1594458276 ESG-Analysis-On-50

Table of Contents

Acknowledgements...... 3 Executive summary...... 4 Introduction to ESG...... 7 Prominence of ESG and the Present Study ��11 ESG highlights...... 12 Scoring categories...... 15 Sample selection...... 16

I – Policy Disclosures

1.1 Principle-wise (as per NVGS) BR policy / policies ��18 1.2 BRR implementation...... 20 1.3 General Disclosures...... 21

II – Environment

2.1 General disclosures...... 24 2.2 Product / Services...... 26 2.3 Energy consumption...... 28 2.4 Renewable Energy ...... 30 2.5 Water consumption...... 32 2.6 Air emissions...... 34 2.7 Waste management...... 36 2.8 Environmental incidents...... 38

III – Social

3.1 Workforce...... 41 3.2 Health & safety...... 45 3.3 Relationships with local communities ��47 3.4 Data security & customer orientation ��48

ESG Analysis on 50 listed companies in India 1 Table of Contents Acknowledgements

IV – Governance At the outset, Stakeholders a brief summary of ESG footprints legal standpoint. The report (including Empowerment Services (SES) of selected NSE listed companies, data capturing, analysis, findings, and 4.1 Board composition...... 52 would like to thank NSE for providing evaluated by SES through its report writing) was solely worked on this opportunity and a platform proprietary model (available at by SES team, without any involvement 4.2 Board committees...... 55 to present maiden report of SES (“Model”). of NSE and CAM. 4.3 Director’s remuneration...... 56 on a contemporary and extremely 4.4 Statutory auditors...... 58 relevant topic “ESG – Reporting The report is the result of collective I express my sincere gratitude to Trends and Practices in India”. efforts of NSE and SES, with Cyril all team members from NSE and 4.5 Audit & financial reporting...... 59 Undoubtedly, this endeavour would Amarchand Mangaldas (CAM) being a SES for this report, and in particular, 4.6 Stakeholder engagement...... 60 not have been possible without knowledge partner solely with respect the following team members for 4.7 Other governance factors...... 62 the initiative taken by NSE and its to the model. NSE provided financial their untiring efforts in compiling guidance and support to the SES support, guidance, and logistics; and analysing voluminous data team on a continual basis. The SES developed the model, and CAM and developing the report in its purpose of this report is to provide assisted with vetting the model from a present form. V – Evaluation Framework

Model - Legal and Voluntary Framework ��69 NSE SES ESG scoring...... 70 Ms. Priya Subbaraman Mr. J.N. Gupta Limitations of the model...... 72 Annexure I – List of companies...... 73 Mr. Avishkar Naik Ms. Aditi Chandani Annexure II – Disclosure pattern in BRR table ��74 Ms. Yukti Sharma Mr. Mukesh Solanki

Mr. Lokesh Bhandari

2 ESG Analysis on 50 listed companies in India ESG Analysis on 50 listed companies in India 3 Executive Summary Executive Summary

For a long time, investors and the study risks, on account of these of India Inc. The study is based on in high E score on voluntary basis. increasing renewable energy analysts have been using traditional non-financial parameters. Investors Key Highlights from the Study: usage. a proprietary model developed by • Wide divergence in scores financial metrics to value a company, are realising that businesses cannot SES which was vetted by CAM from Companies have largely scored was also observed with Water Consumption: 9 companies as if it is only financial results that survive for long without caring for a legal perspective, and by NSE. better on policy disclosures sample companies within within the sample had achieved a matter. The fact is that for investors, environment and society. followed by governance factor, Performance on environmental, the same industry, indicating ‘water positive’ status. in the end, it is only the financial compared to environment that although companies social, and governance factors was • 44 companies from the sample outcome that matters. However, ESG reporting and analysis in a and social factors. This can are operating within same evaluated using the model. had disclosed data on water financial analysis is like a post- structured manner is rather new be attributed to the fact that industry, there is asymmetry in consumption or usage. mortem; it is like a result card and in India, although it has existed governance reforms have appreciation and concern for can be used for modelling future. in fragmented manner for long. For this first ever study on ESG transformed into laws by various environmentally sustainable • 27 companies disclosed data However, beyond the numbers, there While companies have been disclosures and performance, due to regulatory agencies within practices and disclosure on the on water intensity or specific India, in the last two decades. are several factors which are non- evaluated by investors for buy or sell limited availability of sustainability same. water consumption (per monetary yet affect the performance recommendations, by credit rating Similarly, many policies have unit production or w.r.t. the reports, the sample was restricted • All the companies in the of investments and can be said to agencies for credit rating purposes, been mandated to be prepared revenue). to 50 companies. The companies by regulatory authorities. Hence, sample have disclosed be constituents which eventually ESG evaluation has been absent. • 48 companies discussed are those that have disclosed companies have scored higher that they have framed an determine financial outcome. No rainwater harvesting. However, either their sustainability report or on policy disclosure parameters. environment policy. longer can a business perform in Realising ESG to be extremely 37 of such companies provided integrated report voluntarily and • 42 companies from the isolation; it has to integrate itself important to evaluate business details on initiatives taken with the environment in which it risks and continuity, NSE felt that are within the top 10 companies sample stated that they have Policy disclosures: by them regarding rainwater Environment Management operates. Hence, Environment (E) it would be appropriate to carry within their sectors and within top harvesting. All sample companies had a Systems and 22 companies and Society (S) must be an important out a comprehensive study of the 100 companies as per their market policy regarding employees, Waste Generation: 49 provided part of business operations. disclosure and performance of India stated that they have Energy capitalisation. These 50 companies stakeholder, environment, and disclosures on waste. However, Integrating E and S factors with Inc. on these non-financial ESG Management Systems in place. belong to 12 industries which SES corporate social responsibility. only 33 companies have provided business Governance (G) plays an parameters. SES was entrusted with Air Emission: 45 companies felt had a direct impact on the Very few companies had framed information about categories or important role. As a result, investor the task of conducting this study disclosed data on Greenhouse environment and stakeholders, policy on public advocacy, which type of waste generated. focus and interest have shifted to of ESG practices and performance Gases (GHG)/carbon emissions. may be attributed to the fact that due to their business operations. 35 companies disclosed data on Effluents: It was observed that in India, advocacy is seen in bad Consciously, companies in the IT GHG emission intensity or specific 23 companies provided generic light. Hence, if at all done, is done GHG emissions. Overall, only 6 information regarding effluents and banking sectors were excluded in a non-transparent manner. and 4 companies did not make from the present study, due to their companies reported decrease in GHG/carbon emission intensity, any discussion in this regard. indirect impact on environment. Environment: for the last three years.

Scoring: Within the sample Energy Consumption: More Social: The graph depicts the average score companies, SES observed the than 80% of companies in the The average score across Social (out of 100) of all sample companies lowest score of 44 on E factor, automobile (5/6) and metal category among the sample across policy, environment, social, which was almost 50% of the (7/8) industry provided three- companies was 63, with a high of top score of 88. The average and governance factors. year data on energy intensity. 83 and low of 49. sample score was 70. The gap Least disclosure relating to between the top and bottom Women empowerment: Out of 12 energy intensity was observed in scoring companies was very wide. industry groups, three industries the consumer goods and other On one hand, wide divergence is have an average of 10% or more industries. reflective of the lack of mandatory permanent women employees. provisions. On the other, it reflects • Almost all the companies in 10 companies from the sample a sense of concern in a few the sample disclosed steps have more than 10% permanent companies to E factor as reflected or initiatives taken towards women employees. The highest

4 ESG Analysis on 50 listed companies in India ESG Analysis on 50 listed companies in India 5 Executive Summary Introduction to ESG

number of women employees was ED Chairperson: In the sample performance pay) for at least Climate change, rising temperatures, its non-financial performance on a observed in the textile industry – companies, Board Chairperson three years, reflecting exactly plastic pollution, forest wildfires, constant basis. Globally, investors 78.22%. of 24 companies were Executive the same appraisal ratings for rising disparity, gender inequality, are increasingly demanding Directors (ED). different EDs. equal opportunity, social that businesses must focus on Fatalities: The highest number responsibility, uneven development, ESG impact and discharge their of fatalities was observed in Women Director: All sample Statutory Auditors: No case was discrimination, corruption, sexual responsibilities cautiously. Many the metals and construction companies had at least one found in the sample companies harassment, customer privacy, investors are looking for sustained industries. female director on their Boards. wherein statutory auditors were data security, frauds, corporate returns with responsible investment. 6 companies within the sample removed or resigned before the Child Labour: Though none of the governance, audit committee, Board had more than 2 women directors. Short-term profit-making is no sample companies have reported expiry of the term. independence - the frequency with longer the only objective for any child labour complaints, the Within the Age of Directors: Pledge: 8 companies have which these terms have been spoken these investors, as many of them data relates to the workforce of sample ,18 companies have a shares encumbered or pledged about in the last few years reflects wish to integrate the business these companies only. No data Non-Executive Director on the by the promoters of the company. the growing attention to these with environment and society to is provided for child labourers Board whose age if above 75 This pledge shareholding is valued issues from various stakeholders. It generate sustainable profits in employed by associated suppliers, years and 3 companies have an is probably also a warning bell and at ₹ 58,557 crores as of responsible manner. It is a choice contractors, or other stakeholders Executive Director above 70 years a precursor for imminent change, 31 December 2019. between short-term higher profits vs who work in association with the of age. which companies, investors and Shareholders Resolution: sustainable profits in the long run. company. all other stakeholders must brace Board attendance: Only in 15 Overall, for 82 resolutions, public themselves for, if they want to grow Sexual Harassment: During companies all directors attended institutional shareholders voted Inching towards the dawn of a in a sustainable manner and avoid FY 2018-19, 185 sexual 75% or more Board meetings. against for more than 10% of their new decade, we are witnessing an risks on account of the changing harassment complaints total votes polled, whereas public accelerated shift in investor stance, Committees: All the companies world. were reported by 30 sample complied with SEBI (Listing others voted more than 10% in favour of investing based on ESG companies. No complaints were against only for 16 resolutions. performance of companies in India Obligations and Disclosure In recent years, both regulatory as reported by 20 companies. and worldwide. With sustainability Requirements) Regulations, On a consolidated basis, the well as voluntary efforts have made of the future at stake, this report Cyber Security: 37 companies 2015 provisions on composition count was for 36 resolutions. ESG a focus area. SES has observed is a humble and sincere attempt disclosed in the annual report of committees. Overall, in the However, high against votes a steady growth in ESG disclosures for FY 2018-19 that their Risk sample, SRC & CSRC had less than from shareholders resulted in 2 by companies and an enhanced to highlight the ESG reporting Management Committee (RMC) 50% IDs, as the requirement is to resolutions of a company being attention from institutional trends and practices in India, in an monitors and reviews cyber only have at least 1 (33%) ID. defeated, i.e., not approved by its investors on ESG performance endeavour to initiate a discussion security risk. Only 6 companies shareholders. of companies. Once considered on widespread acceptance of provided data on the number From attendance data and a niche thematic approach to responsible investing based on ESG of incidences or complaints disclosure of risk policy, it Ethics, Bribery & Corruption: investing, ESG evaluation has quickly principles, with an eye on future regarding data security or privacy appears that the importance of Only 20 companies have disclosed metamorphosed into a fundamental sustainability. breaches. This reflects that either Risk Management Committee specific information regarding factor for the most investors, the companies are not centrally (RMC) is yet to sink in. Among its training or programmes to particularly for foreign investors. This study not only focuses on tracking all data security/ privacy all committees, RMC had less directors/employees for anti- In developed economies, investors ESG policies but also evaluates a breach concerns or are hesitant to than 75% attendance in 50% corruption policies/ procedures. publish negative information. and stakeholders now critically company’s performance against its companies, the lowest amongst Whistle Blower Complaints: Only evaluate a company’s commitment plans, implementation against set all committees. Governance: 16 companies disclosed whistle towards ESG, its targets, plans, targets and compare such plans blower complaints. 10 companies Independent Directors (IDs): Remuneration: 85% of the total and performance, while reviewing with achievements. Within the sample companies, Board remuneration was paid did not adequately disclose there were 276 IDs in total and 70 to EDs and balance 15% paid whether they have mechanisms of them were associated with the to NED-NIDs and IDs. Identical for whistle blowers – direct access company or group companies for remuneration was paid in 2 to the Chairperson of the audit more than 10 years. companies to EDs (including committee.

6 ESG Analysis on 50 listed companies in India ESG Analysis on 50 listed companies in India 7 Introduction to ESG Introduction to ESG

ESG analysis - Factors analysed: Why ESG? Renewable resources and recharging investors themselves, or for that weightage mainly to quantitative environment and other stakeholders, natural resources should be the matter, companies themselves, to and easily measurable objective not only would they be left out in Environmental damage and social core mantra of all our activities, be it assess ESG performance. Every parameters, such as growth, the sustainability race and prone to inequalities are threatening not only small or big. company must do a gap analysis financial positions, profit, dividend higher risks, but corporations and corporations but all living species, by comparing target set and pay-out, financial ratios, peer humans included. Climate change, businesses may also miss out on The importance of sustainable achievement with benchmarks and comparison, etc., for investment ENVIRONMENT global warming, resultant increase in opportunities of delivering a positive businesses is very well articulated also do peer analysis to achieve decisions. This was perfect when impact by creating long-term value Analyse how a company uses sea levels, consequent droughts and by Mr. Larry Fink (CEO of Blackrock) better ESG performance. Not only analysis was done in isolation. or abuses natural resources floods impact investors frequently, to the investors of the organisation. in his letter: companies, but all entities must However, with the passage of time, and, in effect how the business by disrupting business operations Corporations of today must prepare investors and corporations have operations of the company impact and supply chains and adversely carry out such analysis. for tomorrow, when ESG factors “We believe that all investors, become aware of the fact that they the environment both directly impacting human capital. It is a may determine continued existence, as well as indirectly. How along with regulators, insurers, do not exist in isolation but operate vicious cycle; environmental damage Presently, all across the globe, life as continued degradation of sustainable are the operations? and the public, need a clearer in an ecosystem where long-term, leads to global warming, which in has been disrupted and businesses environment will force law makers picture of how companies sustainable survival is possible turn leads to further environmental have been disrupted due to to ensure that only sustainable are managing sustainability- only with a two-way relationship damage. The extent of adverse COVID-19. And the situation is not operations continue in the future. related questions. This data with environment and society. impact of environmental damage expected to return back to normal should extend beyond climate Governance is the operating system can be easily noticed. It is reported anytime soon, till an effective to questions around how each to manage the two-way relationship. SOCIAL that more than a billion animals vaccine is found or rather, all of us company serves its full set of Companies have to perform their have perished in Australian bush will have to live with a new normal. Analyse how a company stakeholders, such as the diversity obligation towards environment manages relationships with fires. Changing weather pattern Indian businesses are expected of its workforce, the sustainability and society. If they fail in this, it is its employees, labourers, to face a new crisis - shortage of has been causing floods, drought, of its supply chain, or how well obvious that they are increasing the suppliers, customers, the labour, as migrant labourers have and reduction in ground water it protects its customers’ data. risk for business and threatening local communities and various deserted big cities and travelled level. Erratic weather has been Each company’s prospects for the future. Due attention and other stakeholders, regardless back to their rural hinterlands. While playing havoc, impacting crop growth are inextricable from its appreciation of ESG in true spirit will of where it operates. How it is reverse migration and its impact cycle ultimately impacting food ability to operate sustainably and lead to positive impacts on non- impacting society? – both on business and migrant production, thereby threatening serve its full set of stakeholders. financial parameters and can aid labourers – would be a topic for survival of all. ESG, therefore, The importance of serving businesses to prepare themselves research study, the fact is that many cannot be treated simply as three stakeholders and embracing for uncertain future and reduce risks, businesses, in the time of crisis, left letters of English alphabet worthy purpose is becoming increasingly given the damage being caused them alone to fend for themselves, of discussion only in conferences, central to the way that companies to environment, which is posing GOVERNANCE forgetting that labour force is a research papers and in glossy annual understand their role in society...” serious challenge for survival. If very important stakeholder in any Analyse the company’s reports any longer. negative impact of ESG factors are enterprise. The relationship has leadership, board diversity, In order for ESG not to remain a not attended, businesses may be been broken and will take time to fairness in board remuneration, If human race has to survive and piece of literature or an ornament subject to significant external risks independence of statutory prosper, planet Earth must be of décor and a mere lip service, rebuild. This has put the Social factor which potentially can have a sizeable auditors, audits, financial maintained the way nature created an evaluation of ESG practices in forefront. Businesses have to treat impact on the future profitability and reporting, and stakeholder it. For this to happen, ESG must be at regular intervals is a must. For their labour force and society as stability of the business and may engagement. ingrained in the DNA of corporations such an evaluation to be effective, important stakeholders. Healthcare pose serious threat to survival itself. and businesses all over the world, an evaluation framework coupled of workforce and healthcare facilities Such threats are no longer a paper Although the evaluation of especially if the objective is to with benchmarks needs to be fixed will take centre stage. We all have threat or doomsday prophecy, as one ESG practices may be of non- sustain business in the long run. for three factors – Environmental, learned a lesson at a huge cost. corporate in India has experienced it financial nature and appear Businesses should imbibe only Social and Governance. Evaluation in real terms. subjective, the impact of such such practices that are environment based on set ESG criteria can be Significance of ESG practices practices on the business does friendly, socially responsible, and done by independent evaluators for investors: If corporations are not watchful have a financial outcome. follow high standards of governance. like SES, regulatory organisations, Traditionally, investors provided of their negative impacts on the

8 ESG Analysis on 50 listed companies in India ESG Analysis on 50 listed companies in India 9 Introduction to ESG Prominence of ESG & the Present Study

ESG strategies and economic contribution to society. Prominence being given to ESG in performance: Is there any Companies must benefit all of India is reflected in a large number link? their stakeholders, including of companies, representing major shareholders, employees, chunk of market capitalisation that are voluntarily providing integrated customers, and the communities and/or sustainability reporting in which they operate.” although not mandated. A first by India Inc., as rarely performance of India Inc. on a voluntary basis A powerful argument against ESG One of the largest institutional has been so encouraging. ESG is that in the long term, we are all investors, Blackrock’s CEO Mr. performance becoming a vital dead. So why bother for the long Larry Fink, has stressed in his criterion for eligible investment and term? A perfectly valid argument letter ‘A sense of purpose’ to institutional investors demanding for a video game, where time is the investors that “To prosper ESG compliance has acted as a limited and fixed. Business in the over time, every company booster for disclosure. real world is different and unlike must not only deliver financial bonds, businesses are not fixed performance, but also show period investments. Corporations, how it makes a positive by definition, are perpetual in nature. Therefore, by not caring Back home, based on data from NSE, parameters on the company’s for ESG factor, we are hastening ESG index companies on an average performance and risk exposure to degradation. The price for the same The present study is an independent First attempt for any systematic seeking intellectual inputs of will be paid by stakeholders of have performed better compared their investment. It is now clear and systematic analysis and study of this kind is a challenging non-interested, non-competitor corporation only, investors being to other index companies. The that investor interest in responsible evaluation of ESG policies, disclosure and difficult task, as there is institutions was the best possible the biggest loser along with other Nifty 100 ESG (TRI) and Nifty 100 investing is gaining momentum, and performance of selected nothing to look back. Hence, the solution. To this effect, SES stakeholders. It can be said with Enhanced ESG (TRI) have delivered which demands for an objective, companies of India Inc. This first effort goes through many collaborated with CAM, solely to certainty that a business which has 11.3% p.a. and 11.5% p.a. since quantitative analysis of the effect of independent unbiased systematic phases, beginning from researching seek legal inputs on the model an unsustainable operation and 1 April 2011, which is 70 bp and 90 ESG for their portfolio’s performance. assessment of ESG practices would legislative and voluntary guidelines developed by SES, and is threatened of its survival will bp greater than returns of Nifty 100 Increasingly, research analysts help India Inc. to have a broader and practices, comparing once the model was developed, lose value. Studies carried out by (10.6% p.a.) respectively. and the market regulators are picture of India Inc.’s ESG footprint, international practices with national SES independently carried out organisations such as Arabesque Luckily, investors and analysts emphasising equally on other non- benchmark it. It will further enable practices, examining applicability this study. Partners, Oxford University, MSCI, have started considering the non- financial factors that play an equal gap analysis and drive companies of international best practices for and Harvard have concluded that financial parameters, both internal role in evaluating the company’s to achieve leadership status within Indian environment, framing issues there exists a positive correlation and external, to understand the market valuation. their industry and achieve better and creating a model, creating between the company’s economic potential impact of these identified performance. Additionally, it will give benchmarks and finally assessing performance and its strategies and institutional investors a ready-made companies on parameters based on actions towards ESG areas. NIFTY100 ESG NIFTY 100 Period Nifty 100 TR tool to benchmark companies. The disclosures made. TR Enhanced ESG TR study may also act as a catalyst and Globally, the MSCI All Country inspire companies that are at present The job was challenging, not only World Index (ACWI) ESG Leaders 7 year 13.5% 13.6% 12.6% because of steps and work involved Index rose 52% in the past five years not doing integrated reporting and 5 Year 10.3% 10.4% 9.6% but also due to the fact that there is vs. 39% for the MSCI All-country are lagging in their ESG practices compared to peers, to follow better always a risk that some vital factors World Index (Source: Article titled 3 Year 16.4% 16.2% 15.1% “MSCI Says ESG Indexes Will Be ESG practices. The end objective may be unintentionally overlooked Bigger Than Traditional Gauges” 1 year 12.3% 11.5% 11.8% is to create an awareness so that or there could be disproportionate dated February 13, 2020 published appreciation for ESG becomes focus on an area at the cost of As on 31st December, 2019 | Source: Presentation on ‘ESG Investing: Virtue in the stock losing focus on other. To remove by Bloomberg). market’ by Mr. Mukesh Agarwal, CEO, NSE Indices Ltd. | TR – Total Return | TRI: Total Return contagious and becomes ingrained in Index the organisational DNA. such potential shortcomings,

10 ESG Analysis on 50 listed companies in India ESG Analysis on 50 listed companies in India 11 ESG Highlights ESG Highlights

ESG score distribution: Interpretation/ commentary: ESG model and analysis statistics: Companies have largely scored Sample companies were analysed based on a pre-determined set of questions better on policy disclosures followed and parameters. by governance factor, compared to environment and social factors. Questions in the Parameters Total Parameters Model Analysed in each Company Analysed in Sample On policy disclosures, 74% scored 80+, whereas on governance 244 1,069 53,450 factor 14% scored 80+, with TOTAL DATA POINTS ANALYSED 1,00,000+ only 1 company having overall ESG score at 80+. Similarly, 36% To arrive at ESG score of sample companies, over one lakh data points were companies had scored less than 60 analysed. On an average, over 2,000 data points were used for one company. on social factor, compared to 18% ESG footprint: Graph 2 highlights the ESG score of each sample company and divergence of companies scoring less than 60 on score across policy disclosure, environment, social, and governance for each ESG Scores1 are also categorised into ESG footprint levels. Higher the score, higher the footprint and lower the risk. the environment factor. Surprisingly, sample company. 3 companies scored less than 60 on policy disclosure, although these ESG FOOTPRINT SCORE companies have better overall ESG ESG RISKS score. Even divergence of score follows the same pattern amongst three factors - governance is in a Findings: narrow range, whereas E&S scores Top 3 industries Top 3 companies are comparatively staggered in a broad range. This is on expected 73.7 - Automobile 80.1 - Automobile lines; higher governance score is result of almost two decades of 72.1 - Chemicals 77.9 - Consumer goods regulatory efforts, whereas E&S Note: Overall ESG score of companies has been sorted from high to low (Left to Right) are new areas and mandatory push 72.1 - Consumer Goods 77.8 - Automobile is missing. Apart from a lack of regulatory push, proper appreciation Note: Top 3 Industry: Average industry score; Top 3 Company: Top scoring company (referred of E&S is not yet a part of corporate as respective Industry) DNA, as much as one would like it Worst performing industry Worst performing company to be. Additionally, disclosures differ from company to company and at 69.4 - M etals & Mining 61.6 - Metals & Mining times are not comparable. At times

Note: Worst Performing Industry: Lowest Average Industry Score; Worst Performing Company: disclosure practices of a company Lowest Score of a Company differs Y-o-Y, which makes data

1 ESG score of a company is out of 100. The scores are sometime also referred in % form. E.g. 75 score/75% score difficult for comparison.

12 ESG Analysis on 50 listed companies in India ESG Analysis on 50 listed companies in India 13 ESG Highlights Scoring Model & Factors

Policy disclosure: explains the impact of regulatory S factors as a part of organisational In the SES scoring model, push. The gap between maximum culture, rather than regulatory or companies were assessed A high average score on policy and minimum score in G factor (23), investors’ requirement. broadly on four parameters - disclosure compared to all three is much higher compared to E (44) Policy, Environment, Social, and I – Policy Disclosures parameters - E, S, and G - indicates and S (34) factors. Most importantly, The scores reveal that a lot needs Governance. Factors under each time and effort gap in translating 1.1. Principle-wise (as per NCGS) BR policy/policies comparatively low scores on E and S to be done for improvement in category are listed in this section. policy into action. This reflects factors can be attributed to the fact ESG practices and its disclosures However, detailed parameter-wise 1.2. BRR implementation reality; creating a policy is the first that there are no regulations and by Indian corporates, especially discussion and analysis is presented 1.3. General discussions step, translating it into reality takes until now, no scrutiny took place of keeping in mind that sample consists in the later part of this report. much more time and effort. In a disclosures and practices. Further, of Crème de la crème of India Inc. few cases, policy disclosures could many gaps could be due to the fact High scoring companies have made be just an academic effort to tick that for these disclosures, there is reasonably good disclosures. They all the mandated check boxes. The no prescribed format and very little still have room to do better and lowest gap between policy score historical data. Hopefully, scores are match global disclosure standards and factor (ESG) score is in the case likely to move up when companies and improve their ESG focus to of governance, which once again develop a system and imbibe E and become world leaders. II – Environment 2.1. General disclosures 2.5. Water consumption 2.2. Products/services 2.6. Air emissions 2.3. Energy consumption 2.7. Waste management 2.4. Renewable energy 2.8. Environmental incidents

III – Social 3.1. Workforce 3.2. Health and safety 3.3. Relationship with local communities 3.4. Data security and customer orientation

IV – Governance 4.1. Board composition 4.5. Audit and financial reporting 4.2. Board committees 4.6. Stakeholder engagement 4.3. Director’s remuneration 4.7. Others 4.4. Statutory auditors

14 ESG Analysis on 50 listed companies in India ESG Analysis on 50 listed companies in India 15 Sample Selection I. Policy Disclosure Summary of Findings

The first task for a study is to minimal, compared to companies involved in other industries, especially Policy Disclosures This section analysed the company’s disclosures in its Business choose target/sample. For this companies involved in manufacturing activities, which have a high potential for Responsibility Report (BRR) which comprises nine principles of business study, SES has selected the sample negative impact (on E&S). To focus on such impactful companies, a conscious responsibility, and general discussions on the E and S factors. The based on broad criteria specified by decision was taken to exclude finance & IT companies. The other reason was disclosures are further evaluated in detail in relevant sections, viz., that these companies dominate the top 100 companies market cap list, and NSE, keeping in mind objectives of environmental and social. the study. their inclusion would have made sample a biased one. across nine principles of BR, Top 3 industries Top 3 companies Overarching consideration for Final sample: reflecting that compliance in letter

inclusion was the availability of 50 Companies by most companies. Surprisingly, Environment 92.6 - Energy 97.9 - Chemicals structured ESG data both qualitative automobiles, chemicals, cement, 12 industries (excluding Finance/ IT), for analysis purpose, clubbed into and quantitative for at least two to and energy – the four most polluting eight industry groups three years. ESG analysis would 91.9 - Automobile 97.9 - Automobile industries, have come out better not have been possible based on Textile, telecom, services, pharmaceutical and construction, with less than than compared to all other industries BRR alone. Some Indian listed three companies in the sample, are clubbed under ‘Others’ in policy disclosure, indicating level 91.5 - Chemicals 97.4 - Energy of awareness and concerns. companies, going beyond legal Sample has MNC, PSU and Indian promoter companies (as on 15 January requirements, publish integrated or 2020) The BRR format requires companies sustainability reports. It was obvious Note: Top 3 industries: Average industry score; Top 3 companies: Top scoring company Social to provide a ‘yes/no’ response that this study could analyse only Indian Promoter 37 PSU 7 MNC 6 (referred as the respective Industry) to a set of questions on policy such companies. Market capitalisation: 41% of Nifty 100 companies and 30% of total NSE formulation across nine principles Worst performing industry Worst performing company listed companies (as on 31 December 2019). of BR. In case a company does not Criteria for inclusion: publish its BRR separately, it must Promoter managed - 48, professionally managed - 2 Company must have disclosed 73.7 – Metals & Mining 48.1 – Metals & Mining provide a mapping of answers to either integrated or sustainability In 48 promoter-managed companies, shareholding distribution is as below, questions under the BR format, with report or related report for FY with average at 52%: Note: Worst performing industry: Lowest average industry score; Worst performing company: their sustainability report.

Lowest score of a company Governance 2018-19 on or before 15 January % Promoter’s Shareholding ® 0 < 25% 25-50% 50%+ Four companies in the sample have 2020 and provided mapping of BRR but did Distribution of 48 Companies ® 1 13 34 Scores and distribution: Company is either not specifically provide information • In top 10 company of the in the tabular format for question 2 sector/ industry (maximum 10 of BR format as prescribed by SEBI. companies in each sector)2; OR As a result, information required to be disclosed in tabular format is not

• Within list of top 100 easily obtainable. In the absence Evaluation Framework companies by market of structured information, to reflect 3 capitalisation ; OR factual position, a manual search • Within list of Nifty 100 was done to ensure correct score companies4; and wherever possible. However, from an investor’s perspective, information • Not from IT/ banking / finance should be readily available without sectors much efforts or hassle. Therefore, Industry classification is based on NSE (Source: NSE website). Sector wise Complete list of as a policy, considering investor companies (Annexure I). Interpretation/ commentary: that the sample companies are Why the IT / banking / finance convenience, in the next evaluation sectors are excluded: mandated by SEBI to publish their 2 To ensure diversified coverage across various industries, top company from each industry exercise, such companies shall Direct environmental and social were included first regardless of market cap ranking. Overall sample companies have BRR in prescribed formats. BRR loose score if disclosures are not impact due to business operations 3 Market Capitalisation as on 3 December 2019 scored well in policy disclosures. requires companies to disclose provided as per tabular format or in of finance and IT companies are 4 Nifty 100 as on 3 December 2019 This may be because of the fact if they have formulated policies a consolidated manner at one place.

16 ESG Analysis on 50 listed companies in India ESG Analysis on 50 listed companies in India 17 1.1 Principle-Wise (as per NVGS) BR Policy/Policies 1.1 Principle-Wise (as per NVGS) BR Policy/Policies

Among the nine principles, Higher positive responses and principle 8 (growth and legal mandates in India. Hence, Policy Disclosures Assessment factors: the least number of sample were found across principle 1 equitable development - social most companies have formal Assessment of company’s Scores of all companies in companies responded positively (ethics), principle 3 (employees), responsibility). This can be policies to comply with the law on responses to ten questions on the sample were analysed for for disclosures on principle 7 principle 4 (stakeholder), attributed to the fact that some of these principles. nine BR Policies. (Reference: arriving at a policy disclosure (i.e., public advocacy). It had the principle 6 (environment), these policies flow from various score. (Overall 90 responses to SEBI BRR format - Section D- lowest score on all four measures. Question 2) 90 questions) For certain principles, such as P3, Question-wise (as per NVGS) response P4, P6, and P8, 100% compliance Environment was observed with respect to 5 Table 2: Questions Min. Avg. Med. Max. Principle-wise scores (as per NVGS ) response policy formulation. Except for the 1 Do you have a policy/policies for principle? Table 1 reflects minimum, average, median, and maximum percentage scores question relating to formulation 76 95 98 100 within the sample companies across each BR principle. of policies, no other question 2 Has the policy been formulated in consultation with the relevant stakeholders? 70 86 90 90 observed similar highly positive For complete scores of all sample companies across each BR principle and 3 Does the policy conform to any national / international standards? If yes, specify response across the sample. 68 82 84 90 across each question, please refer Annexure II - Disclosure pattern in BRR table. (50 words). One of the recurring reasons

4 Has the policy been approved by the board? If yes, has it been signed by the Social for not framing a policy on the 68 85 88 94 MD/owner/CEO/appropriate board director? Table 1: Principles Min. Avg. Med. Max. principle 7 is that there is no 5 Does the company have a specified committee of the board/director/official to oversee 1 Businesses should conduct and govern specific/ formal policy on public 74 90 94 98 the implementation of the policy? themselves with ethics, transparency and 80 91 92 98 advocacy. However, companies accountability. have stated that they indirectly 6 Indicate the link for the policy to be viewed online. 62 82 82 96 2 Businesses should provide goods and covered aspects of principle 7 7 Has the policy been formally communicated to all relevant internal and external services that are safe and contribute to 76 85 84 98 under other policies. This may be 74 89 94 94 sustainability throughout their life cycle. stakeholders?

attributed to the fact that in India, Governance 3 Businesses should promote the well-being advocacy, if at all done, is done in 8 Does the company have an in-house structure to implement the policy/ policies? 72 88 90 92 80 90 90 100 of all employees. a non-transparent manner. 9 Does the company have a grievance redressal mechanism related to the policy/policies 64 85 86 92 4 Businesses should respect the interests of, The obvious reason for low score to address stakeholders' grievances related to the policy/ policies? and be responsive towards all stakeholders, 78 92 93 100 on this parameter is the general especially those who are disadvantaged, 10 Has the company carried out independent audit/evaluation of the working of this policy 66 78 78 88 vulnerable and marginalised. negative perception on advocacy. by an internal or external agency? 5 Businesses should respect and promote Culturally, advocacy is seen as 74 84 84 94

human rights. an unethical method. Therefore, Most sample companies policy was approved by the Board, companies to disclose a link to Evaluation Framework it is unlikely that this score will sample companies on an average 6 Business should respect, protect, and make responded in the affirmative to the view the policy on the company’s 84 91 91 100 efforts to restore the environment. improve in the near future. question if they had formulated basis scored 81, which is 15% website. On an average, there was a policy on the principles of BR, lesser than the highest average no link provided for 18% policies 7 Businesses, when engaged in influencing The second worst response was taking the average percentage score of 95 on question 1. in the sample companies, or such public and regulatory policy, should do so in 62 69 69 76 with respect to the principles a responsible manner. score to 95. The highest median The lowest average score of 78 policies were not available on the relating to ‘respect and promoting of 98 was observed for the was observed for the question company’s website. 8 Businesses should support inclusive growth 80 91 91 100 human rights’ and ‘engagement question related to formulation related to independent audit and equitable development. In the absence of such hyperlinks, and providing value to customers of BR policies. However, for other evaluation. Probably because it it is inconvenient for stakeholders 9 Businesses should engage with and provide and consumers’. Once again, questions, such as, if the policy is not mandatory as yet, and on a 74 82 84 90 value to their customers and consumers in probably, these concepts are yet were formulated in consultation voluntary basis, it might appear to search a company’s website a responsible manner. to be assimilated in our system. with relevant stakeholder, if to be an avoidable cost, as its to find relevant information, importance is yet to sink in. 5 NVGs: National Voluntary Guidelines on Social, Environmental & Economic Responsibilities policy conforms to national or especially, for those stakeholders of Business international standards, or if BR report format requires who are not tech-savvy.

18 ESG Analysis on 50 listed companies in India ESG Analysis on 50 listed companies in India 19 1.2 BRR Implementation 1.3 General Disclosures

important to review BR initiatives Policy Disclosures Assessment factors: Assessment factors: and implementation plans of the The assessment of BRR General disclosure and company. SES assessed sample performance and frequency discussion on practices companies on this topic as well. of review by sample related to environmental companies 42 companies from the sample impacts, such as air emission, The participation of have specified the period in which water emissions, etc., by the entities connected with they assess the BR performance, management whereas the remaining 8 the sample companies in General disclosure and Environment BR initiatives companies have provided generic discussion on workforce information (e.g. Periodically). diversity, workforce relationships, and health and Only 12 companies have stated Only 29 companies disclosed Assessment of BRR safety-related practices by that they assess the performance that other entity/entities (e.g. performance-frequency the management quarterly. of review Suppliers, distributors, etc.) 5 (of 10) companies in consumer Participate in the company’s BR The law mandates that companies initiatives. As shown in Graph 7, E & S factor- goods industry and 3 (of 8) Social disclose frequency at which they wise disclosure was assessed. companies in metals & mining evaluate implementation of BR Out of such 29 companies, only 6 evaluated the BR performance policies. Because in the eyes of companies have mentioned that lawmakers, planning, execution, quarterly. more than 60% other entities review, and corrective action participate in their BR initiatives. are vital for any project. Regular Business associate 18 companies have disclosed that meetings of audit committees and participation in BRR there is no participation and 3 risk management committee are Environmental and social companies have not provided any Governance tools to manage risk and ensure footprints of the company’s specific information in this regard. good financial control system products and services do not 2 (of 6) companies each, in and are considered to be of high start or end with the company automobiles, energy and 1 (of 3) importance. alone. They extend to raw company each in the chemical, material providers, suppliers, Likewise, meeting of committee fertiliser industries from the distributors, and consumers, who or team responsible for BR sample reported over 60% are important participants along implementation is equally participation by other entities in Evaluation Framework the product life cycle. Hence, it As ESG reporting is rather recent parameters. They have discussed not disclosed any information BR initiatives of the respective is imperative that in the efforts and not structured, SES looked at initiatives or steps taken towards companies. on improvement if any of labour/ of the company to improve its the Board’s Reports, company’s reducing their impact on the management relations. environmental or social impact, 6 (of 8) companies in metals annual reports to find out whether environment. Detailed, quality- All the companies in the sample its BR initiatives must extend to reported no participation of companies have made discussions wise discussions/disclosures are and be applied by entities the other entities, followed by 60% regarding E & S factors. analysed separately under the have included discussions on company does business with. companies in the cement environment and social sections. occupational health and safety. It was a pleasant surprise to industry. However, 4 companies did not BRR format requires companies note that despite not having Only 6 companies in the sample to assess participation of entities, mandatory push, barring few, have not made any discussion on provide any detailed information such as suppliers, distributors, almost all the companies in the labour/management relations, on measures taken to ensure etc., in the implementation of BR sample have discussed about and 5 companies have made improvements in health and safety practices of the company. various environmental and social discussions on relations, but have practices.

20 ESG Analysis on 50 listed companies in India ESG Analysis on 50 listed companies in India 21 II. Environment II. Environment Summary of findings

also belongs to the same sector. The are highly regulated industries, and energy consumption and waste Policy Disclosures Scores obtained by sample Top 3 industries Top 3 companies lowest score in the metal and mining because of their nature of business, management are the two most companies on E factor have industry is also near the lowest score have been in focus and received been analysed mainly covering 75.0 - Cement 88.0 - Cement focussed areas. among the sample companies. It closer scrutiny. the company’s disclosure appears that the metal and mining Water consumption is the most regarding the impact of its 72.7 - Automobile 87.5 - Metals & Mining industry’s appreciation/concern Most automobile companies have neglected area, based on the operations on the environment for the E factor is not uniform. The business operations across multiple average and median scores. and steps being implemented highest scoring metal and mining countries, which requires them to by the company to mitigate 72.7 - Consumer Goods 87.3 – Consumer Goods not only meet Indian standards but Once again, lack of disclosures company appears to be an outlier in Environment its environmental impact. the sector. also global standards, thus resulting could be the factor behind these Additionally, it was also in better disclosure practices. low scores. analysed whether the company Note: Top 3 industries: Average industry score; Top 3 companies: Top scoring company refered as its respective industry The least divergence (5) in scores has managed to reduce its across industries was observed Category Scores in impact on environment and was Worst performing industry Worst performing company within the fertiliser and pesticides meeting the set targets. Environment: industry, among the sample 64.6 - Energy 44.0 - Others companies. Social Note: Worst performing industry: Lowest average industry score; Worst performing company: Wide divergence between high and Lowest score of a company low scores within an industry group indicates that although business is same, there is no symmetry Environment-related risks can due to lack of defined disclosure Interpretation / commentary: in environmentally sustainable have serious ramifications on the standards, despite paying attention Lowest score on the E factor of 44 practices and disclosures on the company’s financial performance, to these risks and addressing the obtained was almost 50% of the same. On one hand, wide divergence in terms of fines, shutdowns, and same, their score may not reflect top score of 88, with average score is reflective of lack of mandatory disrepute, if risks are not identified Governance the real position. Therefore, a more being 70. Clearly, this indicates the provisions. On the other hand, it and handled appropriately in due wide gap between the top and the realistic picture would appear from reflects a sense of concern to E time. India has set a series of bottom. Amongst various industries, next year onwards, when forward- factor as reflected in high E score on Across the eight categories targets to reduce its impact on the highest divergence between voluntary basis. looking companies standardise analysed, in seven categories the the environment. Mere lip service lowest and highest score on E highest score is 100. In water may not suffice, as performance and enlarge not only their attention factor is observed in metal & mining Cement and automobile companies, consumption, the highest score of companies would be not only to E&S factors but also pay more sector, at 42%. It is ironical that despite being one of the most is 98. This indicates that there watched by government agencies attention to disclosures. second highest scoring company polluting industries (in terms of is at least one sample company Evaluation Framework but also by the public as well as product life cycle), have scored (not necessarily same company) discerning investors. relatively better than all other that has scored perfect 100 on 7 sectors. Their lowest score on E parameters. These scores are an earnest factor is better than other sectors The lowest score across eight attempt in identifying the risks and their highest scoring companies categories is 0, again on that are faced by the company are either at par or a few notches disclosures related to water, along related to environmental factors below the highest scoring company with environmental incidents. and assessing the same against an within the sample. objective measurement standard. It Based on average score may be possible that the companies This is probably due to the fact that after general disclosures and have undertaken various initiatives automobile and cement companies environmental incidents, and steps to address their risks on environmental factors. However,

22 ESG Analysis on 50 listed companies in India ESG Analysis on 50 listed companies in India 23 2.1 General Disclosures 2.1 General Disclosures

associated with the company International Organisation for Policy Disclosures Assessment factors: as well. Standardization (ISO) states General disclosure practices that “14001:2015 sets out the 48 companies have identified related to environment; criteria for an environmental environment risk and have management system and can Environmental policy and its dislcosed strategies or initiatives be certified to. It maps out a applicability to other entities to address environmental issues framework that a company or Assessment of environmental caused by them. organization can follow to set risks 30 (60%) companies do not up an effective environmental Environment Strategies/initiatives to have any projects under clean management system. It can address environmental development mechanism. be used by any organization concerns regardless of its activity or sector.” Environment-related Clean Development Mechanism management systems and its (CDM): CDM allows emission- certification reduction projects in developing countries to earn Certified Emission Reduction (CER) Social credits, each equivalent to one Maximum - 100 Best performing industry Best performing company tonne of CO2. These CERs can 91.5 - Fertilisers 100 - 3 Companies be traded and sold and used by Median - 81 industrialized countries to a meet a part of their emission reduction targets under the Kyoto Protocol. Average - 79 Worst performing industry Worst performing company (Source: The United Nations Framework Convention on Climate

67.5 - Others 38.2 - Automobile Governance Minimum - 38 Change – UNFCCC)

11 companies had no disclosure Among the sample companies, 42 Selected initiatives • Bio-Diversity is extended to group / joint regarding bio-diversity, planting companies disclosed the existence ventures / suppliers/contractors / of Environment Management Three companies (from energy, of trees or increase of green Systems. The remaining metal and others) in the sample These companies were also certified NGOs / others. cover. companies have not provided met all the parameters set for with The highest ESG scoring company information in this regard. All

evaluation. These companies made Management Systems: Evaluation Framework • ISO 9001 – Quality Management disclosed that its environment the companies in the energy the following key disclosures: • ISO 14001 - Environment policy extends to other entities and chemical sectors disclosed • Environment policy on website “Businesses should develop Management System and other entities’ participation that they have an environment • Environment programmes / Environment Management management system. • ISO 50001 – Energy Management was more than 60%. initiatives Systems (EMS) and contingency Further, only 22 companies • Strategies / initiatives to address In view of the same, the company plans and processes that help disclosed information about their Observations global environmental issues, may have a relatively high them in preventing, mitigating Energy Management System such as climate change, global General impact on reducing negative and controlling environmental and provided information on ISO 50001 certification. The warming, etc. All the companies in the sample environmental impact in cases damages and disasters, which highest disclosure was observed • Information on environment risk have disclosed that they have an where responsibility is not may be caused due to their in automobile sector companies assessment environment policy. limited to the company, but operations or that of a member from the sample as 67% (4 of 6) • Projects on clean development 34 companies have disclosed is extended to various other of its value chain.” – SEBI BRR companies provided information mechanism that their environment policy entities or external stakeholders Circular on energy management system.

24 ESG Analysis on 50 listed companies in India ESG Analysis on 50 listed companies in India 25 2.2 Products / Services 2.2 Products / Services

Remaining 6 companies provided Policy Disclosures Assessment factors: either very generic information or The company’s disclosures and no information. practices related to products or SEBI BRR Principle 2 requires Product ban or product recall: services impacting environment The most comprehensive that businesses should assure due to disclosure regarding life cycle safety and optimal resource use assessments was observed in Sourcing of materials - over the life cycle of the product consumer goods industry, where sustainability issue – from design to disposal – and 90% (9/10) companies have ensure that everyone connected Incidences regarding banning Environment Product life cycle assessment made that disclosure. with it: designers, producers, products were observed mainly in Product packaging value chain members, customers pharmaceutical companies. Probably Product packaging: and recyclers are aware of their because of the fact that the industry responsibilities. supplies globally and is subject to stricter norms at a global level. Maximum - 100 Best performing industry Best performing company Of 50 companies in sample, 48 have disclosed that they 68.2 - Consumer Goods 100 - Others Only 21 companies provided

have procedures in place for Social Median - 59 information regarding packaging sustainable sourcing. materials. 39 companies disclosed steps or Average - 60 100 - 3 Companies Product recall was observed 80% (8/10) companies in Worst performing industry Worst performing company initiatives taken for sustainable the most in automobile industry the consumer goods industry sourcing. (3 companies), followed by provided information regarding Minimum - 23 48.0 - Metals & Mining 22.6 - Metals & Mining Only 14 companies provided the pharmaceutical industry (1 packaging. The industry is the statistical data on sustainable company). Generally, products were largest user of packaging, as it sourcing, though the level and recalled due to safety standards of produces goods for end use by • Target to use LCA to undertake Governance Selected initiatives: Observations: type of disclosure differed from the products. consumers and requires use of Environmental Product Sustainable sourcing: Sustainable sourcing: company to company. packaging materials. Declaration (EPD) for major/key • Creation of a sustainable supply No uniformity was noticed in Life cycle assessment: products. Companies do not exist in isolation; chain roadmap. disclosures made under this their supply chains are an integral SEBI BR Principle 2 states that • Conducted LCA studies for category. While some companies • Supplier assessment: Evaluation part of their operations and are of “Businesses should assure safety evaluation of the opportunities for provided data in absolute of suppliers on being quality and optimal resource use over the improvement in the value chain of utmost importance. Sustainability numbers, others provided in centred, ethically driven, green life cycle of the product. Product products and implementation of initiatives of the company in relative terms. In a few cases, Evaluation Framework inspired, and socially focused. Life Cycle Assessment indicates appropriate interventions. isolation would leave the company data was provided only for a cradle to grave impact on the • Conducting responsible sourcing particular plant or location, rather unprepared and open to risks from environment by the product, which audit. than for company as whole. Product packaging: possible unsustainable operations can be quantified and compared.” • Creation of ‘Code of Conduct’ for • Collection of consumer packaging of its business partners. Extending Almost all the companies have provided information about key sustainable sourcing. waste. business responsibility initiatives 25 companies disclosed having activities or products/services. • Setting up ‘buy-back’ collection of the company across its supply performed life cycle assessments 44 companies provided Life cycle assessment: centres to collect plastic chain, including its suppliers, (‘LCA’) of their product. information on products • Conducted LCA based on ISO packaging for recycle and reuse. associates, and distributors, or services whose design Out of these 25, only 9 companies 14040 and ISO 14044. • For single product, combining can have a lasting impact on the has incorporated social or disclosed that their assessment • Targets set to conduct LCA for all double (inner and outer) company’s performance and environmental concerns, risks was based on national or major/key products. packaging to single packaging. preparedness in the long run. and/or opportunities. international standards.

26 ESG Analysis on 50 listed companies in India ESG Analysis on 50 listed companies in India 27 2.3 Energy Consumption 2.3 Energy Consumption

Observations: More than 80% of companies in Energy is an essential factor of Policy Disclosures Assessment factors: the automobile (5/6) and metal production. However, the negative Section 134 of the Companies The company’s disclosures (7/8) industries provided three- impact of energy usage on the Act, 2013 mandates disclosure and practices related to energy year data on energy intensity. environment must be reduced by of information relating to energy consumption: increasing the usage of renewable consumption and conservation. The least disclosures are Disclosure of data on total observed in the consumer goods and clean sources of energy and energy consumption / energy ‘Conservation of energy’ was a and other industries. improving energy efficiency through intensity universally discussed issue. energy-saving equipment. 11 companies did not disclose

Reduction in total energy Few companies have made only energy intensity. Therefore, they Environment consumption / energy generic disclosures related to were analysed on the basis of intensity impact on conservation of energy. total energy consumption.

Steps taken to conserve Generic disclosure on energy 38% (3/8) metal companies energy or reduce energy consumption/usage data does reported a decrease in energy consumption not facilitate any meaningful intensity for last three years. analysis. All the companies in the Targets set and its As a best practice, steps or automobile and chemical achievements Social initiatives taken and their impact industries reported a decrease in on conservation of energy in energy intensity for at least one terms of specific disclosure on year (out of last three years). energy consumed figures should 40% (2/5) companies in cements Best performing industry Best performing companies Maximum - 100 be disclosed. and 30% (3/10) companies in consumer goods reported an 86.1 - Metals & Mining 100 - 9 company Energy reduction Y-o-Y in increase in energy intensity for Median - 74 absolute terms may not reflect the last three years. conservation or efficiency due Governance to a variety of factors. Ideally, Average - 75 Worst performing industry Worst performing100 - 3 Companies company disclosure of energy intensity is a better benchmark. Minimum - 30 65.7 - Others 30.0 - Others Energy 3 consumption 3 companies reported a

Common initiatives: upgrading the knowledge base of undertake qualifications of an Energy decrease in total energy Evaluation Framework personnel across different plants. 45 consumption for the last three • Use of energy efficiency products energy manager and energy consumption years (among the 11 companies • Monitoring energy efficiency of auditor. 45 companies disclosed data on • Change in business process for which did not disclose data on energy consumption. major suppliers and conducting energy intensity). energy efficiency. • Training and engagement with energy audit at suppliers. relevant stakeholders in building • Formation of energy cell / Selected initiatives: responsible behaviours in committee / team to identify and • Conducting energy efficiency implement new and innovative usage of energy and facilitating audits. measures for energy conservation. installation of energy efficient Energy Energy 39 3 • Organising awareness and plant & equipment. intensity intensity • Energy Management System – training sessions on ‘energy 39 companies disclosed data 8 companies reported a ISO 50001 certification • Formation of energy management audits’ and energy management on energy intensity or specific decrease in energy intensity systems for sensitising and • Encouraging employees to centre. energy consumption. for the last three years.

28 ESG Analysis on 50 listed companies in India ESG Analysis on 50 listed companies in India 29 2.4 Renewable Energy 2.4 Renewable Energy

70% (7/10) companies in The consumer goods industry Out of the remaining companies Policy Disclosures Assessment factors: the consumer goods industry disclosed targets and an increase reporting decrease in The company’s disclosures disclosed data on renewable in usage of renewable energy, investments, 13% companies and practices on the usage of energy usage. 67% companies both in absolute numbers and reported decrease in investments renewable energy in its total from the automobile (6/8) and relative terms. for last two year, yet reported an energy mix. chemical industries (2/3) have increase in renewable energy 5* companies in consumer goods Renewable energy usage data disclosed the data. usage, probably as a result of have reported renewable energy Steps or initiatives taken to earlier investments. The least disclosures were consumption of 30%+ from total increase renewable energy observed in companies from the energy consumption (*among Environment usage metals and other industries. companies 7 companies that Investment on energy Almost all the companies in have disclosed renewable energy conservation equipment the sample disclosed steps % consumption data) Targets set vs. Achievements or initiatives taken towards Highest % renewable progressively increasing consumption among consumer renewable energy usage. Best performing industry Best performing company goods stood at 73%. Maximum - 100 2 companies from the 2 companies each in automobiles Social automobiles and chemicals 67.7 – Cement 100 – Consumer Goods and fertilisers & pesticides industries did not make any Median - 59 reported renewable energy specific disclosure regarding consumption of more than 15% steps or initiatives taken by them. Average - 61 Worst performing industry Worst performing100 - 3 Companies company from total energy consumption.

47.1 – Fertilisers 20.0 – Chemicals Minimum - 20 Investment in renewable

energy: Governance Common initiatives: • Installation of solar energy Renewable equipment for suppliers. 15 • Capital investments were made to usage set up solar plants, rooftop solar 15 companies reported an panels, windmill plants, biomass Observations: Data 35 increase in renewable energy energy projects, etc. Disclosure usage either in absolute terms 35 companies provided or an increase in contribution in statistical data on the amount total energy consumption, for

Selected initiatives: Evaluation Framework of renewable energy used. 38 companies disclosed the • 2 companies are signatory to last 3 years. In Paris Accord on Climate amount of investment made by RE100 – a collaborative, global Change, India made a pledge them on energy conservation initiative of influential businesses that by 2030, 40%6 of installed equipment. 2 companies committed to 100% renewable electricity. power generation capacity shall disclosed about investments but be based on clean sources, it did not provide the amount of • 3 companies are signatory to was determined that 175 GW of investment. Rest 10 companies EP100 – an initiative which offers Steps / 48 renewable energy capacity will be did not provide any information in companies a choice of three Initiatives 17 installed by 2022. This includes Targets commitments viz. Double Energy 48 companies have disclosed this regard. 100 GW from solar, 60 GW from 17 companies disclosed targets Productivity, Implement Energy steps taken or initiatives to or goals to increase renewable 12 companies reported increase Management System, Net Zero wind, 10 GW from bio-power and increase usage of energy from energy usage. However, only 7 in investments for last two years. Carbon Buildings. 5 GW from small hydro power. renewable sources. companies have been able to 9 companies reported increase 6 Source: Press Information Bureau | Government of India | Ministry of New and Renewable Energy (Weblink) achieve the set target. for 1 year.

30 ESG Analysis on 50 listed companies in India ESG Analysis on 50 listed companies in India 31 2.5 Water Consumption 2.5 Water Consumption

Signs of war over water and water- Among companies that disclosed Policy Disclosures Assessment factors: related risks are visible. Issues water intensity, 2 companies in The company’s disclosures and of pollution of groundwater, river, cement industry which disclosed practices on water usage or pollutants discharge and depletion Consumption data reported decrease in water consumption: 3 of groundwater have disrupted reduction intensity for the last three years. Disclosure of data on total operations of few companies in past. 3 companies reported a water consumption/water The risk is no more a theory or a decrease in total water intensity distant possibility. consumption or usage for

Steps or initiatives taken to the last three years (among Environment 23 companies which did not reduce/recycle/reuse water As India in the water-stressed category, optimum use of water disclose water intensity). Rain water harvesting system and minimal negative impact on Targets set vs. Achievements water resources are two major risk mitigation measures to ensure sustainable business operations. Intensity 7 reduction Best performing industry Best performing company Social Maximum - 98 Overall, only 7 companies 85.3 – Cement 98.3 – Consumer Goods reported a decrease in water Median - 51 Water intensity for the last three 44 consumption years. 13 companies reported a decrease for two out of the last 44 companies disclosed data on Average - 56 Worst performing industry Worst performing100 - 3 Companies company three years. water consumption or usage.

Minimum - 0 39.1 – Energy 0.0 – Others Governance

Common initiatives: • Conducting third-party ‘water Rain Water Observations: 48 audit’. Water harvesting • Use of water from rainwater 27 48 companies discussed harvesting systems – roof top • Creation of bunds, gully pugs, intensity collection, creation of retention 27 companies disclosed data on rainwater harvesting. However, contours and terraces, and ‘Ministry of Water Resources, ponds, storage tanks, etc., and water intensity or specific water 37 such companies provided rainwater harvesting ponds. River Development, and Ganga treatment of wastewater – consumption. details on initiatives taken Rejuvenation’7 data reveals that, Evaluation Framework recycle and reuse. • Installation of water efficient by them regarding rainwater fixtures, sensors, and various The average annual per capita In case of water intensity harvesting. other gears. water availability in the year disclosure, the highest Selected initiatives: 2011 was assessed at 1,545 disclosure of data was observed • 9 companies were ‘water positive’ • Training and awareness sessions cubic meters, which is expected in the automobile industry, on statutory and technical aspects to reduce further to 1,340 and • Plants running without followed by the metal and of rainwater harvesting. 1,140 in the years 2025 and dependency on external water 2050 respectively. chemical industries. 19 sources – An achievement • Enhanced awareness at sites Targets The annual per capita water 23 companies provided through rainwater harvesting through displays on water 19 companies disclosed the availability of less than 1,700 information on water consumption. systems, recycle, and reuse of conservation. cubic meters is considered as targets or goals to decrease However, they did not disclose wastewater. water stressed condition, water freshwater consumption. availability below 1,000 cubic data on water intensity. They were However, only 13 such 7 Annual Report of Ministry of Water Resources, River Development and Ganga Rejuvenation for meters is considered as a water analysed on the basis of water companies have been able to 2018-19 (Weblink) scarcity condition. consumption data. achieve the set target.

32 ESG Analysis on 50 listed companies in India ESG Analysis on 50 listed companies in India 33 2.6 Air Emissions 2.6 Air Emissions

Observations: Policy Disclosures Assessment factors: The company’s disclosures and practices on air/GHG emissions: GHG GHG intensity 45 6 Disclosure of data on total emissions reduction As per Paris Agreement, GHG /carbon emissions or 45 companies disclosed data on Overall, only 6 companies India’s Nationally Determined GHG / carbon intensity GHG / Carbon emissions. reported a decrease in GHG/ Contributions (NDCs)9 has three carbon emission intensity for the Steps or initiatives taken numeric targets for 2030: reduce to reduce GHG/carbon last three years. 15 companies Environment emissions intensity by 33% to reported a decrease for two out emissions 35% from 2005 levels, achieve of the last three years. Emissions within limits of an installed power capacity of CPCB/SPCB8 40% from non-fossil fuel sources GHG 35 and create an additional carbon intensity 50% plus companies from Targets set and its sink of 2.5–3.0 gtco2e from forest metals and automobiles reduced achievements 35 companies disclosed data and tree cover. on GHG emission intensity or intensity for at least two out of specific GHG emissions. the last three years. Social Approximately 70% companies Maximum - 100 Best performing industry Best performing company All the companies in the in consumer goods reduced The government has put in place 71.2 – Automobile 100 – Consumer goods automobile, cement, and energy either their energy consumption laws and taken steps towards Median - 63 industries provided data on GHG/ or energy intensity in the last reducing carbon emissions. Air carbon emissions in absolute three years. emissions in excess of prescribed terms, followed by 83% (6/8) Average - 63 100 - 3 Companies companies in the metal industry Worst performing industry Worst performing company norms pose additional risk for and 80% (8/10) companies in business, thus target setting, 47.3 – Chemicals 20.0 – Chemicals consumer goods. Governance Minimum - 20 monitoring, evaluation and GHG intensity disclosure was disclosures of emissions is vital GHG emissions observed the least in the 21 for all companies. Accordingly, targets Common initiatives: • At the consumer end, reducing frequency - Efficiency of consumer goods and cement companies were analysed on the 21 companies disclosed their CO emissions in new products/ processes and reduction in the industries. Though cement • Increase in use of energy from 2 targets or goals to decrease models compared to previous count of trucks by using bigger steps or initiatives taken by them companies provided data renewable sources, clean energy, emissions. However, only 6 products/ models. truck types. to reduce emissions, effectiveness on emissions, they lagged in energy efficient equipment. disclosing emission intensity data. companies have been able to of the steps taken and their

• Use of carbon price as a tool • Reducing employee travel achieve the set targets. Evaluation Framework ambitions to reduce emission Selected initiatives: to assess projects before frequency – Meetings conducted implementing them. through video communication in the near future. • 10 companies have signed for platforms. Science Based Targets initiative • Some companies engaged in oil (SBTI). business, reduced transportation 100% of sample companies GHG emissions 6 by installation of pipeline provided disclosures on initiatives reduction Notices / • Few companies have the status of 19 networks. regarding reducing GHG/carbon being ‘carbon positive’. 6 companies reported a observations • Afforestation programmes and emissions generated through decrease in total GHG/carbon 19 companies received show- • Plants certified for Carbon Neutral planting trees/plants/saplings their business operations. emissions for the last three years cause notices/observations - Achievement through energy within factories or surrounding (among 15 companies which from CPCB/ SPCB regarding efficiency, use of renewable communities. 9 Source: Emissions Gap Report 2019 - did not disclose GHG/carbon emissions, in the last three energy and planting trees to United Nations Environment Programme emission intensity). years. absorb residual carbon. • Decrease in transportation

8 CPCB: Central Pollution Control Board | SPCB: State Pollution Control Board

34 ESG Analysis on 50 listed companies in India ESG Analysis on 50 listed companies in India 35 2.7 Waste Management 2.7 Waste Management

As per BRR disclosure requirements, Policy Disclosures Assessment factors: companies are required to disclose The company’s disclosures and whether they have any mechanism practices on waste generation to recycle products and waste. Notices / 17 and waste management: observations Types of waste: Effluents and 17 companies received show- solid waste (hazardous/non- cause notices/ observations hazardous) 90% from CPCB/ SPCB regarding emissions in the last three years. Steps or initiatives taken to Environment Companies disclosed that they reduce / recycle /reuse have mechanisms to recycle The fact that 34% companies Discharge of Effluents products or waste. They have have received show-cause notices Waste generation within also provided information indicates a lack of concern and limits of CPCB / SPCB regarding the steps or reveals that the issue has not initiatives taken. received serious attention it deserves. If this is the state of top Social companies, can one hope that rest Best performing industry Best performing company Maximum - 100 of the companies would be in better 8% 84.5 – Automobile 100 – 4 Companies shape? There would hardly be any Median - 78 buyer for this argument. Only disclosed the fact about having mechanisms in place to Effluents Emission: Average - 76 Worst performing industry Worst performing100 - 3 Companies company recycle. However, they did not provide information regarding

steps taken or initiatives taken. Governance Minimum - 31 64.9 – Chemicals 31.0 – Metals & mining

GRI defines effluents as treated Common initiatives: • Treated effluents used in 2016. These rules have created or untreated wastewater that is for plantation, gardening, 2% • Installing effluent treatment stricter norms and risks, as discharged. Untreated wastewater horticulture, washing, toilet equipment, recycling solid waste well a window of opportunity harms the environment. Poorly through in-house treatment flushing, etc. Have provided no specific for companies. treated wastewater has a cascading facilities or sending waste to information about having any • Pet water bottles replaced with negative impact on the usable Evaluation Framework waste recyclers, or to other glass bottles/steel bottles in the 49 companies have provided mechanism to recycle. water sources and limits usability, companies for co-processing. conference rooms and meetings information about their waste thus ultimately impacting all rooms. generation. stakeholders, mostly various living Selected initiatives: Out of these, 33 companies have creatures in this world. • Zero wastewater discharge status, Observations: provided information with respect i.e., wastewater is treated and to categories or type of waste reused within premises and no Among the sample companies, it generated. wastewater is discharged outside Recycling was observed that 23 companies – recycle and reuse of treated 16 companies provided generic 29 targets provided generic information wastewater. The Indian government has information regarding categories 21 companies disclosed data on regarding effluents and 4 companies notified various rules with or types of waste generated, • Zero waste to landfill – recycle or % of waste recycled or reused did not make any discussion in this respect to solid, plastic, e-waste, whereas one company did not of waste or forward as ‘circular through their initiatives. regard. economy’ viz., waste used as raw bio-medical, hazardous & provide any information in this materials by other industries. construction waste management, regard.

36 ESG Analysis on 50 listed companies in India ESG Analysis on 50 listed companies in India 37 III. Social 2.8. Environmental Incidents Summary of Findings Policy Disclosures Assessment factors: Scores obtained by the sample Top 3 industries Top 3 companies Environmental incidents companies on S factor have that may pose a risk for the been analysed under this 67.3 - Automobile 83.4 - Energy company or its reputation head, mainly covering the company’s disclosure regarding its relationship with its human 66.2 - Cement 76.5 - Cement CHANGE OF LAW: capital and relationship with its Occurrence of any environment stakeholders. Analysis included 65.8 - Chemicals 76.0 - Consumer goods incident was researched and scored. Transition from Bharat Stage (BS) Environment evaluation of practices and IV to BS VI emission standards policies adopted by the company Data on environmental incident Note: Top 3 industries: Average industry score; Top 3 company: Top scoring company w.e.f. 1 April 2020* has directly for fair and equitable treatment of was sourced from disclosures by (referred to as the respective industry) impacted the automobile all stakeholders. company concerned in their annual industry, necessitating industry or sustainability reports or disclosure Worst performing industry Worst performing company on stock exchange or news articles. to invest more to upgrade their systems to comply with BS-VI. 59.2 - Others 48.9 - Others Environment incidents are Failure to do so may have an Social defined as incidents affecting the adverse impact on business. Note: Worst performing industry: Lowest average industry score; Worst performing company: environment caused by business Lowest score of a company operations of company through *Union Ministry of Road Transport and its products, processes, inputs Highways has advised NIC to facilitate the used, etc. States /uts in limited registration of BS-IV vehicles all over India except Delhi/NCR in Impact on the company’s business operations due to change in compliance with Supreme Court directions Governance regulatory requirements related to contained in its order dated 27.3.2020. environment standards was also The Supreme Court has allowed limited analysed. and conditional sale and registration of not more than 10 per cent pending BS-4 6 companies in the sample had stock (as conveyed to the Apex Court) with some environmental incidents. 2 vehicle dealers (except in Delhi, NCR), each are engaged in the energy, within 10 days of lifting of the lockdown

metal, and cement industries. Evaluation Framework in a city following outbreak of Covid-19 in The average score of four social stakeholders’ relationships, data the country. The Apex Court has however Air pollution and/or water factors, across the sample security, and the impact of the pollution were the general causes maintained the stay on sale and registration companies was 63, with a high of 83 company’s business operations on of concern. of such vehicles in Delhi NCR. (Weblink) and low of 49. Median score was 64. local community.

Low scores explained: The metal industry, while leading in Sample companies missed terms of the number of employees out mainly due to inadequate disclosures on the number of in the sample companies, had the workforce, employee relation second lowest average score of practices, training of employees, 62, marginally ahead of the ‘other’ health and safety, fatalities, category which scored 59.

38 ESG Analysis on 50 listed companies in India ESG Analysis on 50 listed companies in India 39 III. Social 3.1 Workforce

Category Scores in Social: Policy Disclosures Assessment factors: Least focused area - Data Disclosure on workforce and various security, health, and safety, workforce-related practices: across the sector as well as the individual company. Workforce details and workforce diversity

Most focussed area - Equal opportunity Relationship with local Training on skill development

community - probably due to Environment Industrial relations the impact of CSR.

Maximum divergence - Health and safety Maximum - 80 Best performing industry Best performing company

69.5 - Cement 80.0 - Cement Median - 66 Social Average - 66 Worst performing industry Worst performing100 - 3 Companies company

Minimum - 47 63.1 - Automobile 46.5 - Automobile

Employee Statistics10

Total employees

Total Industry topper (average number of employees) Governance

55,155 15,800 8,84,909 Metals Energy

Women employees

Total Industry topper (average employees in number & as % of total) Evaluation Framework 3,365 3,111 73,007 Metals Others

20.83% 9.09% % 8.25% Others Consumer goods

Employees with disabilities

Total Industry topper (average number of employees)

214 211 3,804 Energy Metals

10 Based on disclosures made by the company with respect to permanent employee.

40 ESG Analysis on 50 listed companies in India ESG Analysis on 50 listed companies in India 41 3.1 Workforce 3.1 Workforce

Equal opportunity employer: Policy Disclosures Employee Statistics11 Graph 13: Disclosures 76% companies disclosed that Total employees 76% they are an equal opportunity 68% 62% Total Best & worst company 58% employer. Only 3 Industries had 10% or 2,85,479 380 34% more women employees in the Metals Consumer goods total workforce.

Equal Attrition Rate % Safety & Skill Average training Training on Opportunity Upgradation hours per prevention Environment Women employees ( # & %) Employer Training employee of sexual harassment Total Best & worst company

19,779 8 Metals Services

78.22% 0.65% % Textiles Services

Training: Social

Only 68% sample companies Companies have generally Employees with disabilities provided data on safety training provided man hours of training. Total Best & worst company and skill upgradation, although Only 3 companies have not the BRR format includes a direct provided any data regarding 782 7 question on the same. training. Metals Companies with 'Zero'

Note: 6 companies have provided no information on ‘Employees with Disabilities’ | Textiles & Services belongs to ‘Other Category’ Governance Complaints Reporting Disclosure* Complaints Received

It was observed that the metals Child/ forced / Women Employees % (Top 5) 48 0 industry, on average, has the largest Involuntary labour workforce. As a result, the metals Industry (Average) Companies (Industry) Discriminatory 44 1 industry has the largest number of Employment Textiles 78.22% Textiles 78.22% female employees. However, female employees account for just 6% of Pharma 16.92% Consumer goods 26.22% *No. of companies reporting complaints the total permanent employees. Services 10.00% Consumer goods 21.32% Evaluation Framework Consumer goods 9.09% Pharma 18.11% On the other hand, one company Telecom 8.91% Pharma 15.78% from the textile industry under the 2 companies did not make one complaint was reported ‘Others’ category has outperformed *Permanent employees disclosures on the number of regarding discriminatory all other sample companies Within the industries, in ‘Others’ companies appears to be second complaints related to child/ employment. employing 78% female employees. category the average ratio of male to best at 16.92%. forced/involuntary labour. 6 companies did not disclose female employees in pharmaceutical However, they provided data on the number of complaints on This ratio is also an exception and various initiatives for betterment discriminatory employment. an outlier, as the next best company 3 Industries have an average of 10% or more permanent women employees of children. However, they had discussed from the Consumer goods industry about being equal opportunity has 26.22% female employees. 10 Companies have more than 10% permanent women employees During FY 2018-19, among employer. the sample companies, only 11 Based on disclosures made by the company with respect to permanent employees.

42 ESG Analysis on 50 listed companies in India ESG Analysis on 50 listed companies in India 43 3.1. Workforce 3.2 Health & Safety

As against the above data it sub-contractors, suppliers, etc., may Policy Disclosures Assessment factors: appears that as far as this sample is have employed children. However, concerned, problem of child labour this does not form a part of the Disclosure & practices on health seems to have been fully eradicated. company’s disclosure practices. & safety of the Company: Are these companies’ outliers or Health & safety practices child labour does exist and not This issue can be handled if the Training on safety properly reported? company’s BR principles are Workers’ health extended to the stakeholders Sexual harassment practices Though sample companies have and companies implement and Environment not reported any child labour penalize the laggards. Further, complaints, the data relates to companies should endeavour to the company only, and no data make such disclosure a part of is provided for child labourers their sustainability reports, so that Maximum - 84 Best performing industry Best performing company employed by stakeholders investors are aware when companies According to publication of ‘Ministry of Statistics and Programme Implementation’, associated with the company. go the extra mile to be sustainable in 67.9 - Automobile 84.1 – Consumer goods 12 Median - 52 namely ‘Children in India – 2018’ , there There may be instances in a certain its true sense. were 1.01 crore working children as per census 2011. industry wherein contractors, Social Average - 52 Worst performing industry Worst performing100 - 3 Companies company

43.4 – Others 14.6 – Others Employees relationships: Minimum - 15

42% disclosed information although disclosures largely had generic information.

Based on the news articles or information available in public domain, it Fatalities reported 93 was observed that 10% companies reported some sort of disputes with Graph 14: Disclosures Governance the employees which resulted in strikes/stoppage in normal business Highest fatalities 88% operations (even though for a short period in some cases). Metals & mining 28 52%

38% 34% Construction 23

Energy 18 Employees relationship Health Detailed Promoting Detailed

Management information Workers information Cement 11 Evaluation Framework System and on safety Health on maternity Health & trainings related benefits Safety Policy Automobile 7 42% 10% Fatalities / 10,000 employees* Construction 5.0

Chemicals 3.8

Information Disputes Disclosed Reported Fertilisers & pesticides 3.7

Cement 2.7

Energy 1.9 12 ‘Children in India 2018’ by ‘Ministry of Statistics and Programme Implementation’ (Weblink) *Based On Permanent Employees

44 ESG Analysis on 50 listed companies in India ESG Analysis on 50 listed companies in India 45 3.2 Health & Safety 3.3 Relationship with Local Communities

Fatalities: remain so risky? Are these high-risk Injuries: Policy Disclosures Assessment factors: Maximum (28/93) fatalities were sectors? Certainly not! H&S factor No consolidated injuries data could reported in metals, followed by the in these industries can certainly be highlighted, as there was no The company’s Corporate construction, energy, cement, and improve. symmetry in the disclosure practices Social Responsibility (CSR) automobile industries. of the company. Some companies expenditure High fatalities in these industries report injury lost time in hours, injury Disclosures related to initiatives The fatalities in these industries are indicate that the companies have lost time in days, injury loss rate, etc. taken by the company to generally brushed aside as “owing to a major scope for improvement on improve local communities their health & safety practices. the nature of business”. Can one say Environment that these industries would always Maximum - 100 Best performing industry Best performing company

86.5 - Automobile 100 - 2 Companies Median - 82

Average - 78 Anti-sexual harassment policy Internal complaints committee Worst performing industry Worst performing100 - 3 Companies company

Disclosed presence 40 Disclosed presence 50 Social Minimum - 42 66.8 - Others 41.9 - Others Disclosed policy 22 Disclosed composition 3 All the 9 companies which failed to Average CSR Spend (Rs. In crores) spend the prescribed amount on Average Average prescribed Actual average CSR activities for FY 2018-19 have Fy Sexual harassment complaints reported - 185 Net Profit CSR expenditure CSR spend provided reasons for not spending the same, as required by the 2019 3,757 75 86 provisions of Companies Act, 2013. It was observed that 10 companies

Complaints / 10,000 Employees* 2018 3,329 67 72 Governance in the sample did not disclose Highest CSR spending industry* specifically about having framed Note: Above CSR data is average of sample companies Services 21.4 Fertilisers & pesticides 181% the anti-sexual harassment policy, though they have disclosed that they Telecom 15.6 Metals 165% Companies Compliance (CSR Spend) have a mechanism in place for the Pharma 6.3 Cement & cement products 138% More than Only up to Less than prescribed prevention for sexual harassment. FY Prescribed amount Prescribed amount amount Chemicals 122% Chemicals 5.7 During FY 2018-19, a total of 185 2019 35 6 9 Automobile 107% Evaluation Framework sexual harassment complaints were Consumer goods 3.5 2018 35 4 11 *Based on CSR Amount spent / reported by 30 sample companies. prescribed CSR amount *Based On Permanent Employees No complaints were reported by 20 companies. In absolute terms, 46 complaints the sample). However, based on 100% CSR Policy were reported in the metal industry complaints / 10,000 permanent 100% Programmes/ initiatives/ projects relating to CSR Out of total complaints, 24 (average of 5.75 per company, which employees, the highest number 96% Impact assessment of CSR initiatives complaints were pending at the end is the highest among industries of complaints was reported in the 90% Steps taken to ensure that community development initiatives are successfully adopted of financial year. with more than 3 companies in services industry. 42% Adequately disclosed mitigation of adverse effects on the local communities 70% Memberships with various associations 88% Companies with no political donations

Only 21 companies adequately disclosed information on initiatives or measures taken to mitigate adverse effects on the local communities due to their operations. 29 companies have made no disclosure.

46 ESG Analysis on 50 listed companies in India ESG Analysis on 50 listed companies in India 47 3.4 Data Security and Customer Orientation 3.4 Data Security and Customer Orientation

Customer orientation: Policy Disclosures Assessment factors: Disclosures on: customer complaints / grievances: No. of companies disclosing data Cyber / data security of the As per BRR format, companies on consumer complaints company are required to disclose the Received during year 26 Company’s practices for percentage of customer improving customer relations, complaints cases that are Pending at year end 38 their complaints/grievances pending as on the end of No. of customer complaints /

financial year. Environment grievances

The analysis is based on Received during year 24,19,507 disclosure on the number of Best performing industry Best performing company Maximum - 73 complaints received and number Pending at year end 6,134 of complaints pending. 50.6 – Fertilisers 73.3 – Consumer goods Median - 45

38 companies the disclosed Approximately 96% of the total Remaining 0.67% complaints Average - 44 Worst performing industry Worst performing100 - 3 Companies company Social number of complaints pending customer complaints were belong to the other 22 at the end of FY 2018-19 in Minimum - 15 33.7 – Cement 15.0 – Cement reported by 3 psus in the energy companies. absolute terms, as per the requirement. industry, and 3.31% of the total No uniformity in reporting customer complaints were Only 26 companies disclosed - few disclosures made in “21(4) The board of reported by one company in absolute numbers and others in Cyber / data security the total customer complaints directors shall define the received during FY 2018-19. automobiles. percentage. role and responsibility Risk committee function includes cyber security 74% Governance of the Risk Management Customer complaints / grievances Formulated data security / privacy policy 38% Committee and may delegate monitoring Industry* Company Information on data security / privacy breach 10% and reviewing of the risk management plan to Highest Lowest Highest Lowest the committee and such Consumer Securities and Exchange Board 500 companies w.e.f. 1 April Energy 4,65,026 ~ 12 Automobile 590 Fertilisers 5 other functions as it may goods of India (Listing Obligations 2019) to monitor and review the deem fitsuch function Note: Excludes companies which did not disclose data on customer complaints/grievances | *Average | ~only 2 companies disclosed data Evaluation Framework and Disclosure Requirements) risk management plan and such shall specifically cover Regulations, 2015 had mandated other functions which also shall cyber security.” Consumer survey / consumer satisfaction trends the risk management committee specifically cover cyber security. of the Top 100 companies (Now Graph 15 indicates the frequency 12 companies did not specify the with which consumer survey/ period of survey. However, they consumer satisfaction trends were disclosed the fact they conduct In accordance with the However, only 19 companies have or privacy breaches. This reflects carried out by companies. consumer survey/consumer satisfaction trends. regulations, 37 companies mentioned about and/or disclosed that either the companies are 31 companies conduct consumer disclosed in their annual reports their data security/privacy policies. not centrally tracking all data surveys or consumer satisfaction 5 companies did not provide any for FY 2018-19 that the Risk trends every financial year. specific information in this regard. security/ privacy breach concerns Management Committee (RMC) Only 6 companies provided data monitors and reviews cyber on the number of incidences or or are hesitant to publish negative security risk. complaints regarding data security information.

48 ESG Analysis on 50 listed companies in India ESG Analysis on 50 listed companies in India 49 Policy Disclosures Environment Social Governance Evaluation Framework 51 attendance at Board- or committee- at Board- attendance time commitment meetings, level against measured directors of is Good governance benchmarks. minimum. much beyond the director’s In case of lowest the practices, remuneration had skewed company scoring or excessive practices remuneration of certain class to remuneration and non-disclosures of director(s) remuneration. skewed rationale for Low scores explained: explained: scores Low scored have Sample companies such as Board in categories low and committees, composition companies most due to majorly with minimum complying number requisite of requirement Independent ids on the Board, of and failing Directors, Women than the minimum, do better to viz., low concerns, governance e factors score score e factors Overall governanc Overall factors than E & S better Statutory auditors-related reporting matured, is the most reportingwith the best practices is the worst composition Board being committees Board overall, worst the second committee Board Company-wise also are remuneration and Board the worst ESG Analysis on 50 listed companies in India companies on 50 listed ESG Analysis IV. Governance IV. in governance: scores Category psus from data excludes analysis factor remuneration Directors’ Note: 60.9 - Metals 84.3 - Others 82.2 - Automobile 82.1 - Metals & mining Worst performing company Worst ESG Analysis on 50 listed companies in India companies on 50 listed ESG Analysis High-scoring companies in companies High-scoring the ones which apart are governance mandatoryfrom have requirement, meet non-mandatory to aspired They practices. governance good tick beyond a step taken have legal and mere approach box policies into venturing compliance, of interest and defend that protect stakeholders. Top 3 companies Top 77.9 - Chemicals 76.2 - Automobile goods 75.6 - Consumer 69.9 - Cement Worst performing industry Worst Top 3 industries Top Note: Worst performing industry: Lowest average industry score; Worst performing company: company: performing Worst score; industry average Lowest industry: performing Worst Note: a company of score Lowest Note: Top 3 industries: Average industry score; Top 3 companies: Top scoring company company scoring Top 3 companies: Top score; industry Average 3 industries: Top Note: industry) as the respective to (referred issues. These twin factors have have These twin factors issues. look at investors the way impacted on focus and attracted governance governance. good importance of and the existence Further, standard of regulatory enforcements have and laws practices governance helped in and certainly matured to compared the G factor, improving statutory in E requirements evolving & S areas. Scores obtained by the sample by obtained Scores have on G factor companies this section, in been analysed the company’s covering mainly practices, Board-related Composition, such as Board committee remuneration, and performance. composition, section also the Further, statutory auditors, analyses reporting, financial audits, engagement and stakeholder functions. 50 The divergence in scores across the across in scores The divergence to compared is the least G factor E & S, primarily factors other two statutory existing to owing at in India for in force requirements And on account a decade. for least scams to the fact that biggest of were hit the financial markets governance with various associated Interpretation / commentary: Interpretation IV. Governance IV. Summary Findings of Policy Disclosures Environment Social Governance Evaluation Framework 53 19 companies had more than had more 19 companies (%). (MNC: 3 | ids mandated PSU: 2 | Others: 14). associated 70 were Of 276 ids, or group with the company than 10 more for companies years. 6 companies had more than 2 had more 6 companies displaying Directors, Women mandatory on beyond steps level at Board diversity gender had 3 Independent 2 companies Directors Women Securities and Exchange Board Board Securities and Exchange Obligations India (Listing of Requirements) and Disclosure mandates 2015 Regulations, top that the Chairperson for than Entities (other 500 Listed managed entities) professionally director be a Non-Executive shall 1 April 2022). (effective 46 companies complied with complied 46 companies with 50% or 33% ids the law, wherein (including 3 companies and the company ids resigned months’ time to had three with the law). comply short were of 4 companies ids on the number of requisite (PSU:Board 3 | Others: 1). 14 Women Directors hold Directors 14 Women positions in Board multiple sample companies than 1 more have 15 companies ids women Average board size at 11 size board Average is much higher directors minimum the to compared (PSU: law by 6 mandated | Others: 10.6 14.3 Directors Directors) 21 | Smallest size: board Largest - 6 size board 89 Board positions held by 71 positions held by 89 Board (16% of Directors unique Women positions) Board the total hold only Directors 57 Women position in sample one Board companies ESG Analysis on 50 listed companies in India companies on 50 listed ESG Analysis 4.1 Board Composition 4.1 Board Non-Promoter Non-Promoter Non-Independent Directors 140 30.2 – Metals & mining 75.3 – Metals & mining 100 - 3 Companies ESG Analysis on 50 listed companies in India companies on 50 listed ESG Analysis Worst performing company Worst Best performing company Best (Board Positions) (Board Independent (ID) Directors Unique Directors Unique Directors on The Board Within sample Directors companies, Board with multiple Positions (NP) Directors Non-Promoter 50 419 276 496 60.7 – Automobile 41.7 – Cement Worst performing industry Worst Best performing industry Best Executive Executive (ED) Directors (Board Positions) (Board Promoter Directors (P) Directors Promoter Within sample Directors companies, with Single Board Position Total Board Positions Board Total 4.1 Board Composition 4.1 Board Combination of Independent Combination of Directors & Non-Independent directors Male and female of directors profile Age Median - 55 Average - 55 Average 141 138 446 557 Minimum - 30 Maximum - 75 Assessment factors: Assessment structure, Board The company’s including 52 Sample companies (Directors as on 30 September 2019) as on 30 September (Directors Sample companies Policy Disclosures Environment Social Governance Evaluation Framework 55 23.3 - Metals & mining 84.4 - Automobile 100 - 3 Companies Best performing Best company Worst performing Worst company All ACs and NRCs had more had more and NRCs ACs All number of than the stipulated (2/3rd Independent Directors case and 50% in AC in case of NRC). of SRC in the sample, Overall, than 50% had less and CSRC is to as the requirement IDs, 1 (33%) ID. at least have only though the other companies disclosed about risk have frameworks. management data and attendance From it risk policy, of disclosure appears that the importance sink in. Among to RMC is yet of RMC had less committees, all in 50% than 75% attendance amongst – the lowest companies committees. all Relationship Committee Committee Relationship Social and Corporate (SRC) Committee Responsibility (CSRC). an have 31 companies Only as a Independent Director Risk Management member of (RMC). Committee

66.1 - Automobile 46.9 - Fertilisers Best performing Best industry performing Worst industry 84 58 59 23 All the companies have disclosed have the companies All their CSR policies in their annual reports or websites. disclosed 11 companies Only policies, their risk management Committee (AC) and Nomination & (AC) Committee (NRC). Committee Remuneration All the companies have at least at least have the companies All as one Independent Director Stakeholders a member of Median

Average Average Minimum Maximum It is observed that the number directors all where companies of than 75% committee more attended Audit for highest meetings was on which kept meetings, Committee other committees. for reducing Policy disclosures: Policy 41 38 34 30 25 4.2 Board Committees 4.2 Board Independence of Board committees Board of Independence Audit committee committee Nomination & remuneration committee relationship Stakeholders CSR committee committee Risk management Disclosure on composition on composition Disclosure committees: various of Audit, nomination and stakeholders remuneration, Social Corporate relationship, and risk (CSR), Responsibility management in those attendance Directors’ meetings committee All the companies complied with complied the companies All on the provisions SEBI LODR committees. of composition All the companies have an have the companies All AuditIndependent Chairman for

Assessment factors: Assessment 85% 78% 47% 45% 37% Companies with 75% attendance committee Audit committee Nomination & remuenration committee relationship Stakeholders committee CSR committee Risk management committee ESG Analysis on 50 listed companies in India companies on 50 listed ESG Analysis ESG Analysis on 50 listed companies in India companies on 50 listed ESG Analysis Chairman is an ID (as per SES) or; ID meeting or; the Chairman of Name of the LID. Name of SES Criteria for Lead Independent Director: Independent Lead for SES Criteria the criteria. met 6 companies Only Directors all in 10 companies Only Meeting. the Annual General attended 100% Directors attended AGMs attended 100% Directors Companies with lead Independent Director Only 22 directors (3%) held Directorships (3%) held Directorships 22 directors Only companies. than 5 listed in more Reasonable time commitments Reasonable < 6) directorships (listed 12% 20% 97% 91 years (ID) 91 years Oldest: (NEDP) 30 years Youngest: Directors liable to liable to Directors rd Only 1 company did not disclose retiring did not disclose retiring 1 company Only Directors. Non-Independent for status Only in 15 companies all Directors Directors all in 15 companies Only meetings. Board 75% or more attended 45 companies had all the directors the directors had all 45 companies qualifications graduation or more. having retire by rotation by retire 2/3 75% & + attendance at Board meetings Board at 75% & + attendance Director’s education: Director’s directors Graduate No. of companies with ED 70+: 3 companies of No. No. of companies with NED 75+: 18 companies of No. Securities and Exchange Securities and Exchange (Listing India of Board Obligations and Requirements) Disclosure 2015 Regulations, shareholders’ mandates continuance for approval Non- or appointment of who Directors executive of 75 years attained have 1 April 2019) (Effective age. 98% 30% 96% 54 4.1 Board Composition 4.1 Board Policy Disclosures Environment Social Governance Evaluation Framework 57 Board evaluation process: evaluation Board made the companies all one, Except evaluation. on Board disclosure did not make one company Only Board regarding specific disclosures in its annual report for evaluation other companies FY 2018-19. All on the Board information provided companies though some evaluation, information. generic provided Gender bias Remuneration: Remuneration: Among the sample companies, women paid to remuneration 16% of who constituted directors 2.9% of only was directors total FY for remuneration board the total 2018-19. IDs women on average Although compared remuneration lesser drew the their male counterparts, to compared moderate was difference EDs and NED NIDs. women to of remuneration of Though share is significantly Directors Women no in the sample companies, less observeddisparity in individual was remuneration regarding companies male and female to payment directors. Identical remuneration was was remuneration Identical EDs to companies paid in two for pay) (including performance reflecting years, three at least the same appraisal exactly EDs. different ratings for 27% EDs were not paid any not paid any 27% EDs were Among compensation. variable non- 71% were these EDs, directors. promoter EDs’ the total 37% of Only of consisted remuneration performance-based variable remuneration. 47% in in 2018-19 from Down due to again FY 2017-18, once some high-paid EDs resigning. In 22 companies, the In 22 companies, EDs comprised of remuneration than 50% variable less performance-based payment, with no companies including two performance-based payments.

ESG Analysis on 50 listed companies in India companies on 50 listed ESG Analysis 4.3 Director’s Remuneration 4.3 Director’s pay: Variable Nine companies had a single NED a single NED had Nine companies (including ID) being paid 50% or remuneration the total of more two nine, Out of NEDs. paid to from moved NEDs had recently a non- to role an executive companies Four role. executive to paid a high remuneration directors, or founder promoter companies and the other three IDs. paid to their ED remuneration. In some their ED remuneration. paid to the remuneration cases, EDs or such NEDs is identical to higher. even

29.1 – Cement 90.0 – Cement 100 - 3 Companies ESG Analysis on 50 listed companies in India companies on 50 listed ESG Analysis Worst performing company Worst Best performing company Best On average, EDPs receive higher higher receive EDPs On average, ED- to compared remuneration that EDPs conclude One may NP. or risk premium ownership take remuneration. of in the form its Non-Executives, of On face on an paid the lowest IDs were The remuneration basis. average the due to skewed data got to fact that some EDs switched continued yet NED-NID (NP) role, higher relatively draw to similar to almost remuneration, between EDPs & ED-NPs EDPs between remuneration.

72.0 – Consumer goods 54.7 – Metals & mining Worst performing industry Worst Best performing industry Best 4.3 Director’s Remuneration 4.3 Director’s Executive and Non-Executive and Non-Executive Executive Directors and Non-Promoter Promoter Independent Directors Median - 72 2 companies in the sample had 2 companies practices, remuneration skewed significant difference i.e., While Promoter EDs’ average EDs’ average While Promoter in 2019 grew remuneration EDs 2018, Non-Promoter over declined, remuneration average highly few due to probably paid ED-NPS from moving non- to roles their executive roles. executive 85% of the total Board Board the total 85% of EDs paid to was remuneration NED- 15% paid to and balance NIDs and IDs. Average - 67 Average Minimum - 29

Maximum - 90 Assessment factors: Assessment fairness practice Remuneration data based on remuneration FY 2018-19 and 2017-18 for 7 psus) (excludes 56 Policy Disclosures Environment Social Governance Evaluation Framework 59 No material/major fraud fraud No material/major reported in the incident was sample companies. frauds employee-related Minor, one of been reported by have in its annual the companies report. 50% companies reported tax- 50% companies which account disputes, related the total than half of more for liabilities. contingent 74% companies reported tax- 74% companies for accounting disputes, related their net worth than 20% of less basis. on a standalone disclosures regarding various various regarding disclosures liabilities. contingent heads of reported 64% companies than less liabilities contingent their net worth20% of on a basis. standalone

100 – Others 100 - 3 Companies 69.6 – Metals & mining Fraud reporting: reporting: Fraud Worst performing company Worst Best performing company Best No case was observed of any observed any of No case was any member having Board partyrelated with transactions other than in the companies, normal course. made adequate companies All 6% companies have provided provided have 6% companies disclosures inadequate party their related regarding These companies transactions. amount of the provided have along with typetransaction of joint Subsidiary, (e.g. companies And not disclosed etc.) venture, entities the related the name of with whom the transactions Without such into. entered were the transactions information, not be known. details could 76% companies have also also have 76% companies term ordinary defined the business.

Contingent liabilities: liabilities: Contingent 92.7 – Chemicals 87.7 – Metals & mining Best performing industry Best performing industry Worst 4.5 Audit & Financial Reporting & Financial 4.5 Audit Audit qualifications party transactions Related liabilities Contingent reporting Fraud Median - 92 One company reported reported One company financial in internal weakness subsidiary. its foreign of controls had 14% companies in qualifications/observations for Audit Report Secretarial the FY 2018-19, though all their provided have companies on the same in their response annual reports. provided have the companies All partyrelated policies on their In their RPT policy, websites. No audit qualifications were were No audit qualifications observedthe sample in statements financial companies’ no FY 2018-19. Further, for restatement financial material observed the said for was year. financial Average - 91 Average Assessment factors: Assessment Minimum - 70

Maximum - 100 ESG Analysis on 50 listed companies in India companies on 50 listed ESG Analysis Related party transactions: party transactions: Related Audit qualifications: Audit qualifications: Exit of statutory statutory Exit of auditor / removal (Due to resignation) N.A. - Multiple companies 100 - 3 Companies 73.8 – Metals & mining 0% No case was found among the found No case was wherein sample companies, statutory were auditors before or resigned removed the term. the expiry of Best performing Best company Worst performing Worst company ICAI guidelines states that ICAI guidelines states should not auditors statutory earned if fee assignments, accept these non-auditfrom assignments statutory than the total is more the opinion that is of SES audit fee. impact may a high non-audit fee and independence the auditors’ should be avoided. ESG Analysis on 50 listed companies in India companies on 50 listed ESG Analysis with upon resignation of the the of with upon resignation entity/ statutory a listed of auditor Limited subsidiarymaterial w.r.t. report as per SEBI review/audit Though Regulations. Listing were conditions general various be possible it would analysed, conditions in specific analyse to as only only, year next detail from be sufficient there then would by available. disclosures 99.6 - Chemicals 93.4 – Metals & mining Best performing Best industry performing Worst industry Audit partner’s Audit partner’s association (With than or less three years) three 97 74 99 100 Median 94% Average Average Minimum Maximum Statutory remuneration auditors’ increased in sample companies 3% in FY 2018-19 compared by FY 2017-18. to than 75% of less was Audit fees auditor’s in total remuneration than 50% and less 33 companies non- Further, in 9 companies. than 50% in more was audit fee 2 companies. MCA, in its Corporate Governance Voluntary Voluntary MCA, Governance in its Corporate in 2009 (Weblink)Guidelines issued , had that an audit partner has to recommended years. every three be rotated had an audit partner companies Three than more with them for associated years. three signing the company’s financials. financials. signing the company’s statutory auditors’ Therefore, the for and reasons resignation also analysed. were same (if any) was resignation No such case of among sample companies. noticed resignation- auditors’ of In view SEBI vide circular issues, related 2019 (Weblink) 18 October dated , be complied to put on conditions 4.4 Statutory Auditors 4.4 Statutory Statutory Statutory tenure auditor’s with law) (Compliance Appointment and term of of Appointment and term statutory auditor audit partner of Association auditors Exit of Assessment factors: Assessment on: Disclosure 100% 58 All the companies were found found were the companies All of with tenure be complying to statutoryappointment of auditors, under the Act.as prescribed Further, in the recent past, many past, many in the recent Further, resigned statutory have auditors their term, of completion before of the event before just mostly Statutory auditors' appointment Statutory appointment auditors' of is made as per the provisions Companies Act,Accordingly, 2013. whether the analysed it was Statutory appointment is auditors’ or not. made as per the law Policy Disclosures Environment Social Governance Evaluation Framework 61

companies have also have 8% companies Others: Regulatory actions: Regulatory It was observed that 100% It was in the sample have companies dividend distribution formulated the same on policies and disclosed their websites. 50% companies only However, distribution dividend provided which can be called policies, enable as they friendly, investor- the quantum assess to the investor dividend. Other DDP are likely of with the compliant technically only way without in any SEBI directive, policies Such helping the investor. the theorystate and parameters deciding payment used for that are dividend without ascribing any of payment for threshold to value dividend. In of or non-payment can the investor form, its present the dividend nor neither estimate the Board decision of Any question. with the policy. comply will companies have disclosed that have 94% companies mapped their internal have they 92% stakeholders. and external disclosed that they companies identified the disadvantage, have and marginalised vulnerable, stakeholders. companies reported that no88% companies been have or penalties strictures the Stock Exchanges imposed by statutory any the SEBI or by or by to related matters authority on any three during the last capital markets other regulatory and various years, bodies. the from reported actions or penalties India. of Competition Commission 4 0 1 36 50%+ 2.11% All shareholders All shareholders All 3 2 2 25-50% 16 1.34% Public others Public others Dividend distribution policy: distribution Dividend Financials results: SEBI Listing Regulations require Top Top require Regulations SEBI Listing formulate to companies 500 listed which policy, a dividend distribution be disclosed in their annual shall reports and on their websites. All these companies have provided provided have companies these All in line pledging shares for reasons 8 August dated with SEBI Circular 2019 (Weblink)reasons . No specific other companies, disclosed by were law. by as the same is not required in the sample 100% companies results disclosed financial have time. period of within the stipulated the companies all In this regard, disclosed presentations/press have on their websites. releases provided 64% companies about future information or their outlook,prospects in such releases. or press presentations general meetings for shareholders’ shareholders’ meetings for general meeting during FY 2018-19. 1 6 5 Average Against Votes % Votes Against Average 0-25% 82 4.94% Public institutional Public institutional 2 Shareholders voting trend: voting Shareholders (No. of Resolutions) of (No. 10% + Against votes 10% + Against Resolutions defeated Resolutions (Data: No. of companies) of No. (Data: holding Promoter pledge shareholding Total pledge shareholding Promoter ESG Analysis on 50 listed companies in India companies on 50 listed ESG Analysis Out of eight such companies, three three eight such companies, Out of pledges share promoters’ have their than 50% of with more than 20% or more shareholding the of shareholding the total of company. 4.6 Stakeholders Engagement 4.6 Stakeholders was pattern voting Shareholders’ in taken resolutions for analysed public 82 resolutions, for Overall, voted shareholders institutional the total than 10% of more against public others whereas polled, votes only than 10% against more voted On a consolidated 16 resolutions. for 36 for was the count basis, high against However, resolutions. in resulted shareholders from votes being a company of resolutions two its by not approved i.e., defeated, shareholders. many for votes high against Despite in sample companies, resolutions communication no proper were there with shareholders or engagement to the company) (disclosed by such a high for the reasons ascertain votes. against of percentage 54,301 (`. in crores) Value Pledged Pledged Value 31,630 5,93,344 1,59,45,556 Total # shareholders Total 8 No. of of No. Pledged shares: Pledged 52.0 – Cement 95.5 – Metals & mining 100 - 3 Companies Companies with promoter pledge promoter ESG Analysis on 50 listed companies in India companies on 50 listed ESG Analysis 8 companies have shares shares have 8 companies their by or pledged encumbered shareholding This pledge promoters. 31 as of at `58,557 crores is valued 2019. December 6.29% 9.97% Holding 34.86% Worst performing company Worst Best performing company Best Public shareholders 0.52% 10,292 FY 2018-19 7,675 0.91% Others FY 2017-18 Category Individuals Institutional Received Pending* *Pending at the end of respective financial respective at the end of *Pending year an increase of approximately 34%. approximately of an increase in increase the substantial Despite there complaints, the number of in which number 22 companies were in FY 2018- decreased complaints of FY 2017-18. to 19, compared 88.3 – Chemicals 71.8 – Cement Public 25.00% 73.24% 46.76% Worst performing industry Worst Best performing industry Best 590 # Shareholders 18.90% 75.00% 53.24% Promoters 4.6 Stakeholders Engagement 4.6 Stakeholders Promoter shareholders Promoter Shareholder complaints Shareholder shares Pledging of in shareholder Voting meetings Dividend distribution Median 48.50% Median - 82 Holding* Shareholders complaints: Shareholders In terms of the number of the number of of In terms individual 96% are shareholders, `2 capital up to share holdings, hold they though in total lakhs, share the total 0.89% of only capital in sample companies. Minimum Average - 79 Average Maximum Minimum - 52 Maximum - 96 Holdings* → Holdings* Assessment factors: Assessment stakeholder The companies’ including: practices engagement Shareholders statistics Shareholders 60 The total number of shareholders’ shareholders’ number of The total received or grievances complaints 7,675 during FY from increased 10,292 in FY 2018-19, 2017-18 to Note: Shareholding as on 31 December 2019 | *Excluding professioanlly managed companies | # arithmatic total including duplicates | # arithmatic total managed companies professioanlly 2019 | *Excluding as on 31 December Shareholding Note: Policy Disclosures Environment Social Governance Evaluation Framework 63 44% 33% 20% 13% Conviction/penalty due to due to Conviction/penalty violation insider trading observedNo such cases were the in sample companies for one year. last employees All of disclosed code 31 companies all which is applicable to conduct, of code Ideally, the employees. the all applicable to be shall conduct the company. of employees 0% 62% Most Disclosures in an Industries Disclosures Most Others Energy Consumer goods Metals Code of practices and procedures and procedures practices Code of UPSI of fair disclosures for & senior Directors personnel management on Directors’ Disclosure insurance & officers’ All the companies have disclosed have companies the All for and procedures practices of code unpublished price of fair disclosures sensitivity information. disclosed code have the companies All and directors of board of conduct of personnel. Further, senior management affirmation disclosed or companies all conduct. of code to adherence disclosed that they 9 companies Only insurance. and officers’ Directors’ have 18% 100% 100% ESG Analysis on 50 listed companies in India companies on 50 listed ESG Analysis 4.7 Other Governance Factors Governance 4.7 Other Insider trading: disclosure: conduct Code of Others: 67% 67% 67% 50% 40% 94.6 – Others 42.9 – Cement Worst performing Worst company Best performing Best company ESG Analysis on 50 listed companies in India companies on 50 listed ESG Analysis Most disclosures in an industry disclosures Most Automobile Fertilisers & pesticides Fertilisers Chemicals Energy products Cement & cement Complaint disclosure made disclosures 16 companies Only complaints. blower whistle regarding No person denied access audit committee to did not disclose the fact 5 companies to denied access that no person was the Audit Committee. Communication / trainings to to / trainings Communication & employees directors disclosed have 20 companies Only its regarding specific information / directors to or programmes training policies anti-corruption for employees / procedures. 79.6 – Fertilisers 95.4 – Cement 90% 34% 40% Best performing Best industry performing Worst industry 83% 80% 80% 78% 67% 74 73 43 95 Median Average Average Minimum Maximum Most disclosures in an industry disclosures Most Automobile Consumer goods products Cement & cement Others & pesticides Fertilisers Direct access to the chairperson of the chairperson of to access Direct audit committee Policy disclosure Policy 10 companies did not adequately disclose did not adequately 10 companies a mechanism for have whether they the to access - direct blowers whistle the Audit Committee. Chairperson of All the companies have disclosed have the companies All policies on their website. blower whistle Policy disclosures Policy All the companies have disclosed that have the companies All However, an ethics policy. have they disclosed information 34 companies either through on their websites, conduct. of policy or code 4.7 Other Governance Factors Governance 4.7 Other Code of conduct Code of Insider trading / vigil blower Whistle mechanism or corruption bribery, Ethics, 80% 68% Assessment factors: Assessment on: Disclosures 100% 62 Whistle blower / vigil mechanism: blower Whistle Ethics, bribery, and corruption: bribery, Ethics, Policy Disclosures Environment Social Governance Evaluation Framework 65 Two of the most the most of Two 13 of their investee companies and and companies their investee of companies. investee potential all guidelines set of A standardised in help corporations which could ESG is a perfect of their assessment disclosure understand to answer companies of and performance of most ESG parameters, on most in non-financial directly which are nature. voluntary independent Various in emerged have organisations which have decades, two the last standards accepted globally provided reportingfor on ESG factors. prominent sustainability reporting sustainability prominent GRI & IIRC. are formats Internationally agreed disclosures disclosures agreed Internationally and metrics enable information within sustainability contained reports accessible be made to thus providing and comparable, with enhanced stakeholders their inform to information decisions. ESG reporting – International – International ESG reporting and trends: frameworks key become having ESG factors, investors, for interest of areas for and guidelines framework of and assessment disclosure assumed have ESG factors key are Investors critical importance. for ESG parameters incorporating look for their portfolios, evaluating ESG performance assess metrics to the weightage of each of the the each of of the weightage sub-heads ‘Standards under the Accounting the Sustainable set by (SASB) were Board’ Standards considered. or impacts positive organisation’s – on the environment, negative In and other stakeholders. society, sustainability reporting doing so, to issues abstract converts measurable tangible and concrete assisting thereby parameters, and managing in understanding sustainability of the effects on the organisation’s developments activities and strategies. ESG Analysis on 50 listed companies in India companies on 50 listed ESG Analysis Weightage: can is: “How question A common for the same parameter have you and a mining company evaluating a consumer or a service company company?” product Conscious does not the fact that one size of to ensure was taken care fit all, logic are rationale and that proper weightage applied while assigning in an ESG factors between The weightage manner. objective Social and Environment, of in Model vary factors Governance based on industry classification. of While arriving at the weightage the heads and sub-heads, each of reporting: Sustainability Sustainability reporting is designed set to organisations facilitate to performance, measure goals, make to in order change manage sustainable their operations more and and enable investors compare to other stakeholders A sustainability performance. on an disclosures report conveys Review successes successes Evaluating Evaluating and failures reporting stakeholders information to to information towards targets targets towards Monitering and Monitering and reporting that Task Force on Climate-Related on Climate-Related Force Task (TCFD) and Financial Disclosures Development UN Sustainable Goals (UN SDG) Monitoring progress progress Monitoring ESG Analysis on 50 listed companies in India companies on 50 listed ESG Analysis The model has also considered The model has also considered other voluntary disclosure many such as and guidelines, frameworks not only based on Business on Business based not only also but Reports, Responsibility requirement disclosure on key and/or Reports Sustainability of (GRI/ IIRC). Reports Integrated factor, governance for Similarly, set as required are parameters Act,under Companies SEBI 2013, 2015 and Regulations, (LODR) as the as well other applicable laws the around followed practices best governance (such as ICGN world principles), along with SES’ own benchmarks. with policy Investment Investment consultants How to align to How external help external teams vs. vs. teams committees Esg teams and teams Esg and investment and investment Standalone ESG Integrated teams Integrated suppliers, and associates in the and associates suppliers, the model also Further, scope. the company’s evaluates objectively the initiatives across performance has and if the company taken meet to in its initiatives succeeded the targets. differentiation and create aspiration aspiration and create differentiation necessarily must do better, to legal beyond benchmarks have As a result, parameters. compliance in the model parameters evaluation Environment, – factors under three not – are Social and Governance on mandatory based only legal by be followed to requirements must They Indian companies. listed practices best also incorporate and a the world around followed benchmarks. SES created few under disclosures example, For and social environmental evaluated are parameters Training Identifying of the latest the latest of skills gap and gap skills developments staying abreast abreast staying goals Targets into concrete concrete into commitments commitments Turning policy Turning Policy of a policy of and its key and its key components The purpose 64 Simply stated, the Model evaluates the Model evaluates stated, Simply a has formulated if the company provided targets, established policy, and initiatives on steps disclosure and if meet the targets, to taken the to restricted are the initiatives or include its subsidiaries, company United Nations Principles for Responsible Investing (UN PRI). Investing Responsible for Nations Principles the United of The model is designed based on the framework and processes. structure organisational into investment embed responsible to steps PRI has laid down ESG model - Scoring and evaluation criteria and evaluation ESG model - Scoring The ESG model has been The ESG model has been evaluate objectively designed to and disclosure the company’s on ESG front. Proper performance bring to with a view evaluation Foundation for ESG analysis: ESG for Foundation The Model developed by SES has taken into account processes outlined by UN PRI. outlined by processes account into SES has taken by The Model developed In order to undertake a study on a study undertake to In order and practices the ESG disclosure in India,trends SES, under the an NSE, has designed of guidance at an arrive to ESG Model (Model) and the model and grade, ESG score a legal from CAM by has been vetted This report has been perspective. SES. by prepared solely V. Evaluation Framework Evaluation V. Policy Disclosures Environment Social Governance Evaluation Framework 67 16

18 Materiality Conciseness Sustainable Development Development Sustainable Goals (SDG): as the Global also known SDGs, United all by adopted were Goals, Nations Member States in 2015, as ending action on to call a universal the planet, and protecting poverty, peace people enjoy ensuring that all 2030. and prosperity by i.e., integrated, The 17 SDGs are that action in one recognise they in others, outcomes affect will area balance must and that development and environmental social, economic, sustainability. as the next step in the evolution of as the next step in corporate reporting. Stakeholder relationships Stakeholder Connectivity information of Consistency and comparability Consistency Guiding principles of IR framework Guiding principles of Strategic focus and future orientation and future Strategic focus 17 standards for different industries industries different for standards can based on which companies material report on financially impacting a sustainability issues corporation. a complete SASB has developed In 77 industryset of standards. 2018, SASB published November a providing these standards, applicable, globally set of complete that standards industry-specific identify financially of the minimal set and sustainability topics material the metrics for their associated in an industry. typical company professionals, academia, and professionals, academia, promotes NGOs. The coalition value creation communication about Human Natural Financial Intellectual Manufactured Manufactured Social and Relationship Social and Relationship 6 types of capital under IR framework 6 types of The International Framework, Page 1- About the IIRC, https://integratedreporting.org/wp-content/ 1- About the IIRC, Page Framework, The International uploads/2013/12/13-12-08-THE-INTERNATIONAL-IR-FRAMEWORK-2-1.pdf https://www.sasb.org/standards-overview/ https://www.undp.org/content/undp/en/home/sustainable-development-goals.html ESG Analysis on 50 listed companies in India companies on 50 listed ESG Analysis Sustainability Accounting Accounting Sustainability (SASB): Board Standards organisation profit SASB is a not for on providing which has worked 16 17 18 International Integrated Reporting Council (IIRC): Reporting Integrated International of IIRC is a global coalition companies, regulators, investors, standard setters, accounting when principles, guiding All describe the combined, a and show strategy organisation’s interrelatedness of picture holistic capital various and dependencies of an of a value create to on each other, in the short, medium, organisation vital all of Integration and long term. the company to related information self-explanatory a more leads to report.integrated 15 ESG Analysis on 50 listed companies in India companies on 50 listed ESG Analysis This option indicates that indicates This option Core. the minimuma report contains the understand needed to information its material the organisation, of nature and how impacts, and related topics managed. these are This builds on the Comprehensive. additional requiring by option, Core on the organisation’s disclosures ethics and integrity, strategy, In addition, the and governance. report to is required organisation impacts, on its extensively more the topic-specific reportingby all topic each material for disclosures the GRI Standards. by covered the to do not relate These options in the reportquality the information of the organization’s or the magnitude of the reflect they Instead, impacts. which the GRI Standards to degree organisation been applied. An have Core from progress to is not required it can choose the Comprehensive; to meets its reporting that best option needs ofneeds and the information its stakeholders. In a period of almost two decades, two almost In a period of GRI reporting has undergone format starting the from changes, many standardsof global version first 2000, GRI G4G1 launched in year 2014. Further, in May launched was 2016, GRI launchedin October on guidelines recent the most sustainability reporting, which are and this as the GRI Standard known the from been upgraded has now guidelines. GRI-G4 The GRI has also incorporated and hasprinciples enunciated with United guidelines harmonized Ten Nations’ Global Compact’s the OECD’s 2000; Principles, MultinationalGuidelines for 2011; and the UN’s Enterprises, and on Business Guiding Principles 2011. Human Rights, that report on Organisations as per thesustainability initiatives a report can prepare GRI framework options with two in accordance andunder the GRI Standards: Core Comprehensive. https://www.globalreporting.org/Information/about-gri/Pages/default.aspx 14 “Developed by the Global the by “Developed Board Standards Sustainability enable the GRI Standards (GSSB), publicly report to organizations all environmental on their economic, and social impacts – and show towards contribute they how Source: development.” sustainable GRI website Global Reporting Initiative: Initiative: Global Reporting 2018 Standards Reporting GRI Sustainability set of Consolidated GRI Standards- G4 Sustainability Reporting Guidelines Reporting G4 Sustainability The Global Responsibility Initiative’s Initiative’s The Global Responsibility sustainability reporting standards (GRI Standards https://www. were globalreporting.org/standards) and as per their disclosure, the first adopted widely the most these are sustainability for global standards reporting. GRI is a voluntary initiative a develop in 1997 to established report to companies for framework parameters. non-financial across The GRI Sustainability Reporting with true developed Standards are and contributions multi-stakeholder in public interest. rooted Global Reporting Global Reporting (GRI): Initiative 66 14 15 13 Policy Disclosures Environment Social Governance Evaluation Framework 69 Governance Companies Act, 2013 2015 SEBI LODR The governance indicators indicators The governance the company's to related are with practices compliance statutory to respect norms as under the Companies laid down , Act, 2013 and SEBI Regulations Board which includes adequate Remuneration, Board structure, the Director, of Independence and its Committees Board policies, Corporate functionality, the Company, of Auditors etc. engagement, Stakeholders India’s ESG regulatory framework ESG regulatory framework India’s into categorised can be broadly parts, viz.,two the compliance reporting and the framework framework. Social Companies Act, 2013 and applicable SEBI Regulations Act, 1948 Factories the to with respect Other laws salaries / wages, of payment minimum gratuity, bonus, activities, welfare wages, etc and Safety, Health The social responsibilities of of The social responsibilities from emanate the company with various its relations such as employees, stakeholders, service vendors, customers, etc. shareholders, providers, the of The social responsibilities various by governed are company Acts and Regulations. The questions are based on the based on the are The questions under requirements disclosure regulatoryand voluntary various in the as elaborated frameworks, brief below. Environment Factories Act, 1948 Factories Act, Protection Environment 1986 and The Air (Prevention 1981 Pollution)Act, of Control and (Prevention The Water Act, 1974 Pollution) of Control Hazardous Waste Handling and (Management, Movement) Transboundary 2016 Rules, Manufacturing companies Manufacturing companies the most face to known are risk and exposure. environmental Acts and The following Environment to relate regulations in India: The questions in the model are model are in the The questions the factual extract designed to on its ESG a company, position of performance. ESG Analysis on 50 listed companies in India companies on 50 listed ESG Analysis Compliance framework Compliance Model - Legal and voluntary frameworks - Legal Model ESG Analysis on 50 listed companies in India companies on 50 listed ESG Analysis SEBI extended the mandate to provide BRR to top 1,000 companies. It also advised on the 1,000 companies. top BRR to provide to mandate the SEBI extended on a voluntary SEBI has given basis. 500 companies top by Reporting Integrated of adoption a provide be published in BRR or to ESG-related to for disclosures companies to an option map it with the BRR. and frameworks accepted sustainability report as per globally This was India's first pilot regarding ESG. MCA introduced the NVG Guidelines. Companies Guidelines. the NVG introduced MCA ESG. regarding pilot first India's This was on their and Report Responsibility Business the principles of adopt to required were on a voluntaryinitiatives basis. report on Business MCA, to on their initiatives After 100 companies top SEBI mandated format in which a specific in the annual report,SEBI also provided in 2012. Responsibility responsibility on business questions series of to respond to required were companies practices. National National Business Business of BRR to BRR to of Voluntary Voluntary top 1,000 top Reporting Extension Extension Guidelines companies Responsibility Responsibility 68 ESG reporting: Analysing disclosure practices in India: practices disclosure Analysing ESG reporting: framework Reporting Policy Disclosures Environment Social Governance Evaluation Framework 71 Information source: SES has used following sources of information: Annual reports, sustainability reports, Business Responsibility Reports, information disclosed to stock exchanges, information available on the companies’ website, Watchout investors, Capitaline database, and any other authentic publicly available information relating to the companies. The scores are worked out only based on published information available in the public domain and no forensic work has been done. As a result, any information which has not been disclosed in the public domain has not been taken into consideration. SES believes that disclosure must be adequate and in public domain. Therefore, as a matter of principle and to maintain absolute independence and fairness, all extracted information by SES is available in public domain only and no interaction was done with the companies. set criteria; information disclosed is disclosed is set criteria; information criteria. Verified mapped against the the basis of score information forms for each question. a culmination of The final score is obtained by the section-wise scores Environment, company on policy, scores, Social and Governance of each based on weightage of these heads. The ESG score objectively depicts the company’s awareness of ESG issues, steps and initiatives taken by the company to imbibe sustainable and good governance practices, and lastly, the effectiveness in incorporating these practices. 45% Category Weighted Governance 20% Social Category Weighted each of the factors, which is adjusted each of the factors, depending between three factors assessed on the sector to which A typical weight company belongs. below. allocation is as depicted assumption that all the questions under each sub-category are applicable to the company being evaluated. If any question is not applicable for a particular industry/ company, the weightages of scores are automatically redistributed on the remaining applicable questions. Each ESG parameter is analysed not only based on the mandatory legal requirements but also on the best practices followed around the globe. Disclosures made by companies are evaluated for their adequacy of information. Higher score is awarded for disclosures which are informative, meaningful, considered adequate, and serve the objective behind disclosure. Thus, the Model is designed to value ‘disclosure in spirit’ higher than ‘disclosure in letter’. The Model evaluates the quality of disclosure practices and quantifies them in the form of sectional/sub-sectional scores, which are collectively viewed by applying appropriate weights. Each question has the highest score of 5 and lowest score of 0. SES has 100% Overall ESG Overall 30% Category Weighted Environmental 5% Category Weighted Policy disclosure Policy ESG Analysis on 50 listed companies in India companies on 50 listed ESG Analysis Questionnaire and Questionnaire and section weightage: Divided into four sections ESG is arrived The overall score of assigned to based on weightage The first section of the model analyses the company’s policy disclosure, which forms the base of the scoring Model. Under E, S, and G heads, set parameters or indicators that reflect the company’s performance towards their ESG factors are evaluated. Under each parameter, various sub-parameters are analysed and scored. The weightage of each sub-parameter also varies, based on the type of industry. It is based on the materiality of each sub-parameter for that type of industry, based on the SASB Materiality Map for that industry. The materiality of each parameter is either high, medium, or low, based on SASB materiality map within the ESG Model. The weightage within the same industry group is fixed and applied uniformly to all companies in same industry. No individual, company-wise weightage adjustment is done. The weightage of each question in the model is assigned based on the Governance Board composition Board Board committees Board Directors’ remuneration Directors’ Statutory auditors Audit and financial reporting Stakeholder engagement Stakeholder Analysis of compliance and compliance of Analysis based practices governance requirements on legal good of and evaluation practices governance the over followed generally and based on SES world benchmarks. is an ESG grading/score is an ESG Analysis on 50 listed companies in India companies on 50 listed ESG Analysis Overall, Overall, the of the analysis of outcome practices, disclosure company’s position, present/actual policies, The prospects. and future to scores positive model awards based on their disclosure companies also the model Further, practices. based scores positive provides sustainable on implementation of practices. instance, under Health & Safety under Health instance, of the existence not only Policy, also whether but policy is examined and health follows the company applied standards any safety policy, of number and safety, health for taken steps Y-o-Y, fatalities/injuries etc. such fatalities/injuries, reduce to Social Health and safety Health Workforce Local community community Local relationship CSR Privacy/data security Privacy/data Customer orientation Customer Analysis of the company’s the company’s of Analysis with its relationship and various stakeholders based on social issues, the by provided disclosures company. ESG Model /GHG) 2 The Model also evaluates the The Model also evaluates the Company of performance For or target. policy a given for based on disclosures made by the the made by based on disclosures These binary are answers company. numerical section-wise give used to the give and then finally scores a grading. the for In order company the true and reflect work model to precondition the absolute picture, or information is that the relevant is disclosed factors ESG on key data properly. does not look SES ESG Model score disclosures the company’s into only account into but also takes practices targets its actual position and future on ESG (based on disclosures) factors. Environment General disclosures General impact Product/service (CO Air emissions Energy consumption Energy consumption Water management Waste incidents Environmental Analysis of the company’s the company’s of Analysis on targets, disclosures and policies performance, the environment, to related the company’s the impact of operations on the and steps environment, the company by being taken adverse mitigate to impacts. environmental Policy Policy Disclosure on principle-Disclosure wise BR policy/policies responsibility Business implementation Analysis of BRR and other of Analysis to policy disclosures ESG factors. core analyse 70 Model - Parameters evaluated: Model - Parameters The SES Model scores policy policy The SES Model scores set, targets disclosures, and adequacy of performance, – E, S, factors three for disclosure 244 well-researched and G, through are These questions questions. binary answers aimed at getting What is being scored? What The SES ESG model is divided into is divided into The SES ESG model Environment, sections – Policy, four has Policy Social, and Governance. section, been included as separate eventually as it is the seed which fruit a full-fledged into results and acts as catalyst. bearing tree only analyses The policy section and other the BRR disclosures the by provided policy disclosures pertaining ESG factors. to company ESG Scoring Policy Disclosures Environment Social Governance Evaluation Framework 73 Metals Metals Metals Metals Metals Metals Metals Metals Textiles Pharma Pharma Industry Services Services Telecom Telecom Chemicals Chemicals Chemicals Automobile Automobile Automobile Automobile Automobile Automobile Construction Construction Consumer Goods Consumer Goods Consumer Goods Consumer Goods Consumer Goods Consumer Goods Consumer Goods Consumer Goods Consumer Goods Consumer Goods Energy → Power** Energy Energy → Oil & Gas** Energy Energy → Oil & Gas** Energy Energy → Oil & Gas** Energy Energy → Oil & Gas** Energy Energy → Oil & Gas** Energy Fertilisers & Pesticides Fertilisers Fertilisers & Pesticides Fertilisers Fertilisers & Pesticides Fertilisers Cement & Cement Products Cement & Cement Products Cement & Cement Products Cement & Cement Products Cement & Cement Products * 9,031 5,318 9,595 3,271 66,082 61,475 53,459 48,797 23,925 38,968 27,147 15,442 16,995 57,155 81,002 69,982 44,099 40,499 37,158 28,113 54,595 40,305 36,448 44,657 19,969 88,584 65,277 56,669 53,176 48,548 39,467 17,720 47,759 38,554 74,362 17,213 46,703 26,092 2,22,591 1,16,776 1,82,213 4,16,293 2,92,117 1,71,212 1,05,465 9,59,787 1,18,195 1,06,630 1,30,249 2,33,915 Market cap. Market Maruti Suzuki India Ltd. Maruti Suzuki Name of the company Name of Mahindra & Mahindra Ltd. & Mahindra Mahindra Eicher Motors Ltd. Eicher Motors Tata Motors Ltd. Motors Tata Hero Motocorp Ltd. Motocorp Hero Ashok Leyland Ltd. Ashok Leyland Ultratech Cement Ltd. Ultratech Ambuja Cements Ltd. ACC Ltd. ACC Dalmia Bharat Ltd. Dalmia Bharat J. K. Ltd. Cement J. Larsen & Toubro Ltd. & Toubro Larsen Galaxy Surfactants Ltd. Solar Industries India Ltd. Solar Industries Tata Chemicals Tata DLF Ltd. Hindustan Unilever Ltd. Unilever Hindustan ITC Ltd. ITC Asian Paints Ltd. Asian Paints Titan Company Ltd. Titan Company Dabur India Ltd. Godrej Consumer Products Ltd. Consumer Products Godrej Marico Ltd. Marico Havells India Ltd. Havells Procter & Gamble Hygiene & Health Care Ltd. Care & Health & Gamble Hygiene Procter Kansai Nerolac Paints Ltd. Paints Nerolac Kansai Reliance Industries Ltd. Industries Reliance Indian Oil Corporation Ltd. Indian Oil Corporation Bharat Petroleum Corporation Ltd. Corporation Bharat Petroleum GAIL (India) Ltd. Hindustan Petroleum Corporation Ltd. Corporation Petroleum Hindustan Adani Transmission Ltd. Adani Transmission UPL Ltd. PI Industries Ltd. PI Industries Rallis India Ltd. Rallis Coal India Ltd. Zinc Ltd. Hindustan JSW Steel Ltd. Ltd. Vedanta Steel Ltd. Tata Ltd. Industries Hindalco NMDC Ltd. India Ltd. Steel Authority of Reddy's Ltd. Laboratories Dr. Cipla Ltd. Adani Ports and Special Economic Zone Ltd. Zone Special Economic and Adani Ports Indian Hotels Co. Ltd. Co. Indian Hotels Bharti Airtel Ltd. Bharti Ltd. Infratel Page Industries Ltd. Industries Page 1 2 3 4 5 6 7 8 9 10 11 15 14 13 12 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 Sr. No. Sr. Annexure I – List of companies of List I – Annexure ESG Analysis on 50 listed companies in India companies on 50 listed ESG Analysis . crores) as on 31 December 2019) | **Respective companies were classified under ‘Energy’ as on 31 December 2019, however, underclassified ‘Energy’ were companies (in `. as crores) on as31 2019) onDecember | 31 2019,**Respective December cap. however, *Market above. table in the as shown ‘Oil & Gas’, or either as ‘Power’ reclassified now are they ESG Analysis on 50 listed companies in India companies on 50 listed ESG Analysis mandated format and mandatory and format mandated may its disclosures requirements, which short, in a score fall resulting true position. While reflect not may one indicative, are these scores draw used to alone cannot be score whether a conclusion definite any or bad. However, is good company coming that in the SES is confident improve, will disclosure years, Further, the true picture. reflecting scores three-year of an analysis – both information of a lot give will and company-wise. market-wise company/ any for Static ESG scores industry sample would or entire for concern/focus a lack of indicate should only ESG. SES’ ESG scores assessment be seen as the current the potential of and an indicator rather than a improvement, for the of assessment standalone company. and directors’ statements and statements and directors’ in annual reportsinformation is used further cross- without any as is, purpose. the scoring for verification SES do like Independent analysts of happenings the internal not know an inside have nor do we a company, practices. the company’s of view that on paper, be possible It may information, based on available be in everything might appear to be could there in reality, But order. or the company plaguing concerns of the scope versa. It is beyond vice such possess our work, nor do we verify public documents to expertise check to visit the company and/or and checks, controls, its internal a note take Users may practices. our scores same and read of accordingly. not standardised, are As disclosures that possibility is a distinct there have may a particular company a lack of due to yet done better, 72 The scores are calculated from from calculated are The scores data and are available publicly made dependent on information and taken the company by available instance, faith. For as true in good reports, reports sustainability BRRs, compliance of certificate auditors, by mandatory of requirements, The scoring Model has been The scoring care, with utmost developed Our and diligence. objectivity, the focus bring to is to intention ESG practices. good importance of that stakeholders SES understands decisions based on multiple take among which ESG is factors, SES’ ESG an important factor. be used for alone cannot scores used and are decisions investment additional as a supplement/an a take to help stakeholders to tool about view and holistic considered in SES’ ESG score the company. the of isolation be a predictor cannot performance. future company’s Limitations of the model of Limitations Annexure II – Disclosure pattern in BRR table

The following table (based on BRR form under Section D – Question 2) reflects disclosures by the companies for a set of ten questions on nine BR policies.

Table 3: Principles (% disclosure by companies)

Questions 1 2 3 4 5 6 7 8 9

1 Do you have a policy/policies for principle? 98 98 100 100 94 100 76 100 90

Has the policy been formulated in consultation with 2 90 84 90 90 84 90 70 90 82 the relevant stakeholders? Does the policy conform to any national/ international 3 86 82 90 84 80 90 68 86 76 standards? If yes, specify (50 words). Has the policy been approved by the Board? If yes, 4 has it been signed by the MD/owner/CEO/ appropriate 94 80 88 94 82 92 68 90 78 Board director? Does the company have a specified committee of the 5 Board/director/official to oversee the implementation 94 88 94 98 88 94 74 98 86 of the policy?

6 Indicate the link for the policy to be viewed online. 90 76 82 96 80 84 62 92 74

Has the policy been formally communicated to all 7 94 88 94 94 86 94 74 94 86 relevant internal and external stakeholders? Does the company have an in-house structure to 8 92 88 90 92 84 92 72 92 86 implement the policy/policies? Does the company have a grievance redressal 9 mechanism related to the policy/policies to address 92 84 90 90 86 86 64 84 86 stakeholders' grievances related to the policy/policies? Has the company carried out an independent audit/ 10 evaluation of the working of this policy, by an internal 80 78 80 78 74 88 66 80 78 or external agency?

74 ESG Analysis on 50 listed companies in India