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April

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Introduction to National Voluntary Guidelines – Business Responsibility Reporting

by Harsha Yadav

 

Ministry of Corporate Affairs, Government of India, in July 2011, came out with the ‘National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business’ – NVGs.

SEBI – as a part of its circular on 13th August 2012, makes it mandatory for top 100 BSE and NSE listed companies (as on March 2012) to disclose their Business Responsibility Practices through a report adhering to the NVG framework.

Are you on the list? Check here.

If you are in the list then read on… Even if you are not, nothing stops you from reporting how responsible you are in conducting your business. So read on in either case…

The NVG Framework talks about Sustainability. Govt. of India, through the National Voluntary Guidelines want companies to:

  • Give back something to the society
  • Be responsible
  • Be accountable for its actions and
  • Be sustainable in itself and in the environment it operates in.

That’s not much to ask for, is it? Also, NVGs are applicable to all businesses operating in India and Indian MNCs operating elsewhere irrespective of sector, size, orientation or ownership.

Organisations tend to underestimate their influence on different aspects. If you see the figure below:

Factory Influence on Aspects

The deemed influence of an organisation/company lies in the green area where the important factors are Customers, Employees, Shareholders, etc., No doubt that an organisation exerts considerable influence on these aspects and vice-versa. But not just these, any organisation exerts influence on other larger aspects such as Economy, Policy, Community Relations, Environment and the like.

 

So, we need organisations which look beyond their primary influence and target broader Sustainability goals…which is what a lot of companies are doing of late. This provides advantages to the organisation such as:

  • Improve ability to enhance competitive skills
  • Improve company and brand reputation
  • Increase ability to attract and retain better talent
  • Manage investor and society relationships in a better way.

Coming to NVGs, they come with a broad framework of 9 principles which help companies achieve these benefits & comply to requirements.

Principle 1: Businesses should conduct and govern themselves with Ethics, Transparency and Accountability.

 

Principle 2: Businesses should provide goods &services that are safe and contribute to sustainability throughout their life cycle.


Principle 3: Businesses should promote the well being of all employees.


Principle 4: Businesses should respect the interests of, and be responsive towards all stakeholders,especially those who are disadvantaged, vulnerable and marginalised.


Principle 5: Businesses should respect and promote human rights.


Principle 6: Business should respect, protect, and make efforts to 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.

 

So for each of these principles, companies need to provide their declaration/report on their compliance and level of compliance by providing numbers, data and any specific cases relevant  to each of the principles.

The format of a Business Responsibility Report is given in the  figure below

Business Responsibility Report Format

 

Note: If an organisation is already reporting their impacts through a Sustainability Report in any of  Internationally accepted formats (GRI, IIRC, etc.,), it need not prepare a new BR Report again. It can just point out specific sections in the Sustainability Report  or Annual Report which highlights its compliance to the 9 principles.

 

Here you are. If you are interested in reporting your Business Responsibility impacts or are mandated by SEBI to do so, get in touch with us. We can:

  • Help you understand the policies and their impacts on your business.
  • Prepare a gap analysis of the requirements Vs existing ‘as-is’ scenario.
  • Do a Materiality assessment of the aspects relevant to being a Responsible  Business and comply with the requirements.
  • Develop the “Responsible Business Strategy” aligning internal objectives and external requirements.
  • Develop the actual Business Responsibility Report.

 

Check out our team here and our capabilities in Sustainability Reporting here and here.

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