A recent study conducted by Carbon Masters on preparedness levels of top BSE-100 companies, indicated that 64% of the top affected companies are not prepared to submit SEBI’s prerequisite Business Responsibility (BR) report. This comes to wake, with companies requiring to submit this document along with their annual report, on or after 31st December 2012.
The Securities and Exchange Board of India (SEBI) first announced this requirement in November 2011, and later with a circular in August1 this year stating that non-financial reports should include environmental, social and governance initiatives, outlined as per National Voluntary Guidelines (NVG). SEBI envisions this proactive step would increase the transparency in business operations, thereby enabling stakeholders to measure companies on their ‘true performance.’
The Carbon Masters research identified more PSUs than Private companies have not reported to NVG or an international framework, such as Global Reporting Initiative (GRI). The sectors better prepared are Information Technology, followed closely by Infrastructure and Energy sectors, with the Healthcare and Finance sectors requiring considerable improvement. The study also critiqued subsidiary companies for being dependent on their parent company’s disclosure report, as the finer details on local initiatives are missed.
The research further graded the top quarter of the BSE listed companies against their climate change initiatives (a principle 6 requirement as per NVG guidelines). Only 36% of affected companies have disclosed their baseline carbon footprint and 20% of the companies have stated their carbon emission reduction targets. Mr. Som Narayan, co-founder of Carbon Masters pointed out that, “although some companies have shown leadership in disclosing their baseline carbon footprint we have a long way to go before all affected companies follow the suit. In establishing a carbon footprint baseline and emission reduction target, businesses have a clear understanding of their current operational emissions and where they’d like to be. A strategic carbon management plan would allow a company gain multiple benefits including reduced operating costs, while doing their bit to tackle climate change”.
Carbon Masters is a Scottish Development International supported enterprise with its headquarters in Edinburgh and branch offices in three other countries including Bangalore, India. The company has had extensive experience in delivering carbon management projects and providing reports on Corporate Social Responsibility and Sustainability for various international clients. Mr. Narayan further pointed out that, “the annual report and Business Responsibility report need to be correlated. However, companies make the error to regard them separately. A non-financial report should document an integrated, substantiated, holistic representation of the company’s sustainable business model.”
 SEBI (13 August 2012) Business Responsibility Reports Circular (CIR/CFD/DIL/8/2012).
- SEBI released a first issue of Business Responsibility Reporting in November 2011. It was re-issued in August 2012, with further details on the framework and that it would be mandatory under Clause 55.
- National Voluntary Guidelines provide 9 core principles that revolve around three main themes –Environmental, Social and Governance (ESG). Details are available on the SEBI website. Source: http://www.mca.gov.in/Ministry/latestnews/National_Voluntary_Guidelines_2011_12jul2011.pdf
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