Sustainability reports: now's the time for india inc
there are several benefits the reporting companies can reap


The time is just right for indian organisations to come out with their first
'triple bottomline' (economic, environmental and social) performance, and
put forth their first corporate sustainability (cr) report.

Of the 250 largest global companies, over 65% are already publishing a
sustainability report. more than 3,000 companies across the world report on
how they minimise their environmental footprint, engage with stakeholders,
adopt fair social practices, or embed sustainability into their day-to-day
business, r&d or marketing practices.

companies across europe, canada, australia, japan and usa, and across
sectors, have been coming up with sustainability reports for 6 to 10 years
now. companies like bp, abn amro, bt, novo nordisk and others have been
rated amongst the best reporters for years.

however, with over 7,000 listed companies, india has only a handful (25)
reporting on sustainability strategy, vision, performance or governance.
these reporters are mainly from oil & gas, mining, cement, steel, minerals,
automotive, pharma and other such 'industrial' sectors. hospitality is the
only non-industrial sector which sees indian reporters (2), as against the
worldwide scenario where all leading banks, services, telecom and
hospitality companies have been reporting on sustainability for years now.
itc, reliance industries, dr reddy's, jubilant organosys and tata steel are
some of the more visible organisations that report on sustainability in
india, with the first two companies having recently been given the highest
rating (g3 a+) from gri (global reporting initiative) for their latest
sustainability report.

the concept is also fast spreading amongst other developing economies -
brazil, china have jumped on to the bandwagon already.
what is sustainability reporting?

a sustainability report comprises information on how a company, proactively
and beyond regulations, acts responsibly towards the environment around it
and works towards equitable and fair business practices and brings to life
products and services with lower impacts on the natural environment.
such a report describes how a company has implemented a greener supply
chain, has engaged with local communities, is helping tackle climate-change
issues, or is "innovating for the poor".

best-in-class reports mention where raw material and labour are sourced
from, and openly discuss sustainability issues at hand (e.g., diversity in
the workforce, overall environmental footprint, safety performance, labour
conditions in the supply-chain), along with the associated "remediation
steps." some of the best reporting organisations benchmark their
sustainability performance against global peers.

the new gri guidelines (g3) were launched globally in october 2006, and this
has given a revived momentum to sustainability reporting.
the time is nowtoday, with increased emphasis on corporate governance across the world, the multiple forms of transparency and risk mitigating activities required are a
part of life. the world expects sustainability and transparency from the
corporate community and is concerned about environmental, climatic and other
global challenges.

investors also expect companies to be clear on their environmental and
social risks and on how they monitor and prevent them. just disclosing past
financial performance isn't enough anymore.

proactive organisations can actually turn these expectations into
competitive and differentiating advantages.

sustainability reporters are able to unearth significant monetary benefits
while reporting, by unveiling cost reduction opportunities in the
least-travelled dimensions of their business including consumption of
natural resources, transport, employee attrition and optimisation across
supply chain. in the process, such organisations have entered into a
'virtuous sustainability cycle', which positively benefits their
bottomlines.

indian companies going global have to be perceived "at par" with their
global peers on such non-financial performance disclosure. non-disclosure
may increase suspicion, and may affect goodwill.

indian companies listing on foreign stock exchanges derive positive
attention while coming out with a robust triple bottomline report. it helps
build confidence amongst investors, get a 'positive brand recall' at ipo
stage, and attract socially responsible investors.

indian companies supplying to mncs are under increasing pressure to be
transparent in providing information on non-financial performance (work
safety, compliance with ilo standards, energy consumption, social
responsibility of the supply chain, chemicals and other products used in the
process, etc). a readily available sustainability report, along with
quantified sustainability performance indicators, is a good tool to build
confidence.

mncs operating in india also need to consider putting together an
india-specific sustainability report, in addition to their existing global
sustainability report. few have done it so far, though this has happened in
other developing economies such as brazil. with such a report, an mnc would
be able to share its commitments and plans to operate sustainably in india.
with sincere intentions, and a great report, their license to operate and
brand image in the country will surely benefit.

some companies may see sustainability reporting as a tool to increase brand
value. while reporting, they would have to gather quantitative and
qualitative information, which could be used in multiple external
communications.

though there is no mandatory sustainability reporting requirement yet in
india, there are many drivers for indian companies to report at this
juncture, and 2007 is expected to be the year indian sustainability
reporters surf this wave in large numbers. the benefits can be multiple -
easier access to funds, increased attractiveness for investors (through
sustainability ratings and sustainability indexes), enhanced brand image to
draw and retain employees, not to forget better access to eu markets.


Publication : DNA; Section : Money; Pg :22; Date : 2/8/07

URL :
http://digital.dnaindia.com/epapermain.aspx?edorsup=Sup&queryed=3&querypage=4&boxid=30778848&parentid=45337&eddate=08/02/2007