The government plans to make it mandatory for corporates to report their efforts for sustainable development under the Companies Act.
Corporate affairs minister Veerappa Moily said a committee headed by CII president and Godrej group chairman Adi Godrej has been asked to look at the viability of compulsory sustainability reporting within the formal framework of corporate governance.
The concept of sustainable development in this context include environmental, social and economic performance of the firms.
The Godrej panel is formulating the draft national corporate governance policy, the objective of which will be to encourage companies to adopt economically sustainable measures.
The committee is expected to make it essential for the corporates to include environmental performance, social performance, economic performance and CSR activities as part of corporate governance, Moily told FE, speaking on the sidelines of the FE-EVI green leadership awards. The idea is to include these norms in the new Companies Bill which is slated to be considered by parliament for passage in the monsoon session.
?Our ministry has also issued voluntary guidelines on social, environmental and economic responsibilities of the business. The core elements of these guidelines state that business should respect, protect and make efforts to restore the environment and business should support inclusive growth and equitable development,? Moily said.
According to MCA, sustainability reporting is one of the most critical aspects of good corporate governance, which involves economic and environmental reporting as part of the corporate governance initiatives by the companies.
MCA had set up a committee under Godrej in April which will also suggest a framework for the ?highest quality? of corporate governance in the country. The Godrej committee will also suggest a comprehensive policy framework to enable corporate governance of the highest quality in all classes of companies without impinging on their internal autonomy to order their affairs in their best judgment.
?While we have given him (Godrej) time of six months, the draft recommendations can be expected well-within the time frame,? Moily said.
The minister pointed out that capital market is one of the significant aspects of every financial market. A developed, dynamic and vibrant capital market can immensely contribute to speedy economic growth and development.
?Confidence in corporate India is still very high and we need to maintain it in future too. It has been noted that financial sectors are investing more and more in Indian markets and they play an important role in growth of India. The sector has emerged as one of the most prominent sector and it is estimated to add 15 million jobs in market by 2020,? Moily said.
