Sustainability Reporting- A Recent
Trend and Future Prospects in India
Associate Professor, Finance, School of
JRE Group of Institutions, Greater Noida
Climate change, social degradation, economic crisis and complexities
in business have raised serious concern over organisations' sustainability. Sustainability
reporting is a broad term considered synonymous with others used to describe
reporting on economic, environmental, and social impacts (e.g., triple bottom
line, corporate responsibility reporting, etc.). The purpose of a sustainability
reporting is the practice of measuring, disclosing, and being accountable to
internal and external stakeholders for organizational performance towards the
goal of sustainable development.
Currently in India, only few
companies have adopted such reporting practices as compared to other developed
countries like Japan, USA etc. With the growing concern on social and
environmental issues worldwide, this decade is going to see paradigm shift in
reporting standards on sustainability.
Global Reporting Initiative is a
non-profit organization that works towards a sustainable global economy by providing
sustainability reporting guidance. GRI pioneered and developed a comprehensive
sustainability reporting framework that is widely used around the world.
This article explores the guidelines of GRI’s
sustainability reporting standards. It also unveils recent reporting trends of
the Indian organisations on sustainability performances and future prospects.
Sustainability, Triple Bottom Line, GRI, Disclosure Frameworks, Corporate Social
An organisation needs to
be financially self sufficient to be able to become sustainable in the long
term. Once this primary need for financial capital has been met, the
organisation then needs to be socially responsible. This is achieved by
ensuring that its governance and workplace practices and its environmental and
social impact are self monitoring and conform to society’s expectations and
ethical values. Only then a company can achieve sustainability in the long
Relationship between sustainability and financial self-sufficiency
Evolution of the concept of
1919, a landmark judgment was given by the Supreme Court of the State of
Michigan, USA in the case of Dodge v. Ford Motor Company. The court said that
the primary objective of a business is to make profits and that any business is
responsible to its shareholders and not to the community as a whole or to its
employees. To date this judgment is treated as a fundamental reference point in
relation to the responsibilities of a business and the inherent principle in it has not been overruled by
Laureate Milton Friedman (1970) wrote that the responsibility of a business is
increase profits and that engaging in activities which discharge the corporate
social responsibilities (CSRs)
of a business is an instance of 'agency
conflict' or a conflict between managers and shareholders. Friedman explains
further that CSR activities are undertaken by
managers to their personal needs and at the expense
of the shareholders. Also, he even went on to say that in a free enterprise
society, CSR reflects an inappropriate use of corporate funds.
the early 1980s, social scientists have moved away from the theory of agency as
propagated by Friedman and gravitated towards a new model developed by Peston
and Caroll, which was embodied in a structure they called the “corporate social
performance” (CSP) framework, which combines the principles and philosophy of
societal needs with the economic responsibilities of a business.
(1984) defined stakeholders as “any group or individual who can affect or is affected
by the achievements of an organisation's objectives”. The stakeholder’s theory
asserts that firms have relationships with many constituent groups and that
these stakeholders both affect and are affected by the actions of the firm. In
1984, Freeman argued that the systematic attention of the stakeholders interest
is critical to the success of a firm and that management must pursue action that
are optimal for a broad class of stakeholders rather than those that serve only
to maximise shareholder interests.
principles set the path for more research and understanding of these theories and
led to the integration of the environmental, social and governance
responsibilities of a business with the otherwise predominant economic aspects.
The stakeholder concept has facilitated the inclusion of the sustainability
concept in the core business practices of a company.
changing global environment is challenging companies to look beyond financial
performance to drive business. Business leaders are increasingly realizing the
need to integrate environmental and social issues within the business strategy.
In a world of changing expectations, companies must account for the way they
impact the communities and environments where they operate. Climate change, community
health, education and development, and business sustainability are some of the
most important issues of this decade. Businesses are increasingly involved in
these areas as are their clients and their people. This raises the importance
of accurately and transparently accounting for and reporting these activities.
means different things
to different people. The most often quoted definition is from the Brundtland Commission
(1987) which states that sustainable development is "Development that
meets the needs of the present without compromising the ability of future generation
to meet their own needs." Sustainability is, therefore, more of a journey
that a destination wherein ideals, values and measurement metrics are in a
constant state of evolution.
The Triple Bottom Line (TBL), a term coined by Elkington (l997) implies that corporation should
focus “not just on the economic value they add but also on the environmental and social value
they add – and destroy".
As Deegan (1999) indicated, “for an organisation or community to be
sustainable, it must be financially secured (as evidenced through such measures
as profitability), it must minimise (or ideally eliminate) its negative
environment impact, and it must act in conformity with society’s expectation”.
While Sustainability Reporting is a decade old idea, it is
relatively in its early years with the methodology evolving constantly. Still,
many nations and organizations have started to understand the concept and
incorporate it in their business functions. Sustainability Reporting is a
process for publicly disclosing an organizations economic, social and
environmental performance. As with any disclosure, the Sustainability Report
lays bare the organizations performance to public scrutiny. What distinguishes the
Sustainability Report from other reports is the fact that it makes an
organization look at its business from every possible quarter in a single
document. In an ideal world, the organization’s stakeholders would analyze the
report and give constructive feedback to the organization to improve its
But Sustainability Reports need to serve a purpose. It should be
possible to derive information and knowledge out of them so that they can be
compared across organizations. For this purpose, common standards need to be
developed. It was in this context that the Global Reporting Initiative (GRI) was
founded in 1997 as a project under Ceres, a Boston (US) based national network
of investors, environmental organizations and other public interest groups working
with companies and investors to address sustainability challenges such as
global climate change. In 2002, GRI became an independent international NGO and
its secretariat has since been located in Amsterdam, The Netherlands. Its main
role was to set up a multi-stakeholder process to define guidance to
organizations on what issues they should measure and report on. GRI pioneered and developed a comprehensive sustainability
reporting framework that is widely used around the world.
4. GRI reporting framework:
Sustainability reports based on the GRI
Reporting framework disclose outcomes and results that occurred within the
reporting period in the context of the organization’s commitments, strategy,
and management approach. Reports can be used for the following purposes, among
assessing sustainability performance with respect to laws, norms, codes, performance
standards, and voluntary initiatives;
the organization influences and is influenced by expectations about sustainable
within an organization and between different organizations over time.
The GRI Reporting Framework is intended to serve as a generally accepted framework for
reporting on an organization’s economic, environmental, and social performance.
It is designed for use by organizations of any size, sector, or location. It
takes into account the practical considerations faced by a diverse range of organizations
– from small enterprises to those with extensive and geographically dispersed
The GRI Reporting Framework contains
general and sector-specific content that has been agreed by a wide range of
stakeholders around the world to be generally applicable for reporting an
organization’s sustainability performance.
4.1 Standard Disclosures: The
Guidelines identify information that is relevant and material to most organizations
and of interest to most stakeholders. There are three different types of
disclosures suggested by GRI.
Strategy and Profile: Disclosures
that set the overall context for understanding organizational performance such
as its strategy, profile, and governance.
Management Approach: Disclosures
that cover how an organization addresses a given set of topics in order to
provide context for understanding performance in a specific area.
Performance Indicators: Indicators
that elicit comparable information on the economic, environmental, and social
performance of the organization.
Performance Indicators: The
Sustainability Performance Indicators is
organized by economic, environmental, and social categories. Social Indicators
are further categorized by Labour, Human Rights, Society, and Product
Responsibility. Each category includes a Disclosure on Management Approach and
a corresponding set of Core and Additional Performance Indicators. Core
Indicators have been developed through GRI’s multi-stakeholder processes, which
are intended to identify generally applicable indicators and are assumed to be
material for most organizations. An organization should report on Core
Indicators unless they are deemed not material on the basis of the GRI
Reporting Principles. Additional Indicators represent emerging practice or
address topics that may be material for some organizations, but are not material
for others. The Disclosure(s) on Management Approach should provide a brief
overview of the organization’s management approach to the Aspects defined under
each Indicator Category in order to set the context for performance
information. The organization can structure its Disclosure(s) on Management
Approach to cover the full range of Aspects under a given category or group its
responses on the Aspects differently.
4.2.1 Economic Performance Indicators:
The economic dimension of sustainability concerns
the organization’s impacts on the economic conditions of its stakeholders and
on economic systems at local, national, and global levels. The Economic
i) Flow of capital among different stakeholders; and
ii) Main economic impacts of the organization throughout
Financial performance is fundamental to
understanding an organization and its own sustainability. However, this
information is normally already reported in financial accounts. What is often
reported less, and is frequently desired by users of sustainability reports, is
the organization’s contribution to the sustainability of a larger economic
system. Following are the economic performance indicators.
EC1 (Core) :
Direct economic value generated and distributed, including revenues, operating
costs, employee compensation, donations and other community investments,
retained earnings, and payments to capital providers and governments.
(Core): Financial implications and other risks and opportunities for the
organization’s activities due to climate change.
Coverage of the organization’s defined benefit plan obligations.
(Core): Significant financial assistance received from government.
(Add): Range of ratios of standard entry level wage by gender compared to
local minimum wage at significant locations of operation.
(Core): Policy, practices, and proportion of spending on locally-based
suppliers at significant locations of operation.
(Core): Procedures for local hiring and proportion of senior management
hired from the local community at locations of significant operation.
Indirect Economic Impacts
(Core): Development and impact of infrastructure investments and
services provided primarily for public benefit through commercial, in kind, or pro bono engagement.
EC9 (Add): Understanding
and describing significant indirect economic impacts, including the extent of
4.2.2 Environmental Performance Indicators: The
environmental dimension of sustainability concerns an organization’s impacts on
living and non-living natural systems, including ecosystems, land, air, and water.
Environmental Indicators cover performance related to inputs (e.g., material,
energy, water) and outputs (e.g., emissions, effluents, waste). In addition, they
cover performance related to biodiversity, environmental compliance, and other
relevant information such as environmental expenditure and the impacts of
products and services.
(Core): Materials used by weight or volume.
EN2 (Core): Percentage
of materials used that are recycled input materials.
EN3 (Core): Direct
energy consumption by primary energy source.
EN4 (Core): Indirect
energy consumption by primary source.
EN5 (Add): Energy
saved due to conservation and efficiency improvements.
EN6 (Add): Initiatives
to provide energy-efficient or renewable energy based products and services,
and reductions in energy requirements as a result of these initiatives.
EN7 (Add): Initiatives
to reduce indirect energy consumption and reductions achieved.
EN8 (Core): Total
water withdrawal by source.
EN9 (Add): Water
sources significantly affected by withdrawal of water.
EN10 (Add): Percentage
and total volume of water recycled and reused.
EN11 (Core): Location
and size of land owned, leased, managed in, or adjacent to, protected areas and
areas of high biodiversity value outside protected areas.
EN12 (Core): Description
of significant impacts of activities, products, and services on biodiversity in
protected areas and areas of high biodiversity value outside protected areas.
(Add): Habitats protected or restored.
EN14 (Add): Strategies,
current actions, and future plans for managing impacts on biodiversity.
EN15 (Add): Number
of IUCN Red List species and national conservation list species with habitats
in areas affected by operations, by level of extinction risk.
Aspect: Emissions, Effluents, and Waste
EN16 (Core): Total
direct and indirect greenhouse gas emissions by weight.
EN17 (Core): Other
relevant indirect greenhouse gas emissions by weight.
EN18 (Add): Initiatives
to reduce greenhouse gas emissions and reductions achieved.
EN19 (Core): Emissions
of ozone-depleting substances by weight.
EN20 (Core): NO,
SO, and other significant air emissions by type and weight.
EN21 (Core): Total
water discharge by quality and destination.
EN22 (Core): Total
weight of waste by type and disposal method.
EN23 (Core): Total
number and volume of significant spills.
EN24 (Add): Weight
of transported, imported, exported, or treated waste deemed hazardous under the
terms of the Basel Convention Annex I, II, III, and VIII, and percentage of
transported waste shipped internationally.
EN25 (Add): Identity,
size, protected status, and biodiversity value of water bodies and related habitats
significantly affected by the reporting organization’s discharges of water and
Aspect: Products and Services
EN26 (Core): Initiatives
to mitigate environmental impacts of products and services, and extent of
EN27 (Core): Percentage
of products sold and their packaging materials that are reclaimed by category.
EN28 (Core): Monetary
value of significant fines and total number of non-monetary sanctions for
noncompliance with environmental laws and regulations.
EN29 (Add): Significant
environmental impacts of transporting products and other goods and materials
used for the organization’s operations, and transporting members of the workforce.
EN30 (Add): Total
environmental protection expenditures and investments by type.
Performance Indicators: The social dimension of
sustainability concerns the impacts an organization has on the social systems
within which it operates. The GRI Social Performance Indicators identify key Performance
Aspects surrounding labour practices, human rights, society, and product responsibility.
188.8.131.52 Labour Practices and Decent Work Performance
LA1 (Core): Total
workforce by employment type, employment contract, and region, broken down by
LA2 (Core): Total
number and rate of new employee hires and employee turnover by age group, gender,
LA3 (Add): Benefits
provided to full-time employees that are not provided to temporary or part time
employees, by significant locations of operation.
Aspect: Labor/Management Relations
LA4 (Core): Percentage
of employees covered by collective bargaining agreements.
LA5 (Core): Minimum
notice period(s) regarding operational changes, including whether it is specified
in collective agreements.
Aspect: Occupational Health and Safety
LA6 (Add): Percentage
of total workforce represented in formal joint management–worker health and safety
committees that help monitor and advise on occupational health and safety programs.
LA7 (Core): Rates
of injury, occupational diseases, lost days, and absenteeism, and total number of
work-related fatalities, by region and by gender.
LA8 (Core): Education,
training, counselling, prevention, and risk-control programs in place to assist
workforce members, their families, or community members regarding serious
LA9 (Add): Health
and safety topics covered in formal agreements with trade unions.
Aspect: Training and Education
LA10 (Core): Average
hours of training per year per employee by gender, and by employee category.
LA11 (Add): Programs
for skills management and lifelong learning that support the continued employability
of employees and assist them in managing career endings.
LA12 (Add): Percentage
of employees receiving regular performance and career development reviews, by
Aspect: Diversity and Equal Opportunity
LA13 (Core): Composition
of governance bodies and breakdown of employees per employee category according
to gender, age group, minority group membership, and other indicators of
Aspect: Equal Remuneration for Women and Men
LA14 (Core): Ratio
of basic salary and remuneration of women to men by employee category, by significant
locations of operation.
(Core): Return to work and retention rates after parental leave, by
184.108.40.206 Human Rights: There
is growing global consensus that organizations have the responsibility to
respect human rights. Human rights Performance Indicators require organizations
to report on the extent to which processes have been implemented, on incidents
of human rights violations and on changes in the stakeholders’ ability to enjoy
and exercise their human rights, occurring during the reporting period. Among
the human rights issues included are non discrimination, gender equality,
freedom of association, collective bargaining, child labor, forced and
compulsory labor, and indigenous rights.
Human Rights Performance Indicators
Aspect: Investment and Procurement Practices
HR1 (Core): Percentage
and total number of significant investment agreements and contracts that include
clauses incorporating human rights concerns, or that have undergone human rights
HR2 (Core): Percentage
of significant suppliers, contractors, and other business partners that have
undergone human rights screening, and actions taken.
HR3 (Core): Total
hours of employee training on policies and procedures concerning aspects of
human rights that are relevant to operations, including the percentage of
HR4 (Core): Total
number of incidents of discrimination and corrective actions taken.
Aspect: Freedom of Association and Collective Bargaining
HR5 (Core): Operations
and significant suppliers identified in which the right to exercise freedom of association
and collective bargaining may be violated or at significant risk, and actions taken
to support these rights.
Aspect: Child Labor
HR6 (Core): Operations
and significant suppliers identified as having significant risk for incidents
of child labor, and measures taken to contribute to the effective abolition of
Aspect: Forced and Compulsory Labor
HR7 (Core): Operations
and significant suppliers identified as having significant risk for incidents
of forced or compulsory labor, and measures to contribute to the elimination of
all forms of forced or compulsory labor.
Aspect: Security Practices
HR8 (Add): Percentage
of security personnel trained in the organization’s policies or procedures concerning
aspects of human rights that are relevant to operations.
Aspect: Indigenous Rights
HR9 (Add): Total
number of incidents of violations involving rights of indigenous people and
HR10 (Core): Percentage
and total number of operations that have been subject to human rights reviews
and/or impact assessments.
HR11 (Core): Number
of grievances related to human rights filed, addressed and resolved through
formal grievance mechanisms.
220.127.116.11 Society: Society
Performance Indicators focus attention on the impacts organizations have on the
local communities in which they operate, and disclosing how the risks that may
arise from interactions with other social institutions are managed and
mediated. In particular, information is sought on the risks associated with
bribery and corruption, undue influence in public policy-making, and monopoly
Society Performance Indicators
Aspect: Local Communities
SO1 (Core): Percentage
of operations with implemented local community engagement, impact assessments,
and development programs.
SO2 (Core): Operations
with significant potential or actual negative impacts on local communities.
SO3 (Core): Prevention
and mitigation measures implemented in operations with significant potential
or actual negative impacts on local communities.
SO4 (Core): Percentage
and total number of business units analyzed for risks related to corruption.
SO5 (Core): Percentage
of employees trained in organization’s anti-corruption policies and procedures.
SO6 (Core): Actions
taken in response to incidents of corruption.
Aspect: Public Policy
SO7 (Core): Public
policy positions and participation in public policy development and lobbying.
SO8 (Add): Total
value of financial and in-kind contributions to political parties, politicians,
and related institutions by country.
Aspect: Anti-Competitive Behavior
SO9 (Add): Total
number of legal actions for anticompetitive behavior, anti-trust, and monopoly
practices and their outcomes.
SO10 (Core): Monetary
value of significant fines and total number of non-monetary sanctions for
noncompliance with laws and regulations.
18.104.22.168 Product Responsibility: Product
Responsibility Performance Indicators address the aspects of a reporting
organization’s products and services that directly affect customers, namely,
health and safety, information and labelling, marketing, and privacy. These
aspects are chiefly covered through disclosure on internal procedures and the
extent to which these procedures are not complied with.
Product Responsibility Performance Indicators
Aspect: Customer Health and Safety
PR1 (Core): Life
cycle stages in which health and safety impacts of products and services are assessed
for improvement, and percentage of significant products and services categories
subject to such procedures.
PR2 (Add): Total
number of incidents of non-compliance with regulations and voluntary codes
concerning health and safety impacts of products and services during their life
cycle, by type of outcomes.
Aspect: Product and Service Labelling
PR3 (Core): Type
of product and service information required by procedures, and percentage of significant
products and services subject to such information requirements.
PR4 (Add): Total
number of incidents of non-compliance with regulations and voluntary codes concerning
product and service information and labelling, by type of outcomes.
PR5 (Add): Practices
related to customer satisfaction, including results of surveys measuring customer
Aspect: Marketing Communications
PR6 (Core): Programs
for adherence to laws, standards, and voluntary codes related to marketing communications,
including advertising, promotion, and sponsorship.
PR7 (Add): Total
number of incidents of non-compliance with regulations and voluntary codes concerning
marketing communications, including advertising, promotion, and sponsorship by
type of outcomes.
Aspect: Customer Privacy
PR8 (Add): Total
number of substantiated complaints regarding breaches of customer privacy and losses
of customer data.
PR9 (Core): Monetary
value of significant fines for noncompliance with laws and regulations
concerning the provision and use of products and services.
Policy initiatives by Indian Government
on corporate social responsibility and sustainable development:
With increasing importance of India as a global economy and its role
at crucial international forums dealing with economic and climate change
issues, the Finance Ministry decided in 2011 to expand the scope of the annual
Economic Survey to include a chapter on the topic of financing of climate
change. The survey discusses the effect of climate change in India, the government
initiatives, financing and overall strategy.
India has many
publicly-funded programs for the
prevention and control of climate risks and issues
relating to sustainable development. One of
the major objectives of many rural development and
poverty upliftment programmes is the reduction of vulnerability to risks
arising out of climate change.
Banks have been assigned a special role in the economic development
of the country, and the Reserve Bank of India, the banking regulator, has prescribed that certain percentage
of bank lending should be allocated to developmental sector called the “Priority
Sector”. In addition, banks have begun to realise their role as multipliers for
responsible and sustainable business as they increasingly integrate evaluation
on sustainability as one of the key inputs to their decision on financing and
valuation of projects. Similarly, the Charter on "Corporate Responsibility
for Environmental Protection (CREP)" from Ministry of Environment & Forest
(MoEF) looks beyond the compliance of regulatory norms for prevention & control
of pollution through various measures including waste minimisation, in-plant
process control & adoption of clean technologies. The Charter set targets
concerning conservation of water, energy, recovery of chemicals, reduction in pollution,
elimination of toxic pollutants, process & management of residues that are
required to be disposed of in an environmentally sound manner, listing action
points for pollution control for various categories of highly polluting industries.
Financial reporting in India includes mandatory reporting on
environment and social matters such as on consumption of energy, use of raw
materials and intermediaries, conservation efforts, accounting for environment
cost, and disclosures on liability for environment issues. Labour and
industrial laws are also well established and companies are required to report
on matters such as salaries, wages and benefits paid to employees and the
status of payment towards retirement and social benefits.
The Ministry of Corporate Affairs released Voluntary Guidelines on
Social, Environmental and Economic Responsibilities of Business (NVGs) in July
2011 after considerable stakeholder consultations. They are compatible with
globally acceptable guidelines on sustainability reporting. The GRI focal point
India and the GIZ India have supported and promoted the creation of the NVG through
the IICA-GIZ CSR Initiative.
Recently, the department of public enterprises has issued guidelines
on Sustainable Development and CSR for Central Public Sector Undertakings (CPSEs).
These guidelines stipulate how much and how CPSEs should invest and report on Corporate
Social Responsibility (CSR). The CSR budget mandated range from 0.5 percent to 5
percent of the profit depending on the net profit of the CPSE.
A recent decision taken by the Securities and Exchange Board of India
(SEBI) mandates that listed entities should submit Business Responsibility report
as a part of their annual reports, which would describe measures taken by them
along the key principles enunciated in the 'National Voluntary Guidelines on
Social, Environmental and Economic Responsibility of Business' (NVGs) framed by
the Ministry-of Corporate Affairs (MCA).
To start with, this requirement would be applicable to the top 100
companies in terms of market capitalisation and would be extended to other companies
in a phased manner. This decision indicates the importance that the Government
of India places on the fulfilment of environmental, social and governance
responsibilities of businesses.
The new Company's Bill
tabled in the Parliament in December 2011 is a key steps towards strengthening
corporate governance and business sustainability measures. The new Bill suggest
that Every company with a net worth exceeding Rs. 5 billion or a turnover exceeding
billion or profit exceeding Rs. 50 million should
form a committee of three or more directors, including at least one independent
director, to recommend activities for discharging corporate social responsibilities
in such a manner that the company would spend at least 2 percent of its average
profits of the previous three years on CSR. The company is also required to
disclose its activities in its report or on its website, and to institute a
formal policy on CSR.
reporting trends in India and around the world:
Indian companies have
been reporting on sustainability since 2001 by using the GRI Framework,
following the Carbon Disclosure Project (CDP) or completing the UN Global
Compact's Communication of Progress (CoP). The process of evolution for most
companies has been to initiate the reporting process under the CDP or the UNGC
CoP, and later progress into reporting under the GRI Framework, which is based
on both principles and standard disclosures, including performance indicators.
However, a small number of companies report under all the three reporting
norms. The number of companies reporting on sustainability has been increasing
but is still relatively small as compared to the total number of companies that
are publicly traded in India.
The first version of
the GRI Guidelines was issued in 2000. A second generation of the guideline known
as G2 was unveiled in 2002 at the World Summit on Sustainable Development in Johannesburg.
Some Indian companies started reporting on the G2 framework from the year it was
launched in 2002. Since then, the number of reporting companies has increased
steadily over the years. It can also be observed that the growth rate of
sustainability reporting is higher in India as compared to China and USA in the
period from 1999 to 2009.
Figure-2: Growth rate in Sustainability Reporting
Source: GRI Sustainability
launched the third generation of its Guidelines, G3, in 2006 and Indian
companies transitioned to the G3 Guidelines in 2007; all reports since 2009 are
based on the G3 guidelines. In a recent analysis by GRI, it has been observed that Indian companies are producing the
highest proportion of complete report globally, implying the disclosure of a
complete set of information that is relevant to the reporting organisation and
external assurance. In March 2011, GRI published the G3.1 guidelines - an
update and completion of G3, with expanded guidance on reporting gender, community
and human rights- related performance - and Indian companies are adapting to
these new changes in the reporting framework. There are around 80 Indian companies
from various sectors that have been reporting and there are about 60 companies
that publicly declare that they use the GRI guidelines, although only 74 sustainability
reports are registered on the GRI database. Most of these reports disclose information
on almost all aspects of performance indicators ranging
from environment, social and
governance, although the rigour and details vary.
Figure-3: Number of Companies Reporting Sustainability
Source: GRI Sustainability
Figure-4: Number of Companies Reporting Sustainability in India
Source: GRI Sustainability
7. Issues with sustainability
recent study by University of Leeds and Euromed
Management School, France based on an analysis of over 4000 CSR
reports concluded that the reports have been fraught
with irrelevant data, unsubstantiated claims, and gaps in data and inaccurate
data and suggest that missing rigour and voluntary action results in lower
public trust in such reports.
financial reporting, the disclosure of sustainability metrics to the market is largely
unregulated and predominantly voluntary. However, as sustainability becomes a critical
factor in the business environment it would become important for companies to build
a framework for these processes, information systems and controls that match the
quality and focus observed in financial reporting. A third party assurance, in
this direction, may ensure quality and consistency of disclosures. It involves verification,
which is an independent, documented and systematic process of scrutinizing data,
its associated processes and methods for collection and its management, which
leads to an assurance statement. This indicates the reliability of disclosures
and demonstrates credibility of the organization to its stakeholders.
in external assurance of sustainability reports based on the GRI framework from
India reveals a rise in external assurance from 10% in 2006 to more than 70% in
2010. This rise in percentage is significant more so when coupled with the rise
in number of GRI reports from Indian industry. It is worthwhile to note that
GRI recommends the use of external assurance
is acknowledged as one of the fastest growing economies in the world; as a
result, it faces the challenge of balancing fuel consumption, and its rapid
growth with the equitable conservation of its key resources, and managing the
impact on society. Although corporate responsibility
seems to be in the experimental phase in India as of now, significant progress
in both the number of reports and quality of information reported is expected
in the coming years. The expectations form Indian reporters going forward is to
focus on presenting information related to:
Sustainability issues, challenges,
dilemmas and opportunities.
environment and fact-based information.
of interest to investors such as materiality of issues in financial terms,
vision and strategy statements, goals and targets, etc.
on identification and prioritization of material issues.
friendly report design.
At the regulatory level, various directives have
been issued and with some still in pilot stage. The Institute of Chartered
Accountants of India (ICAI) has set up the ICAI – Accounting Research
Foundation (ICAI-ARF), which has undertaken a special project to suggest a
suitable framework for sustainability reporting for Indian companies. Further,
the Ministry of Corporate Affairs, Government of India in association with the
Indian Institute of Corporate Affairs has released the voluntary guidelines on
social, environmental and economic responsibilities of business. In the
financial sector, there is a visible trend to promote environmentally and
socially responsible lending and investment, with the Reserve Bank of India
recently issuing a circular for highlighting role of banks in promoting
There is no doubt that corporate responsibility is
here to stay and businesses have realized the value of embracing sustainability
and more so making it a part of their overall business strategy.
Carroll, A., (1979), A
three dimensional model of corporate performance, Academy of Management
Review, no. 4, pp. 99-120.
Deegan, C. (1997), “A Triple Bottom Line Reporting: A new approach
for sustainable Organisation” Charter, April, Vol.70, pp. 38-40.
Elington, J. (1997), “Cannibals with Forks: The Triple Bottom Line
of 21st Century Business”, Oxford Capstone Publishing.
Finch, Nigel (2005), “The Motivation for Adopting Sustainability
Disclosure”, MGSM Working Paper no. 2005-17, Available SSRN:
Friedman, M., (1962), Capitalism and Freedom, University of
Chicago Press, Chicago.
Freidman, M., (1970), The social responsibility of business is to
increase its profits, New York Times, September 13, pp. 122-126.
Freeman, R. Edward (1984), Strategic Management: A Stakeholder Approach,
Boston Pitman, USBN 0273019139.
Gelb, D. and Strawser, J. (2001), "Corporate Social
Responsibility and Financial disclosure: An alternative explanation for
Increased Disclosure”, Journal of Business Ethics, Vol.33, No.1, pp.
Mc William, A. and Siegel, D. (2001), “Corporate Social
Responsibility: A Theory of the Firm Perspective”, Academy of Management
Review, Vol.1, No.26, pp. 117-27.