MCA panel proposes sustainability reporting regime for businesses1 min read . Updated: 11 Aug 2020, 10:37 PM IST
MCA Secretary appreciated the efforts of the committee in proposing such a robust reporting framework and said that MCA will work closely with SEBI for its implementation
New Delhi: An expert panel set up by the ministry of corporate affairs has proposed a new regime for businesses to report how sustainable and responsible they are is in addition to being compliant with the law.
The panel led by Gyaneshwar Kumar Singh, a joint secretary in the ministry, has recommended two reporting formats—a comprehensive reporting regime and a ‘lite version.’ The reporting requirement is to be rolled out in a gradual way. Eventually, these filings by companies could be used to develop a business responsibility and sustainability index for companies, the panel has recommended.
The idea is to put pressure on firms to pay attention to how they contribute to the society, going beyond meeting shareholders’ objectives and complying with the laws. This would also give investors an opportunity to assess how ethical a company is while making investment decisions. It also signals the thinking in the government that the corporate sector can contribute in meeting the sustainable development goals India is committed to meeting such as poverty reduction, gender equality and adoption of clean energy.
“As a long-term measure, the committee envisions that the information captured through BRSR filings be used to develop a business responsibility-sustainability index for companies," said an official statement from the ministry.
The statement said, quoting secretary in the ministry Rajesh Verma, that it will work closely with the capital market regulator SEBI in implementing the reporting regime. Indian companies aspiring to have a global foothold cannot ignore the emerging trend of corporate governance, that is being responsible businesses, the statement said quoting Verma.
Due to the trends of environmental, social and governance investing, the demand for non-financial reporting is growing and the proposed business responsibility framework will set the stage for sustainable investing, the statement said quoting SEBI executive director Amarjeet Singh.
The reporting regime will cover a set of guidelines on responsible business conduct brought out in 2019, which is an updated version of voluntary guidelines issued in 2009. SEBI has already mandated top 1000 listed entities by market capitalisation to file business responsibility reports from an environmental, social and governance perspective. These enabled business to engage more meaningfully with stakeholders going beyond regulatory and financial compliance, said the ministry statement. The proposed reporting framework will cover both listed and unlisted enterprises.