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Rising regulatory push raises compliance level on public disclosure of ESG strategies: Report

Rising regulatory push raises compliance level on public disclosure of ESG strategies: Report

Increasing regulatory push has seen an increasing compliance level on public disclosure of environmental, social and governance (ESG) strategies and performance data, with as much as 98 per cent of domestic companies publishing sustainability reports, according to a report. The Companies Act, 2013, has made impact, affirmative actions and investments mandatory through the compulsory 2 per cent CSR spends. While, the Securities and Exchange Board of India has mandated the 1,000 largest publicly listed companies to report on their ESG practices, under provisions of the newly introduced business responsibility and sustainability report (BRSR) guidelines.

Both these measures have pushed up the level of disclosures.

When it comes to ESG strategies, disclosures and performance, around 98 per cent of the 163 domestic companies surveyed regularly publish sustainability reports and 41 per cent of them do that in accordance with the global reporting initiative standards, an analysis of these metrics by global financial markets data and infrastructure supplier Refinitiv, which is a London bourse arm.

As against this, the numbers are much lower in South Africa at 39 per cent, Brazil at 31 per cent, China at 40 per cent, Hong Kong at 50 per cent, and 39 per cent globally.

As much as 98 per cent of domestic companies respect and promote human rights compared to 46 per cent of overall universe and Brazil (52), China (31), Hong Kong (72), said the report.

More than two-thirds (64 per cent) of domestic businesses respect and promote the well-being of its employees, including those in their value chains under trade union representation, while 72 per cent of respect the interests of and are responsive to all its stakeholders.

The report attributes the high scores to the policies for equal voting rights (100 per cent), veto power golden share (99 per cent), policies for community involvement (99 per cent), CSR sustainability reporting (98 per cent), and CSR sustainability committees (98 per cent).

It also attributes the scores to internal audit department reporting (96 per cent), whistleblower protection (96 per cent), policy skills training (95 per cent), and policy energy efficiency at 94 per cent.

None of the companies in the study score as high as this on any.

In trade union representation also, Indian companies top with 64 per cent, while the global average is 46 per cent, while in China it a paltry 13 per cent, in South Africa it is 56 per cent, in Brazil its 54 per cent and just 22 per cent in Hong Kong, said the report.

At the same time, the domestic companies fare poorly on the following key metrics -very low carbon offsets/credits (which is only 1 per cent in India), products recovered to recycle (which again is only 1 per cent), elimination of cumulative voting rights (1 per cent), written consent requirements (1 per cent), and fair price provision (1 per cent).

They also did poor on expanded constituency provision (1 per cent), revenue from environmental products (1 per cent), revenue from healthy food or products (1 per cent), and no chief persity officer at all.

But the countries compared in the analysis fare better than their Indian peers by wide margin of 2 to 30 per cent on an average.

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