Abstract
M.Com. (International Accounting)
Society is increasingly placing pressure on business and industry to recognise their role in the destruction of the global environment and to acknowledge their responsibility to reverse this damage. Corporate reporters have reacted by gradually migrating from reporting which was once almost entirely focused on financial outputs towards mechanisms which offer a more holistic view of communication with stakeholders, namely, Integrated Reporting (IR).
The primary objective of this study is to determine to what extent the Corporate Natural Capital Accounting (CNCA) Framework could be used to report on natural capital within an integrated report. The study begins with a literature review that introduces the concept of natural capital and the need for effective communication to stakeholders of the impact that business and industry may have thereon.
The literature review examines the current corporate reporting landscape, describing the various tools, standards and frameworks which are available to organisations, allowing them to report on their relationship with natural capital to their stakeholders.
The literature review identifies IR as a dominant vehicle for communicating natural capital impacts to stakeholders. The study highlights IR’s main weaknesses and proposes the use of the CNCA Framework as a potential supplement for use within the integrated report as a means of addressing those weaknesses. This study details the reporting requirements relating to natural capital as outlined in the Integrated Reporting Framework (IR Framework) and the CNCA Framework respectively. The guiding principles of the IR Framework are then compared to the prescribed requirements of the CNCA Framework through a comparative analysis, in order to determine the extent to which the two frameworks are aligned.
The study found that although the two frameworks are aligned in many respects, some of the guiding principles contained in the IR Framework are not directly addressed by the CNCA framework and so, employment of the CNCA Framework within the IR Framework will not automatically result in reporting that meets all of the requirements of the IR Framework.