Abstract:
As global reporting standards continue to include sustainability
and Environmental, Social, and Governance (ESG) factors, Sri
Lanka is adjusting its corporate reporting practices to keep pace
with these changes. This chapter discusses how integrated
reporting and ESG disclosures are shaping financial accounting
practices in Sri Lanka, in line with international standards. Sri
Lanka has begun following the International Sustainability
Standards Board guidelines, with plans to apply IFRS S1 and S2
from 2025 for sustainability and climate related reporting. Local
regulators and the stock exchange have also taken steps to improve
ESG reporting rules. Based on a literature review and data analysis,
the chapter builds an ESG Quality Index and an ISSB Readiness
Score to understand how well companies are preparing to meet
global standards. Findings from 2024 show that more companies
are publishing integrated reports, with fifty reports released and
ten of them following the international framework. However,
challenges remain in areas such as consistency, selecting material topics, and connecting ESG information with financial results. To make progress, stronger policy support, training efforts, and better
alignment with international frameworks will be important.
