ESG Performance
Companies undertake many types of responsible business activities. It is difficult to comprehend easily the breadth and scope of their work. Our study uses a measure called the Spread, which is indicative of how broad-based the responsible business activities of a company are and is a combined score of the environmental, societal and governance parameters.
Overview
- Infosys Limited is the top ranked company – the first time a service sector company achieved the top rank.
- Unlike previous years, no group of companies dominates the top 10 rankings.
- Environment and Governance are seeing an upward trend.
- Social performance needs more focus.
| Rank | Company |
|---|---|
| 1 | Infosys Ltd. |
| 2 | Mahindra & Mahindra Ltd. |
| 3 | Tata Chemicals Ltd. |
| 4 | ITC Ltd. |
| 5 | Vedanta Ltd. |
| 6 | Wipro Ltd. |
| 7 | Hindustan Unilever Ltd. |
| 8 | Godrej Consumer Products Ltd. |
| 9 | Grasim Industries Ltd. |
| 10 | Bharat Petroleum Corporation Ltd. |
Performance improved across years and parameters
Although we have been noting increased disclosures across years, this year’s study highlights an increase in the number of companies that provided integrated reporting. From the previous year the number of companies providing integrated reports has improved significantly with 26% of companies reporting in this format this year. While more companies are moving towards integrated reporting, at the same time, companies are also producing multiple reports. For instance a company may have an integrated report, CSR report, as well as a sustainability report.
Companies perform fairly evenly across environmental and governance parameters. On social front, companies need to perform better. Governance and social got a leg up with the passage of Companies Act 2013, while environment though important for quite some time has benefitted from the push with the signing of the Paris Accord.
| Environment | Social | Governance | Total | |
|---|---|---|---|---|
| Average Scores (a) | 25.9 | 17.7 | 26.5 | 70.1 |
| Median Scores (b) | 26 | 18 | 28 | 72 |
| Highest Score (c ) | 35 | 25 | 34 | 88 |
| Lowest Score (d) | 3 | 10 | 11 | 29 |
| Average Score/Highest Score (a/c) | 74.1% | 71.0% | 77.8% | 79.7% |
| Percentage companies that score more than 50% scores | 92% | 70% | 96% | 95% |
Performance has improved across the board
Improvement in performance is not driven by a particular category of company. No matter how we dissect the study sample, we find increased scores. This indicates improvement across the board. We analysed the performance of the companies across the following classifications:
Manufacturing and services
Manufacturing companies, on an average, score far better than service companies (total score of 71.7 for manufacturing versus 63.9 for service companies) overall and across criteria.
| Rank | Manufacturing companies | Service companies |
|---|---|---|
| 1 | Mahindra & Mahindra Ltd. | Infosys Ltd. |
| 2 | Tata Chemicals Ltd. | Wipro Ltd. |
| 3 | ITC Ltd. | Tech Mahindra Ltd. |
| 4 | Vedanta Ltd. | Tata Consultancy Services Ltd. |
| 5 | Hindustan Unilever Ltd. | Adani Ports & Special Economic Zone Ltd. |
| Average scores | Environment | Social | Governance | Total |
|---|---|---|---|---|
| Manufacturing | 26.6 | 18.0 | 27.1 | 71.7 |
| Services | 23.3 | 16.6 | 24.0 | 63.9 |
Public and private
Private sector companies perform better than public companies. While they perform better on environmental and governance issues, they lag on social front.
| Rank | Public companies | Private companies |
|---|---|---|
| 1 | Bharat Petroleum Corporation Ltd. | Infosys Ltd. |
| 2 | Indian Oil Corporation Ltd. | Mahindra & Mahindra Ltd. |
| 3 | GAIL (India) Ltd. | Tata Chemicals Ltd. |
| 4 | Hindustan Petroleum Corporation Ltd. | ITC Ltd. |
| 5 | NTPC Ltd. | Vedanta Ltd. |
Private sector companies perform better than public companies. While they perform better on environmental and governance issues, they lag on social front.
| Average scores | Environment | Social | Governance | Total |
|---|---|---|---|---|
| Public | 20.3 | 18.9 | 24.3 | 63.5 |
| Private | 27.7 | 17.4 | 27.2 | 72.2 |
Industries
Information Technology and Diversified are the top performing industries, while Other Financials are laggards.
| Industry | Average Score | Top performing company |
|---|---|---|
| Information Technology | 82.0 | Infosys Ltd. |
| Diversified | 77.1 | ITC Ltd. |
| Other Industrials | 76.5 | Adani Ports & Special Economic Zone Ltd. |
| Healthcare | 73.3 | Jubilant Life Sciences Ltd. |
| Energy | 73.0 | Bharat Petroleum Corporation Ltd. |
| Consumer Staples | 72.9 | Hindustan Unilever Ltd. |
| Consumer Discretionary | 72.5 | Mahindra & Mahindra Ltd. |
| Utilities | 71.2 | Adani Power Ltd. |
| Materials | 71.1 | Tata Chemicals Ltd. |
| Financials | 66.7 | HDFC Bank Ltd. |
| Capital Goods | 64.9 | Larsen & Toubro |
| Telecommunication Services | 63.5 | Bharti Airtel Ltd. |
| Other Financials | 46.3 | Mahindra & Mahindra Financial Services |
| All | 70.1 | Infosys Ltd. |