SUSTAINABILITY REPORTING

India Inc is less transparent than its peers in Brazil, China and South Africa when it comes to reporting about economic, social, environmental and governance issues concerning their business, according to a non-profit organisation working for a sustainable global economy.

But 80 companies in India that have set up a reporting mechanism come up with the best disclosures worldwide, says the Global Reporting Initiative (GRI).

A sustainability report is an organisational report that gives information about a company’s economic, environmental, social and governance performance. GRI says for companies and organisations, sustainability — the capacity to endure, or be maintained — is based on performance in these four key areas. Among the lead adopters of this practice in India are Larsen & Toubro, JSW Steel and the Mahindra Group.

“It actually benefits everyone. It benefits the business, because through a reporting requirement, a company can review its weak points, opportunities and risks across governance issues. Measuring and reviewing continually can help improve the company,” says Aditi Haldar, Director of the GRI’s Focal Point India, on sustainability reporting.

The GRI argues that sustainability reporting is a vital step for change toward a global economy that combines long-term profitability with social justice and environmental care.

Do Indian companies really have such a poor track record when it comes to corporate social responsibility and environmental protection? A review of the annual reports of Sensex-listed companies reveals that most companies devote at least some space to outline their CSR activities and research and development initiatives to conserve energy and safeguard the environment.

But for the GRI, these disclosures are not up to the benchmark it has set and popularised globally — through strategic partnerships with the United Nations Environment Programme, Organisation for Economic Cooperation and Development and International Organisation for Standardisation — for sustainability reporting.

“We have a standard framework — the sustainability reporting guidelines or GRI guidelines. Disclosures should be across the triple bottomline: environmental, social, economic and governance,” says Haldar. “It must be a separate report,” she stresses. Clearly, the Indian authorities line of thinking mirrors GRI’s mindset. Market regulator SEBI on August 13 came out with a comprehensive format for sustainability reporting by Indian companies, which makes it mandatory for the 100 largest companies to furnish a separate report alongside their annual report that details efforts to social and environmental concerns, governance issues, energy conservation, utilisation of small local suppliers and recycling, among other parameters.

SEBI has directed the top 100 companies to bring out sustainability reports from the next financial year and the requirement will be gradually expanded to other listed entities.

arvind.jayaram@thehindu.co.in

(This article was published on August 23, 2012)
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