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Indian cos need to evolve in improving quality of CR reporting: KPMG

Only 1 in 5 CR reports are more balanced with in-depth discussion on key challenges, says KPMG.

Information Technology (IT) sector is among the leading sectors with all N100 IT companies producing separate corporate responsibility (CR) reports with the financial services sector lagging behind with no separate reports, KPMG said in a survey.

The 2013 edition of the KPMG India survey supplements the 8th KPMG International survey, published first in 1993. The India survey is the most comprehensive research on CR reporting in India and covers top 100 listed companies by revenue (N100).

CR reporting in India largely assumes the form of limited discussion on community development and/or environmental protection initiatives as disclosed by companies in their annual reports and websites. Based on KPMG India survey the number of N100 companies which use standard frameworks to report in CR is 45 and 31 companies have separate reports comprehensively covering aspects of CR strategy, governance, targets and commitments, and performance

Reporting on corporate responsibility, which is evolving as a standard business practice in India and undertaken by almost three quarters (73 percent) of large Indian companies, says KPMG.

KPMG has found 71 per cent of the CR reports reckon climate change as a key environmental and social change (or ?sustainability megaforce?) that will impact businesses while energy & fuel, water scarcity and material resource scarcity are other key megaforces discussed.

Increasing number of companies also identify business opportunities (71% of CR reports) related to CR indicating that it is now viewed as value driver apart from the traditional linkage of CR to primarily manage reputation or brand value, says the report.

However, identification and reporting on supply chain environmental and social issues is low among N100 companies with 71% of CR reports having no disclosure on these issues.

?The need for business transparency and accountability is felt greater than ever. Regulations like Clause 55 (business responsibility reporting) of the listing agreement and CSR disclosure under the new Companies Act will drive the reporting agenda in India. It is no more a choice for companies to report or not to report,? said Raajeev Batra, Head of KPMG Climate Change and Sustainability Services in India.

The survey analysed companies for quality of reporting through a scoring criteria on seven key aspects of reporting ? strategy, risk and opportunity; materiality; targets and indicators; suppliers and value chain; stakeholder engagement; governance for CR; transparency and balance. Indian CR reports score 40 out of maximum possible 100 on quality of reporting as compared to score of 59 by global 250 large corporations.

?Indian companies should now focus on ?what to report on CR?? and ?how to report on it?? to enhance the quality of CR disclosure. Linking business priorities with stakeholder expectations and concerns through a robust materiality determination process is vital to integrate CR in corporate strategy. Targets and goals on material issues have to be backed up with solid CR management plans,? noted Santhosh Jayaram, Technical Director (Climate Change and Sustainability) of KPMG.

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First published on: 16-01-2014 at 09:37 IST
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