The concept of Environmental, Social and Governance Reporting or ESG Reporting owes its origin to United Nations' Principles for Responsible Investment (PRI) in 2006. As per these principles Investment Companies were requested to include the Environmental, Social and Governance aspects in 'financial evaluation' of companies by the Investment Companies, which subsequently matured into 'developing sustainable investments'. In 2006, around 60 investment companies had applied ESG considerations, when they signed up for investing US $6.5 trillion dollars, which grew to 2450 investment companies measuring Assets Under Management of $80 trillion. (Source: https://www.forbes.com/sites/betsyatkins/2020/06/08/demystifying-esgits-history--current-status/?sh=22db35922cdd).
Business entities currently adopt this framework both as an internal tool to integrate environmental, social and governance aspects into the process of strategy formulation, planning and execution of the strategies as well as to 'boost' the image of the business entities in the eyes of the external world in order to facilitate 'smoothness' in raising of funds.
Sustainability factors are becoming a mainstream part of investment decision-making. There are increasing calls for companies to provide high-quality, globally comparable information on sustainability-related risks and opportunities, as indicated by feedback from many consultations with market participants.
There is also a strong desire to address a fragmented landscape of voluntary, sustainability-related standards and requirements that add cost, complexity and risk to both companies and investors. " (https://www.ifrs.org/groups/international-sustainability-standards-board/
An Integrated Report, as explained by IFRS Foundation, serves "to explain to providers of financial capital how an organization creates, preserves or erodes value over time". The Foundation, further states that an integrated report would benefit 'all stakeholders' "interested" in an organization's ability to create value over time. Thus while the scope in relation to 'stakeholders is broadbased", 'presence of interest' is an essential factor that distingusihes between (a) those stakeholders who participate in the process of creation of value and are interested in the organization's ability and (b) those stakeholders who participate in the process of creation of value but are 'not' interested in the organization's ability. Further, the 'reporting' is to 'only providers of financial capital'. Thus there is a 'gap' as far as the audience who the entity is reporting to in relation to providers of other 'capital stocks', especially, intellectuals, employees, society and the nature.
In order to enhance the awareness of the corporate entities in relation to the impact of their operations on a society as a whole and from the perspective of utilisation of resources, which are not to be restricted only to monetary capital, the concept of 'capital' has been broadened to include, Physical Capital, Human Capital, Intellectual Capital, Social and Relationship Capital and Natural Capital. The following links provide current status of the project on Integrated Report in the hands of the IFRS Foundation.