State-run public sector units (PSUs) are ahead of private firms in corporate accountability and business responsibility, reveals the India Responsible Business Index (IRBF) 2015, to be released on Tuesday.
An initiative of not-for-profit organisations such as Oxfam India, Corporate Responsibility Watch and Partners in Change, along with research organisation Praxis, the IRBF Index looks at the 100 largest BSE-listed companies by market capitalisation as on April 1, 2012, and examines corporate inclusiveness and sustainable growth.
The ministry of corporate affairs had drafted in 2011 the National Voluntary Guidelines for Social, Environmental and Economic Responsibilities of Businesses (NVGs) to safeguard sustainable and inclusive business growth.
The index, which was reviewed by Business Standard, measures companies’ policy commitments against principles put forth in the NVGs. Keeping disclosure as its basic premise, the index takes into account information on said principles which are disclosed by the companies on the public domain. It, however, does not independently verify actual compliance or performance of the companies vis-à-vis NVGs.
PSUs have scored more than private counterparts in parameters such as non-discrimination at the workplace, community development; respecting employee dignity and human rights and involving the community as stakeholders in the business.
However, in instituting sustainable company policies in their supply chain, private players have a clear edge over PSUs. No PSUs figure in the list of companies which were awarded highest scores in this regard. Capital goods maker Siemens was adjudged the best in this category.
On the issue of non-discrimination in the workplace, three out of the five top scoring companies were PSUs, with heavy machinery manufacturer Bharat Electronics on the top slot. Oil India Limited bagged the highest score in respecting employee dignity and human rights in the workplace.
PSUs also scored high in helping local communities develop, as well as involving them in the business process. Oil and Natural Gas Corporation and Coal India were awarded the highest scores.
Overall, companies that have mid-level market capitalisation fared much better than those which feature among the top 20 in BSE, in that regard. While it is 14 times that a mid-level company came among the top 25 companies across five parameters, companies in the top 20 could manage to do so only eight times.
The Securities and Exchange Board of India had also issued a directive in 2012 requiring the top 100 companies to publish a business responsibility report based on the principles listed in the NVGs.
The index report stated: “The Corporate Social Responsibility (CSR) clause, added to the companies Bill had taken the focus away from the NVGs, which acknowledge the rights of diverse stakeholders connected with and impacted by business activities.”