2011 was a watershed movement in India’s corporate accountability discourse. Drawing from National 
Voluntary Guidelines for Economic, Social and Governance related responsible conduct of Businesses (NVGs), which were launched in 2011, Securities Exchange Board of India (SEBI) mandated non-financial reporting through Business Responsibility Reports (BRRs) on Human Rights related aspects for the top 100 listed companies in National Stock Exchange/Bombay Stock Exchange as per the market capitalization. In 2015, this was extended to top 500 listed companies and in a recent circular SEBI has extended it to top 1000 listed companies. This is surely a positive development.
This has opened the gates of Indian companies for strengthening public accountability as well as scrutiny because companies have started disclosing data on some critical aspects in public space. The Business Responsibility Reports have a suggestive framework comprising 44 questions and is divided into 5 sections, which includes data on aspects such as ethics, accountability &transparency, product life-cycle sustainability, employees’ well-being, stakeholder engagement, human rights, environment, public advocacy, inclusive growth and customer value. Significantly, these guidelines have been drawn from a number of existing international frameworks and provide an Indian narrative supporting responsible business conduct, which has been created through a consultative process with civil society, businesses: both large and small and government.
This in a way also hints towards the extension of public disclosure mechanism to private-sector space, which for long has remained confined to the government space. The very fact that this instrument is looking at pro-active disclosure of information from a business for larger public also sets a base for more transparency within corporate space and redefines the citizen and business relationship in the times when the nexus between state and businesses is becoming a major concern.
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In short, this is the first time that the public can access information about companies without struggling with complex bureaucratic systems though the extent of information is pre-defined.
SEBI while mandating these disclosures has also gone a step further and redefined the traditional understanding of stakeholders which emanated from the profit motive and safeguarding on interests of investors and shareholders sense in which business stakeholders are recognized. In its circular dated 13 August 2012 clearly stated, ‘enterprises are increasingly seen as critical components of the social system, they are accountable not merely to their shareholders from a revenue and profitability perspective but also to the larger society, which also happens to be its stakeholder. Hence, the adoption of responsible business practices in the interest of the social set-up and the environment is as vital as their financial and operational performance. This is all the more relevant for listed entities which, considering the fact that they have accessed funds from the public, have an element of public interest involved, and are obligated to make exhaustive continuous disclosures on a regular basis. This becomes more relevant in light of the introduction of section 135 of the Companies Act, 2013 that mandated 2 per cent spending by companies with a certain condition on social development areas as defined in the Schedule VII of the Act, which is popularly known as ‘Corporate Social Responsibility (CSR)’ in Indian context. The introduction of CSR has narrowed down the overall understanding and scope of corporate responsibility, which need not be seen merely as expenditure on development projects in themes and areas, as they are separated from business activity. NVGs and BRRs reiterate the fact that companies need to be responsible and because they need to understand how they are generating their profits rather than focusing on 2 per cent expenditure on projects which on many occasions have been found to be furthering corporate image in spite of violation being reported in core business areas.
The very fact that BRRs were based on the soft law or voluntary approach of the NVGS but were mandated by SEBI to be disclosed as part of the Annual Report disclosures with well-defined fixation of responsibility adds credibility to the information provided to an extent that one can always complain if the said information is found to be false or manipulative. This is surely more accountable and open to scrutiny in comparison to many other voluntary disclosure initiatives such as Global Reporting Initiative (GRI), which are targeted at investors and largely depend on companies’ own will when it comes to disclosures. Comparability also becomes a big challenge in these initiatives. BRRs too have limitation in terms of the scope of information and comparability and it is good to see that Ministry of Corporate Affairs (MoCA) has set up a committee to review the framework of questions and are looking at making questions more sharper with a clear intent to compare disclosures. These efforts have been further strengthened by the launch of the latest version of the NVGs, which are now known as the National Guidelines on Responsible Business Conduct (NGRBC).
BRRs in terms of popularity have come a long way. During the initial few years, it remained a less known instrument with very few takers. Only two major initiatives were there: one by a civil society space steered by a 14-organization network named Corporate Responsibility Watch (CRW) and the other was from an industry promoter group named GIZ. Significantly, these initial dives into BRR data lead to the extension of disclosures to 500 companies. This very much points to the need to continuously engage with BRR data and help generate narratives around it. In recent years, many academic institutions including IIM B, consultant companies such as KPMG and Civil Society Organizations such as Change Alliance have explored into BRR data by providing interesting insights.
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BRR has certainly acted as an instrument encouraging more disclosures from corporate space. Although it is well recognized, they still need a lot more sharpening for better comparability.
A look into the trends as revealed in the recent release of an analysis of top 300 companies by CRW points to the normalization of certain violations incorporate space. Surprisingly, none of the top 300 companies has a composition of People with Disabilities (PWDs) crossing the 3 per cent figure. This is in spite of the fact that law mandates 4 per cent composition for PWDs in government-owned institutions. On a positive side, more than 90 per cent companies claim to have Human Rights policies in place through the depth of these policies in defining Human Rights is still doubtful.
It is certain that businesses have started using the word Human Rights and it is more a taboo.
This also provides us with an opportunity to look at these disclosures from the lens of different constituencies such as investors, academicians and researchers and not miss the affected communities who need to be seen as stakeholders in businesses activity. Only this engagement is going to make disclosures more accurate and would lead to strengthened accountability from businesses, which is pertinent considering the influence that businesses carry in present times. Not to forget that there are strong trends towards the privatization of key services shrinking government safeguards. Another significant development is the commitment from the Government of India to formulate a National Action Plan on Business and Human Rights (NAP–BHR) by the end of next year and already the zero drafts are out in public. The data disclosures from BRRs will add great value to the understanding of the Indian business landscape, which could inform some of the recommendation in the NAP.
