Tata Steel lone Indian co in S&P’s CSR rankings
The Financial Express — December 26, 2004

India Inc’s hope of excelling in triple bottomline disclosures has been kept alive by a single corporate entity — Tata Steel, which ranks among the top 100 companies in Standard & Poor’s ‘The Global Reporters 2004 Survey of Corporate Sustainability Reporting’. The idea of sustainability reporting or triple bottomline reporting (on economic, social and environmental parameters) has assumed significance in the backdrop of a series of corporate scandals like Enron.

S&P notes that brokerage firms recommend corporate managers and board directors include social, environmental and governance reporting in their annual reports and financial statements. “Tata Steel provides one of the strongest reports from emerging economy countries and is definitely India’s top reporter. It is a bit like a Japanese report with its detailed numerical data, but the report contains an extensive set of stakeholder concerns and issues, linking them with the company’s response and strategic objectives,” notes S&P in its latest edition (Risk & Opportunity: Best Practice in Non-financial Reporting).

The company has, however, not been able to make it to the top 50 list of sustainability reporters but is placed in ‘The Other 50’, where companies like DaimlerChrysler and BMW are placed. Speaking to FE, PricewaterhouseCoopers Ltd associate director Dr P Ram Babu said that within India only 25 companies have so far come forward for the sustainability reporting. “The Tata group accounts for 12 companies out of 25 while the others include ITC, Jubilant Organosys, Ford India and Dr Reddy’s Laboratories,” points out Dr Babu. “Reliance Infocomm is also seeking to report on these lines.”

Ernst & Young partner Xavier Houot, which has recently taken over Indian operations, pointed out that India’s reporting was in sharp contrast to Europe where 1,200 out of the 7,300 listed companies do sustainability reporting. “In France, it’s 100%,” Mr Houot added. Tata Steel head (social services and family initiatives) Shakti Sharma said that the company had invested over Rs 1,500 crore in social and environmental initiatives during 1992-2002.

“The social expenditure has been around 10-12% of PAT earlier, but for the last two years PAT has been extraordinary so as a percentage, the spending would have come down,” said Ms Sharma, and added, “Now, as we are setting up a new steel plant in Orissa and also enhancing capacity in Jamshedpur, we are also taking into account the social impact and the desired expenditure of this eight million additional capacity expansion.” “With so many companies now producing reports, competition for slots in the top 50 is intense,” says the survey.

“Long-time top 50 reporters which have dropped into the ‘other 50’ category include BMW and DaimlerChrysler.” The survey points out that “DaimlerChrysler’s 2004 report devotes more space to photographs of handshakes than it does to the discussion of climate change, which is now a key area of risk and opportunity for anyone in the mobility business.” The most striking feature of the 2004 results is that just over half (26) of the top 50 are new to the survey.

The newcomers include British American Tobacco, Rabobank, HP, Ford Motor Company, Veolia Environment, Lafarge, Cadbury Schweppes and Matsushita Electric Group. S&P’s corporate governance agenda includes issues like: How extensive is the company’s own social and environmental reporting? Does it fully or partially disclose in accordance with the global reporting initiative? Does the company maintain an active policy of engagement to investor and stakeholder interest groups?

Are there any NGOs or public interest groups that oppose the company’s activities? What is the substance of their opposition? The fact that triple bottomlines have not acquired the desired importance in India is reflected by the turnout at CII’s recent corporate social responsibility summit where most prominent speakers failed to turn up.