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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Integrated Reporting Framework, Global Reporting Initiative Framework and Business Responsibility and Sustainability Reporting

Deccan Steel Ltd's board is preparing an integrated report. The CFO says the report should show how the company's strategy, governance, performance and prospects lead to value creation across the short, medium and long term, using the six capitals. Which statement about the Integrated Reporting Framework is correct?

The Integrated Reporting Framework uses six capitals: financial, manufactured, intellectual, human, social and relationship, and natural. It shows how an organisation creates value over time. It is principles-based and not a statute, and the nine principles belong to the NGRBC and BRSR rather than to it.

  1. AIts six capitals are financial, manufactured, intellectual, human, social and relationship, and naturalCorrect
  2. BIts six capitals are equity, debt, reserves, assets, goodwill and brand
  3. CIt lists exactly nine principles that mirror the NGRBC principles
  4. DIt is a statute that prescribes penalties for non-compliance by listed companies

Explanation

The framework uses six capitals: financial, manufactured, intellectual, human, social and relationship, and natural. The accounting items in the second option are not the capitals. The nine principles belong to the NGRBC and BRSR, and the framework is a principles-based voluntary framework, not a statute.

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