Do good and tom-tom it

THE HINDU
Photo: B. Jothi Ramalingam

 

89 per cent of Indian businesses believes CSR and sustainability should be integrated into financial reports.

A survey by Grant Thornton found that 68 per cent of businesses in India now issues corporate social responsibility (CSR) and sustainability information (up from 32 per cent two years ago), either in the financial report or in separate reports, and that a clear majority believes it should be reported.

The survey was part of the quarterly Grant Thornton International Business Report. “Businesses are also seeing the value in measuring performance in a more holistic manner, considering environmental, social, human resource and governance frameworks, in addition to financial; this will deliver more meaningful information to all stakeholders,” said Mahadevan Narayanamoni, Partner — Advisory Services, Grant Thornton in India.

Globally, the number of businesses reporting CSR and sustainability is highest in India, followed by Vietnam and the Netherlands (64 per cent), the Philippines (60 per cent) and Mexico (52 per cent). In contrast, Estonia (6 per cent), Poland (12 per cent), New Zealand (16 per cent), Finland (18 per cent) and Australia (19 per cent) have lower levels of business reporting. Globally, 31 per cent of businesses is currently reporting CSR and sustainability, up from 25 per cent two years ago.

Overall, 89 per cent of Indian businesses believes CSR and sustainability should be integrated into financial reports — up from 39 per cent two years ago. Support for integration of business information into financial reports is strongest in India, followed by the Philippines (86 per cent), Peru (84 per cent) and Brazil (77 per cent). Support was weakest in Estonia (18 per cent), Sweden (19 per cent), Latvia (26 per cent), Lithuania (37 per cent) and Japan (38 per cent). Globally, 57 per cent of businesses believes CSR and sustainability should be integrated into financial reports — up from 44 per cent two years ago.

An additional 36 per cent of Indian businesses thinks it will probably report CSR and sustainability within the next five years, and another 7 per cent said it was possible. Countries with the greatest interest are Mexico (73 per cent), Turkey (71 per cent), Peru (69 per cent), Brazil (66 per cent), and the Philippines (61 per cent).

Only a small percentage of businesses in Sweden (2 per cent), Hong Kong (6 per cent), Italy (9 per cent), Norway and Germany (12 per cent) plans to report such information. Globally, an additional 12 per cent thinks it will probably report CSR and sustainability, and another 14 per cent said it was possible

The 2013 Companies Act has introduced several provisions that would change the way Indian corporates do business — one such relates to spending on CSR activities. Companies are now required by law to report details of their CSR initiatives in the Directors’ Report and on the company website.

“Corporate India had to wait long for a corporate reporting framework that is current and, with some work, can be considered visionary. Introduction of the ‘comply or explain’ principle in the case of CSR is one such example,” said Vishesh Chandiok, National Managing Partner, Grant Thornton in India.

“CSR reporting, as suggested by the International Integrated Reporting Council (IIRC), is to structure this report around the company’s business model and the six capitals (financial, manufactured, intellectual, human, social and relationship, and natural) that an organisation uses and affects,” adds Mahadevan.

“The use of the capitals is a means of connecting the financial and CSR performance of the company in an organised way, which may be comparable from company to company and period to period. The benefit of this more integrated reporting is that it better allows the company to describe and measure the values it creates, and hopes to create in the future. It ties together discrete activities and investments with value creation.”

(This article was published on December 1, 2013)

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