CARROTS AND STICKS – PROMOTING ... - Global Reporting Initiative

82 Carrots and Sticks - Promoting Transparency and Sustainability
reduction of pollution, etc., followed
by social elements like supporting
local NGOs, promoting education in
the local communities, campaigning
against HIV/AIDS, promoting
entrepreneurship in local youth
and women, etc., are the common
disclosure aspects.
Assessment
Companies in India have taken
to disclosing their economic,
environmental and social reports in a
voluntary manner. These companies
have recognised that reporting
practices have led to systematic
measurements and improvements in
an incremental manner. This in turn
has led to good reputation and brand
building amongst various stakeholder
groups including the investors.
From the list of sustainability reports
registered in the GRI website it is
observed that many companies like
ITC, Reliance Industries, Jubilant
Organosys and Dr Reddy’s are the
leading companies with almost 6–7
years of experience in sustainability
reporting. However, there are many
companies from other sectors like
engineering and construction, e.g.
L&T, Mahindra & Mahindra of the
auto sector; Infosys and Wipro
Technologies from the ICT sector
that have come up with innovative
approaches to report presentation
and establishing reporting
processes only in the recent past.
It is noteworthy that the five
industrial sectors with the highest
market value are petrochemicals;
manufacturing; infrastructure;
telecommunications; and banking
which are showing a rising trend of
reporting. For example, a move has
been set in motion by the central
regulating Reserve Bank of India
(RBI) which would like major banks
to play a pivotal role in sustainability
issues by sensitising their clients to
the issues related to human rights
and environment.
It is most often understood by the
leading reporters that the purpose
of issuing Sustainability Reports is
to enlarge the scope of conventional
corporate financial reporting and help
companies to ensure transparent
communication and engagement
with their stakeholders in respect
of the company’s sustainability
performance. However, the link
between sustainability report content
and stakeholder dialogues and their
outcomes show few examples of an
established, systematic approach.
Early reporters of the Indian
subcontinent need encouragement
to report fully and regularly using
the principles of materiality and
stakeholder inclusiveness.
In India, the incorporation of
environmental and social costs and
benefits into mainstream financial
reporting is an embryonic field at
present but it is certain to grow. At
present this approach and practice
of considering a full array of metrics
tied directly to business performance
and risk management is yet to take
root. Involvement and commitment
of corporate accountants and
strategy managers in sustainability
management appears to be limited.
Conclusion
The evolutionary course of
sustainability reporting is now taking
shape as more companies move
from informal statements to formal
reporting. It is often expressed
that the standardised framework
of the GRI Guidelines provides
an incremental road map for
widening the scope of disclosure
aspects. However, capacity
building of local institutions that
can further impart knowledge and
expertise to companies to adopt
the standardised framework is an
important issue which needs to be
considered.
It is also pertinent that Indian
companies should adopt and
establish a sound reporting
process for identifying its material
issues and target audience before
embarking on the sustainability
reporting agenda. This will help
them to accrue the benefits of
the reporting practice, ensuring
accountability, transparency,
consistency and comparability to its
readers.
In many cases it is observed that
some of the best sustainability
reporting practices spring from
countries with regulations, listing
requirements and exchangesponsored
indexes. Investors
should also use their leverage with
government and stock exchanges
to promote the practices of
sustainability reporting. Efforts to
promote these changes must be
undertaken in parallel with those to
engage companies individually to
encourage sustainability reporting.
5.6 South Africa
Introduction
In part due to its political history
and transition to democracy in the
1990s, South Africa has played a
prominent role in the sustainability
reporting movement. As a result of
debates about disinvestment from
South Africa under the old Apartheid
dispensation, and driven by initiatives
such as the Sullivan Principles in the
USA, the transparency and disclosure
debate was a lively one in South
Africa from an early stage, even
before the concept of sustainability
reporting became popularised.
“Business is the main driving
force for resource efficiency
in the economy, for technology
deployment and development, for
infrastructure construction and
providing financial services. But
business can fulfill its role only if
the right framework conditions –
including those for reporting and
disclosure – are in place. Valuing
and sustainability reporting must
increasingly become a more
integral part of economic planning
and decision-making by society,
government and business.”
Björn Stigson, President, World Business
Council for Sustainable Development (WBCSD)