ESG in India
Table of Contents
ESG Evolution in India
Ten Point Charter
Voluntary Corporate Social Responsibility Guidelines
National Voluntary Guidelines
Business Responsibility Reporting (BRR)
Transition from NVGs to NGRBC
National Guidelines on Responsible Business Conduct (NGRBC)
Changes between NVG & NGRBC
Key Features of NGRBC
Nine Principles of NGRBC
ESG which discusses the Environmental-Social-Governance (ESG) framework's essential role in modern business, specifically focusing on the Indian context. It offers in-depth insights into each ESG component, providing practical guidance for various stakeholders. It introduces innovative concepts like the 'New Theory of Responsibility' and the 'Solar System Model of ESG', uniquely blending theoretical understanding with practical applications tailored for the Indian business landscape.
A detailed understanding on each Indian Instrument pertaining to ESG is presented while describing it in the process of evolution only. Key ESG Trends and Issues in Indian Context have also been presented. It is also pertinent to understand that when we consider evolution of ESG in Indian Context, we study among others:
National Voluntary Guidelines on Social, Environmental, and Economic Responsibilities of Business (NVGs), 2011
Business Responsibility Report (BRR), 2012
National Guidelines on Responsible Business Conduct (NGRBC), 2019
Business Responsibility and Sustainability Report
1. ESG Evolution in India
The National Voluntary Guidelines on Social, Environmental, and Economic Responsibilities of Business (NVGs) were published in 2011 by the Ministry of Corporate Affairs, Government of India. It offered guidance to companies on what constituted ethical business behaviour. SEBI brought out the Business Responsibility Report (BRR) requirement in 2012 which was on disclosures on responsible business, to be done based on the NVGs. Following global developments, the NVGs were revised in 2018 in order to bring them in line with the Sustainable Development Goals (SDGs), the United Nations Guiding Principles on Business & Human Rights (UNGPs), as well as the emerging global issues. Hence, NVGs were revised and new guidelines were released namely, National Guidelines on Responsible Business Conduct (NGRBC) in 2019 following extensive stakeholder con- sultations. The NGBRC was developed to help companies adopt the concept of responsible behaviour beyond the requirements of regulatory compliance.
A Committee on Business Responsibility was constituted for finalising Business Responsibility Reporting formats for listed and unlisted companies. Report of this Committee recommended that BRR be updated to BRSR. Based on the NGRBC and report of the Committee on Business Responsibility Reporting, SEBI notified the BRSR format. The disclosures as per the BRSR framework were made mandatory for the top 1000 listed companies (by market capitalisation) in India from FY 2022-23, while the disclosures were voluntary for FY 2021-22 for these companies.
SEBI has also introduced the ‘BRSR Lite Framework’ for unlisted companies, which covers the essential aspects of ESG reporting for any kind of businesses in country. It is expected that the reporting requirement may be extended by the Ministry of Corporate Affairs to unlisted companies above a specified threshold of turnover or paid-up capital. Further, the Committee recommends that smaller unlisted companies below this threshold may, to begin with, adopt a Lite version of the format, on a voluntary basis.
The BRSR Core framework is a new regulatory framework for enhancing the ESG disclosures by India’s top 1,000 listed entities. It was introduced by the Securities and Exchange Board of India (SEBI) on March 29, 2023, as a subset of the wider Business Responsibility and Sustainability Reporting (BRSR) framework that SEBI had launched in May 2021. The Gazetted notification came on 12 July 2023 and it prescribes the disclosure and assurance requirements for BRSR Core ESG disclosures for value chain, and assurance requirements. Now listed companies are also expected to mandatorily undertake Reasonable Assurance of BRSR Core, it has been notified that 150 top companies will undertake in FY 23-24, 250 in 24-25,
500 in 25-26 and 1000 in FY 26-27.
Table: Evolution of Business Responsibility Frameworks in India
Year Initiative
2007 Ten Points Charter by the Hon’ble Prime Minister;
2009 Voluntary Corporate Social Responsibility Guidelines;
2011 Endorsement of United Nations Guiding Principles on Business & Human Rights by India;
2011 Ministry of Corporate Affairs issued National Voluntary Guidelines (NVGs) on Social, Environmental and Economic responsibilities of Business;
2012 SEBI mandates top 100 listed companies by market capitalization to file Business Responsibility Reports (BRR) based on NVGs;
2014 Introduction of the CSR Provisions in the Companies Act, 2013;
2015 SEBI extends BRR reporting to top 500 companies by market capitalization;
2019 Ministry of Corporate Affairs released the National Guidelines on Responsible Business Conduct (NGRBC).
ESG Evolution in India
2. Ten Point Charter
In May 2007, the then Prime Minister of India, Shri Manmohan Singh, proposed a Ten Point Charter for Business that included: the inclusive employment and humane treatment of workers, investments in communities, ethical practices in all business dealings, investments in environment-friendly practices and technology, promotion of socially-responsible media and advertising, responsible consumption, and promotion of enterprise and innovation. This was in response to contemporary media and civil society reports of high-profile cases of social, environmental and economic violations by businesses and the resultant negative impacts on different stakeholders and on economic activity. At the same time, business needed to positively contribute more actively to the national goals of inclusive growth and sustainable development.
3. Voluntary Corporate Social Responsibility Guidelines
All the issues in ten point’s charter remained relevant and found place in the voluntary Corporate Social Responsibility Guidelines-released by the Ministry of Corporate Affairs in 2009. The guideline, in its preamble, outlines the context, state that the 21st century is characterised by unprecedented challenges and opportunities arising from globalisation, including the desire for inclusive growth and the imperatives of climate change. The guidelines comprise six core elements:
(a) Care for all stakeholders
(b) Ethical business practice
(c) Respect for Worker’s Rights and Welfare
(d) Respect for Human Rights
(e) Respect for the Environment
(f) Activities for Social and Inclusive Development.
Guidelines Drafting Committee
Based upon stakeholder feedback for a more comprehensive guideline, the Indian Institute of Corporate Affairs (IICA) was tasked by the Ministry of Corporate Affairs to undertake the process of ‘review and elaboration’ of the Guidelines, and a multi-stakeholder Guidelines Drafting Committee (GDC) was constituted in 2009, its mandate was as under:
(a) To formulate a draft framework guideline for social, environmental responsibilities of business, which would be offered to enterprises for voluntary adoption with wide applicability across all enterprises, irrespective of their size, and that the guidelines serve to ultimately enhance the performance of business.
(b) To specifically ensure that the framework addresses the concerns of Inclusive Growth and Sustainability.
Further, the GDC was encouraged to ‘draw insights from good-practices and international norms and frameworks, as well as from national resources in as much as they help to address Indian particularities. In particular, the GDC took cognizance of key international and national resources focussing on business responsibility and sustainability issues which included:
(a) The International Standards Organisation (ISO)’s Corporate Social Responsibility Guideline (ISO 26000), as an example of a voluntary, holistic and certifiable standard
(b) The UN Global Compact, as an example of a UN-sponsored voluntary code for companies
(c) The OECD Guidelines for Multinational Enterprises, as an example of State-sponsored and supported initiative
(d) The Global Reporting Initiative (GRI), as an example of a holistic voluntary disclosure and reporting framework for companies
(e) Bureau of Indian Standards (BIS): IS 16000, as an example of a domestic workplace standard
(f) Department of Public Enterprises- CSR & (Community Development) Guidelines, as an example of state-driven guidelines for community development initiatives by companies in the public sector.
4. National Voluntary Guidelines
Ministry of Corporate Affairs released National Voluntary Guidelines (NVGs) on Social, Environmental and Economic Responsibilities of Business in 2011. NVGs comprise inter-related and inter-connected Nine Principles. Each of the nine Principles is explained through a Brief Description and accompanied by attendant Core Elements. the principles can be broadly aggregated as Social (P3, P4, P5, P8 and P9) Environmental (P2, P6 or Governance (P1 and P7). The Social can be further sub-divided into stakeholder-specific principles (P3, P8 and P9) and cross-cutting ones (P4 and P5).
Principle 1: Businesses should conduct and govern themselves with Ethics, Transparency and Accountability
Principle 2: Business should provide goods and services that are safe and contribute to sustainability throughout their life cycle
Principle 3: Businesses should respect and promote the well-being of all employees
Principle 4: Businesses should respect the interests of, and be responsive towards all its stakeholders, especially those who are disadvantaged, vulnerable and marginalized
Principle 5: Businesses should respect and promote human rights
Principle 6: Businesses should respect, protect, and make efforts to protect and restore the environment
Principle 7: Businesses, when engaged in influencing public and regulatory policy, should do so in a responsible manner
Principle 8: Businesses should support inclusive growth and equitable development
Principle 9: Businesses should engage with and provide value to their customers and consumers in a responsible manner.
(Ministry of Corporate Affairs, 2011)
5. Business Responsibility Reporting (BRR)
Business Responsibility Report (BRR) was introduced in India as part of the Annual Reports for the top 100 listed companies based on market capitalization in 2012. The format of BRR was based on the National Voluntary Guidelines (NVGs) issued by the Ministry of Corporate Affairs. The evolution of Business Responsibility Reporting in India can be traced back to the Corporate Voluntary Guidelines in 2009 and the endorsement of United Nations Guiding Principles on Business & Human Rights by India in 2011. The Committee on Business Responsibility Reporting proposed two formats for disclosures: a comprehensive format and a Lite version is a disclosure of adoption of responsible business practices by a listed company to all its stakeholders. This report is applicable to all types of companies including manufacturing, services, etc. The report is important considering the fact that these companies have accessed funds from the public, have an element of public interest involved, and are obligated to make exhaustive disclosures on a regular basis.
6. Transition from NVGs to NGRBC
The Ministry of Corporate Affairs (MCA), Government of India, released a set of guidelines in 2011 called the National Voluntary Guidelines on the Social, Environmental and Economic Responsibilities of Business (NVGs). This was expected to provide guidance to businesses on what constitutes re- sponsible business conduct. In order to align the NVGs with the Sustainable Development Goals (SDGs) and the ‘Respect’ pillar of the United Nations Guiding Principles (UNGP) the process of revision of NVGs was started in 2015. After, revision and updation, the new principles are called the National Guidelines on Responsible Business Conduct (NGRBC). As with the NVGs, the NGRBC has been designed to assist businesses to perform above and beyond the requirements of regulatory compliance.
In 2017, Ministry of Corporate Affairs took a considered view, that given the various significant international and national developments had taken place related to the business responsibility domain and since sufficient time had elapsed since the NVGs were released 2011, the NVGs should be updated to include such developments, which may include: the UNGPs, the UN SDGs, Paris Agreement on Climate Change, Ratification in 2017 of ILO Core Conventions 138 and 182 on child labour, SEBI’s 2012 notification for Annual BR Reports and the Ministry of Corporate Affairs’ notification in the Companies Act, 2013 mandating companies to undertake CSR among others. Emerging global risks in respect of ESG were also considered. Accordingly, the review exercises and multi-stakeholders consultations were organized throughout the country and comments were sought from public and stakeholders. After considering due processes, the National Guidelines for Responsible Business Conduct (NGRBC) came into shape as an update/new version to the NVGs.
The primary rationale for the update is to capture key national and international developments in the sustainable development agenda and business responsibility field that have occurred since the release of the NVGs in 2011. Some of the key drivers behind the emergence of NGRBC are listed below:
Core Conventions 138 and 182 on Child Labour by the International Labour Organization (ILO)
SEBI Annual Business Responsibility Reports (ABRRs)
Section 135 of the Companies Act, 2013
The UN Guiding Principles for Business and Human Rights (UNGPs)
UN Sustainable Development Goals (SDGs)
Paris Agreement on Climate Change (2015).
The NGRBC are designed to be used by all businesses, irrespective of their ownership, size, sector, structure or location. It is expected that all businesses investing or operating in India, including foreign multinational corporations (MNCs) will follow these guidelines. Furthermore, the NGRBC reiterate the need to encourage businesses to ensure that not only do they follow these guidelines in business contexts directly within their control or influence, but that they also encourage and support their suppliers, vendors, distributors, partners and other collaborators to follow them.
7. National Guidelines on Responsible Business Conduct (NGRBC)
Government of India launched National Voluntary Guidelines on Economic, Social and Environmental Responsibilities of Business in 2007 which were revised in 2009 and 2011. The next revision was introduced as the National Guidelines on Responsible Business Conduct of Business, replacing the earlier guidelines. (Ministry of Corporate Affairs, Govt. of India, 2018).
Nine principles for performance disclosures are:
(a) Ethical, Transparent and Accountable conduct
(b) Provide goods and services in sustainable and safe way
(c) Promote the well-being of all employees including those in value chain
(d) Respect the interests of all shareholders
(e) Promote human rights
(f) Protect and restore the environment
(g) Transparent engagement in public policy
(h) Inclusive growth and equitable development
(i) Provide value to their consumers responsibly
(Ministry of Corporate Affairs, 2019)
A notion about the NGRBC among the readers may be that NGRBC is a business responsibility reporting tool. No doubt that NGRBC provide a framework of reporting also but it is not its mere function. NGRBC is a step by step guide for adopting responsible business conduct by a business. The NGRBC are designed to be used by all businesses, irrespective of their ownership, size, sector, structure or location. It is expected that all businesses investing or operating in India, including foreign multinational corporations (MNCs) will follow these guidelines. Correspondingly, the NGRBC also provide a useful framework for guiding Indian MNCs in their overseas operations, in addition to aligning with applicable local national standards and norms governing responsible business conduct.
Considering the national and international developments in the domain of RBC, the nine principles of NVGs have been modified and words such as sustainable, integrity, and respect were included in NGRBCs. This highlights the MoCA commitment towards the advancement of RBC. While NVGs had 48 Core Elements in the updated NGRBC there are 53 Core Elements.
8. Changes between NVG & NGRBC
An overview of modifications is presented in the table below:
NGRBC 2019 NVG 2011
1. Businesses should conduct and govern themselves with integrity in a manner that is ethical, transparent and accountable Businesses should conduct and govern themselves with Ethics, Transparency and Accountability
2. Businesses should provide goods and services in a manner that is sustainable and safe Businesses should provide goods and services that are safe and contribute to sustainability throughout their life cycle
3. Businesses should respect and promote the well-being of all employees, including those in the value chain Businesses should promote the well being of all employees
4. Businesses should respect the interests of and be responsive to all its stakeholders Businesses should respect the interests of, and be responsive towards all stakeholders, especially those who are disadvantaged, vulnerable and marginalised
5. Businesses should respect and promote human rights Businesses should respect and promote human rights
6. Businesses should respect and make efforts to protect and restore the environment Business should respect, protect, and make efforts to restore the environment
7. Businesses, when engaging in influencing public and regulatory policy, should do so in a manner that is responsible and transparent Businesses, when engaged in influencing public and regulatory policy, should do so in a responsible manner
8. Businesses should promote inclusive growth and equitable development Businesses should support inclusive growth and equitable development
9. Businesses should engage with and provide value to their consumers in a responsible manner Businesses should engage with and provide value to their customers and consumers in a responsible manner
The NGRBC are the framework that companies can use to integrate RBC practices into their operations and strategy in order to keep pace with the rapidly changing business environment and thrive in the uncertain world we live in.
9. Key Features of NGRBC
The NGRBC consist of two chapters and an expanded set of annexures*
NGRBC Principles have been updated, but they have retained the articulation and description of NVGs.
More emphasis on Core elements of the principles
Practical guidance to businesses to adopt NGRBC
Practical guidance on implementation of NGRBC
Business case for MSMEs has been given
Updated Business Responsibility Reporting (BRR) Framework
Serves as a tool for the companies to assess company’s initiatives towards responsible business conduct
Serves as tool to identify opportunities to improve responsible business conduct
Serves as a framework for regulators to develop disclosure formats.
*The Guidance has following annexure:
Guidance on adoption of NGRBC
Guidance for Micro, Small and Medium Enterprises
Business Responsibility Reporting Framework
SDGs mapped against NGRBC
Business Case Matrix
Guidance for businesses on using BRRF as a self-assessment tool
Indicative Mapping of Indian Laws and Princ
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