Bombay Stock Exchange (BSE)
Bombay Stock Exchange (BSE)

Companies have largely fared well on disclosures related to policy and governance compared to environment and social factors, according to an analysis of 50 listed companies on the basis of ESG practices.

The report titled 'ESG (Environment, Social and Governance) analysis on 50 listed companies in India' by leading stock exchange NSE noted that better scores could be due to governance reforms transforming into laws by various regulatory agencies within the country in the last two decades.

Similarly, many policies have been mandated to be prepared by regulatory authorities and hence companies have scored higher on policy disclosure parameters, the report released on Friday said.

The report -- based on an analysis of ESG practices across 50 listed companies in 12 different sectors -- noted that all these firms had a policy regarding employees, stakeholders, environment and corporate social responsibility.

"Companies have largely scored better on Policy disclosures followed by Governance factor compared to Environment and Social factors," it said.

However, very few companies had framed policy on public advocacy, may be owning to the fact that in India advocacy is seen in bad light hence if at all done, is done in a non-transparent manner, it said.

"Our approach has to be to invest for the long term with sustainability at the core. Companies that don't adapt their business models will face increasing public, legal and regulatory pressure and are at risk of compromising stakeholder value," NSE Managing Director and CEO Vikram Limaye said.

According to him, the value proposition of ESG disclosures need to be better articulated to motivate companies and boards to make improvements in this area and not to treat them as a check the box compliance.

As per the report, 42 companies stated that they have environment management systems and 22 have energy management system in place. As many as 45 companies disclosed data on Greenhouse Gases (GHG) or carbon emissions and 35 firms disclosed data on GHG emission intensity or specific GHG emissions.

"During the FY 2018-19, total 185 sexual harassment complaints were reported by 30 sample companies. No complaints were reported by 20 companies," the report said.

Also, it said that only 16 companies made disclosures regarding whistle blower complaints while 10 firms did not adequately disclose whether it has a mechanism for whistle blowers.

The report also noted that investors are realising that businesses cannot survive for long without caring for environment and society.

Performance on Environmental, Social and Governance factors was evaluated using a particular model.

(To download our E-paper please click here. The publishers permit sharing of the paper's PDF on WhatsApp and other social media platforms.)

Free Press Journal