Metals & Mining Companies Outperform In Environment Impact Reporting, Says Report

It was noted that the healthcare services, IT, financial services, and media entertainment and publication sectors lag behind

An improvement in the quality of environmental data has been reported by metal and mining companies, stated a report by Sculpt Partners, a sustainability-oriented advisory firm, on Monday. The report also provided better visibility on sustainability topics that are better reported vis-à-vis others.

“Companies disclose richer information and metrics for sustainability topics such as waste management, GHG emissions, water consumption, and energy efficient operations,” stated the report. Surprisingly, it was noted that the healthcare services, IT, financial services, and media entertainment and publication sectors lag behind on these parameters.

At the beginning of the year, the Business Responsibility and Sustainability Reporting (BRSR) guidelines introduced by SEBI made it mandatory for the top 1000 listed companies in India (by market capitalisation) to publish sustainability reports and disclose vital ESG information as per BRSR standards.

On this matter, Kumar Subramanian, Founding Partner and Managing Director, Sculpt Partners, commented, “In order to align with the SEBI guidelines, we believe that most companies from the lagging sectors need to significantly improve their environmental impact reporting practices.” Board of Directors, Chief Financial Officers (CFOs) and Chief Sustainability Officers (CSOs) of these companies need to step up and establish measurement mechanisms and narratives to report firm sustainability performance in a fair, transparent, accurate, and intuitive manner.”

The report further delved deeper into key findings regarding the reporting practices, which are part of a robust governance structure to effectively oversee, manage and execute an organisation’s sustainability agenda. They are as mentioned below:

• Less than 15 per cent of the Nifty 500 companies have a dedicated committee of the board to oversee the enterprise sustainability agenda
• About 37 per cent report key sustainability risks based on the enterprise risk management framework
• Only four per cent report that their board evaluation framework captures sustainability topics
• Only six companies have appointed a Chief Sustainability Officer (CSO) (or an equivalent key management role) to lead enterprise sustainability initiatives at the management level
• Only two per cent report that key sustainability indicators are linked to management remuneration
• Only three companies reveal the precise percentage of compensation linked to sustainability performance.

Subramanian said, “The enterprise sustainability mandate has to be steered by the Board. They need to integrate the sustainability agenda with their firm strategy, goal-setting, risk management, and management incentives. Boards also need to invest themselves in regular training on contemporary sustainability topics. Where appropriate, they should co-opt an advisory board to seek counsel on sustainability risks and opportunities material to the firm. The management of these companies has to sponsor, articulate and execute key sustainability initiatives within the firm and across their value chain. “

He added that robust collection, reporting, and third-party verification of sustainability data provides the right foundation for a data-led sustainability strategy and practices, and provides transparency to investors on current performance and future commitments.

As per the study, most Nifty 500 companies fail to report material information on vital customer-related topics such as product safety and quality, product recalls, and practises regarding product labelling and consumer data protection.

The report said less than 10 per cent of companies (48 of 500) report indicators of data protection breaches and about one per cent (7 of 500) report product recall metrics.