multi-capital Reporting in India 9

10 Materiality and connectivity of capitals An organisation creates value through a proper execution <IR> Framework model that links capitals across the entire 10 PwC

11 Materiality enables: Connectivity enables: change in one can impact another Integrated Reporting - Multi-capital Reporting in India 11

12 Connecting capitals to Sustainable Development Goals reporting such as the Sustainable Development Goals 9 9 CONTINUOUS CONSIDERATION OF SUSTAINABLE DEVELOPMENT ISSUES OVER TIME Value creation (preservation, diminution) over time Financial Mission and vision Financial Manufactured Intellectual Risks and opportunities Governance Strategy and resource allocation Manufactured Intellectual Business model SUSTAINABLE DEVELOPMENT Inputs Business activities Outputs Outcomes Human Performance Outlook Human Social and relationship Natural SUSTAINABLE DEVELOPMENT Social and relationship Natural EXTERNAL ENVIRONMENT Including limits on availability of capitals, availability of/potential for substitute capitals to achieve goals 9. Adams, C A (2017) The Sustainable Development Goals, integrated thinking and the integrated report, published by the IIRC and ICAS 12 PwC

13 Connecting capitals to business risks 10 Intellectual Human Natural Social and Relationship Business risks Cyber threats Protectionism Speed of technological change Availability of key skills Readiness to respond to crisis Rising employee benfits and persion costs Unemployment Changing working demographics Climate change and environmental damage Supply chain disruption Volatile energy costs Activist investors or other campaigners Changing consumer behaviour Geopolitical uncertainty Lack of trust in business New market entrants Over-regulation Populism Potential ethical scandals Social instability Terrorism Disclaimer: The above chart categorises business risks (from the 2018 PwC Global Investors Survey) to the most relevant capital and is for illustration only. It should be noted that in real business situations, risks may impact more than one capital. 10. (2018) Global Investor Survey: Anxious Optimism in a complex world, PwC Integrated Reporting - Multi-capital Reporting in India 13

14 Integrated thinking to drive a multi-capital approach integrated thinking Integrated thinking 11 incentive structure to encourage decision-makers to take 11. (February, 2016). Joining the Dots, CGMA. 14 PwC

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16 About PwC Contact details Manpreet Singh Ahuja Address: Phone: pwc.in This document does not constitute professional advice. The information in this document has been obtained or derived from sources believed by PricewaterhouseCoopers Private Limited (PwCPL) to be reliable but PwCPL does not represent that this information is accurate or complete. Any opinions or estimates contained in this document represent the judgment of PwCPL at this time and are subject to change without notice. Readers of this publication are advised to seek their own professional advice before taking any course of action or decision, for which they are entirely responsible, based on the contents of this publication. PwCPL neither accepts or assumes any responsibility or liability to any reader of this publication in respect of the information contained within it or for any decisions readers may take or decide not to or fail to take PricewaterhouseCoopers Private Limited. All rights reserved. In this document, PwC refers to PricewaterhouseCoopers Private Limited (a limited liability company in India having Corporate Identity Number or CIN : U74140WB1983PTC036093), which is a member SUB/August