BSE extends business responsibility reporting to top 500 firms

New Delhi: BSE signed a pact with international not-for-profit Global Reporting Initiative (GRI) on Wednesday to extend business responsibility reporting (BRR) from top 100 to the top 500 listed companies.

The so-called memorandum of understanding (MoU) was signed at the fifth global conference of GRI in Amsterdam, which was attended by 20 stock exchanges, multinational corporations, Indian companies, officials from regulatory authorities and sustainability experts.

The MoU marks another step towards encouraging listed entities to report on and act upon reducing environmental and social impact.

BSE, with over 5,000 firms, is one of the largest exchanges in the world and the first from Asia to join the United Nations’ Sustainable Stock Exchanges (SSE) initiative.

BRR is a voluntary disclosure of the extent of adoption of responsible business practices, in line with those mentioned in the National Voluntary Guidelines (NVGs) drawn up by the ministry of corporate affairs (MCA) in 2011.

The Securities and Exchange Board of India (Sebi) in 2012 suggested that the top 100 BSE-listed companies include BRRs with their annual reports. Now, the top 500 firms will need to do the same starting 1 April, with the capital markets regulator throwing its weight behind the move.

“This new dimension in the corporate sector’s role, wherein organizations are not only managing scarce resources but are also responsible for the impact their operations have on society and the environment, requires a strategic commitment,” said Aditi Haldar, director-regional hub South Asia for GRI.

GRI is an international organization that promotes transparency on sustainability performance and impact. Its guidelines are the world’s most widely used sustainability reporting framework, adopted by companies across 38 sectors in more than 85 countries.

The BSE-GRI alliance is expected to supplement Sebi’s initiative in “making reports on Indian companies comparable to global standards to attract institutional investors committing funds for ‘responsible investment’,” said Neeraj Kulshrestha, chief-business operations at BSE.

According to him, the alliance will help companies in India adopt the best practices for non-financial disclosures, particularly in the area of ‘sustainability’, and also help BSE’s ongoing efforts to create awareness among institutional and other investors in India to factor ‘sustainability of business’ into their investment decisions.

With natural resources under stress and climate change becoming a reality, it is believed that BRRs help encourage investor interest as well.

“Companies that effectively communicate sustainability impacts and strategy adopted to mitigate these impacts are likely to experience improved potential access to capital, as investors progressively include ESG (environment, social and corporate governance) considerations into the investment decisions,” said Haldar.

Kulshrestha added that sustainable business practices are critical to the creation of long-term shareholder value in an increasingly resource-constrained world.