October 21, 2017

India has emerged as the top country for reporting corporate responsibility information in the annual financial report of companies, but the quality of disclosures has to improve, according to a KPMG survey.

Steps taken by the Securities and Exchange Board of India has helped the country score high on this parameter.

In February, Sebi asked the top 500 listed companies to adopt integrated reporting on a voluntary basis, although only five companies published such information. But 99% of the companies reported on their sustainability performance. The 10th KPMG Survey of Corporate Responsibility Reporting studied annual financial reports and corporate responsibility reports of the top 100 companies by revenue in each of 49 countries it covered.

In India, 95 companies acknowledged human rights as an issue to their business, ranking the country well above the global average. The business risks of climate change, however, were acknowledged by only 34 in India in their non-financial disclosures, according to the survey.

“The quality of disclosures has to improve. Companies in India are not going beyond their organisation to study violation while globally companies even examine their supply chains … private sector has started taking the initiatives and corporate India is discussing these issues,” said Santhosh Jayaram, partner, sustainability services, KPMG in India.

“Pressure on firms to up their game on disclosure is growing by the day. Some investors are already taking a hard line approach to demanding disclosure; some countries are considering regulation to mandate it,” said KPMG’s global head of sustainability services, José Luis Blasco.

The survey explored trends in corporate responsibility reporting, including reporting on the UN’s Sustainable Development Goals (SDGs), on human rights and carbon reduction targets. The reporting or linkage of SDGs in India was below the global average of 39%, with only 18 companies linking their business activities with the goals in their business reporting.

Almost three quarters of large and mid-cap companies worldwide do not acknowledge the financial risks of climate change in their annual financial reports, as per the survey findings.

Of the minority that acknowledge that, fewer than one in 20 provides investors with analysis of the potential business value at risk.

[The Economic Times]