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Emerging ESG Action Landscape of 2013 reveals expectation mismatch between Indian business and investors
A recent research study by the working group on sustainability disclosure and reporting under the Sustainable Business Leadership Forum (SBLF) which analyzed the changing landscape and actions by Indian businesses and their supply chain surrounding Environmental, Social and Governance (ESG) parameters found increased management of impact metrics related to ESG but the lack of disclosure of performance regarding the same. This new focus on measuring, managing and disclosing non-financial metrics comes amidst an increasing demand from global customers and investors for ESG data as well as greater regulatory interest.
Policy push to ESG management and disclosure by businesses was provided by the 2011 launch of the National Voluntary Guidelines for Social, Environmental and Economic Responsibilities of Businesses (NVG-SEE) by Ministry of Corporate Affairs (Government of India) which is applicable for all Indian businesses and the 2012 Securities and Exchange Board of India (SEBI) circular mandating disclosure on ESG performance for the 100 largest publicly traded firms.
Neha Kumar, Project manager, GIZ is of the opinion that “The nine principles of NVGs help Indian businesses assess their sustainability criteria and goals. Integrating sustainability at the core of one’s business is the cornerstone of the NVGs. With SEBI mandating the ABRR, the reporting format based on the NVGs, India’s top 100 listed companies have already started to disclose, but meaningful disclosure and reporting needs to go beyond compliance, which in turn can lead to enhanced competitiveness and credibility of businesses. The role of investors and banks is important in creating a market which rewards responsible business action. Their own performance and practices need a much higher degree of integration of ESG.”
The goal of the research study was to assess the prevalence of ESG management and disclosure among firms across three sectors: (i) Pharmaceuticals and Chemicals, (ii) Automotive and Automotive Ancillary and (iii) Food/Agriculture/Consumer Products and analyze the preparedness to adopt enhanced management/disclosure systems. Researchers engaged with a broad spectrum of stakeholders including investors, businesses (small/large), government ministries, accountants, ratings agencies and business analytics firms to build a more informed view on ESG disclosure in India.
Pawan Mehra, Managing Director cKinetics, indicated that the “the findings of this report should serve as a wake-up call to the broader Indian ESG community and policy makers as well as enabling institutions should focus more efforts on accurately matching the kinds of data firms are producing with what the investors demand.”
More on the research is available at: http://sblf.sustainabilityoutlook.in/about-the-forum/sustainability-disc...
About 2013 Industry Working Group on Sustainability Disclosure and Reporting
In 2013 the Indian Institute of Corporate Affairs (Policy Lead), cKinetics, Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), and the Impact Investment Policy Collaborative (in association with the Initiative for Responsible Investment at Harvard University) convened a working group to facilitate a conversation about the expectations, concerns, challenges and realities surrounding ESG measurement/management/disclosure in the Indian market and identify how existing institutions can be leveraged to drive the adoption of E&S measurement and disclosure in India.
About Sustainable Business Leadership Forum
Sustainable Business Leadership Forum (SBLF) is an invitation-only Indian industry focused market development platform which equips organizations, managers and industry stakeholders on the ‘how’ of sustainability through a unique programmatic approach comprising of round the year programs and ‘on-ground industry oriented’ work. Instituted by Sustainability Outlook, the leading information marketplace on sustainability action, SBLF enables a unique exchange of thought leadership, business know-how and catalytic tools for enabling corporate transition towards sustainable business practices. Based on membership inputs and requests for focused research, the Forum facilitates creation of Industry Task Forces guided by industry catalysts and corporates. The advantages of members working as a group on common issues are:
- Build shared insight on sometimes, complex issues
- Pool in resources with other like-minded agencies and institutions
- Generate attention from the relevant customers, stakeholders, etc. that is larger than if done by members individually.