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.
THE HONOURS
- Tata group companies occupy the prime position. Of the top ten companies, two are from the Tata stable (as compared to three in the previous year).
- Several companies have moved up the list – Infosys, Bharat Petroleum, Toyota Kirloskar Motors being the chief amongst them.
- Bharat Petroleum is the only public sector company amongst the top ten companies.
- Unlike the previous year, this year there is one company of foreign origin (Toyota Kirloskar Motors) in the top ten list.
| Rank | Company |
|---|---|
| 1 | Tata Chemicals Ltd. |
| 2 | Infosys Ltd. |
| 3 | Bharat Petroleum Corporation Ltd. |
| 4 | Mahindra & Mahindra Ltd. |
| 5 | ITC Ltd. |
| 6 | Ambuja Cements Ltd. |
| 7 | Tata Motors Ltd. |
| 8 | Vedanta Ltd. |
| 9 | Hindalco Industries Ltd. |
| 10 | Toyota Kirloskar Motor India |
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 18% of companies reporting in this format this year.
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 | 26.5 | 17.2 | 26.3 | 70.0 |
| Median Scores | 26.0 | 17.0 | 27.5 | 72.0 |
| Highest Score | 35.0 | 23.0 | 34.0 | 87.0 |
| Lowest Score | 3.0 | 11.0 | 6.0 | 25.0 |
| Average/Highest Score | 75.7% | 74.8% | 77.4% | 80.5% |
| Percentage more than half | 92.0% | 68.0% | 93.0% | 94.0% |
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
| Rank | Manufacturing companies | Service companies |
| 1 | Tata Chemicals Ltd. | Infosys Ltd. |
| 2 | Bharat Petroleum Corporation Ltd. | Wipro Ltd. |
| 3 | Mahindra & Mahindra Ltd. | Tech Mahindra Ltd. |
| 4 | ITC Ltd. | YES Bank Ltd. |
| 5 | Ambuja Cements Ltd. | Tata Consultancy Services Ltd. |
Manufacturing companies, on an average, score far better than service companies (total score of 72 for manufacturing versus 64 for service companies) overall and across criteria.
| Average scores | Environment | Social | Governance | Total |
| Manufacturing | 27.4 | 17.4 | 26.9 | 71.6 |
| Services | 23.2 | 16.5 | 24.2 | 63.9 |
Public and private
| Rank | Public companies | Private companies |
| 1 | Bharat Petroleum Corporation Ltd. | Tata Chemicals Ltd. |
| 2 | Indian Oil Corporation Ltd. | Infosys Ltd. |
| 3 | GAIL (India) Ltd. | Mahindra & Mahindra |
| 4 | Hindustan Petroleum Corporation Ltd. | ITC Ltd. |
| 5 | NMDC Ltd. | Ambuja Cements 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 | 21.5 | 18.6 | 24.3 | 64.4 |
| Private | 28.0 | 16.8 | 27.0 | 71.8 |
Industries
Information Technology and Energy are the top performing industries, while Other Financials are laggards.
| Industry | Average score | Top performing company |
| Information Technology | 80.5 | Infosys Ltd. |
| Energy | 76.1 | Bharat Petroleum Corporation Ltd. |
| Utilities | 75.0 | Tata Power Company Ltd. |
| Healthcare | 73.0 | Dr. Reddy’s Laboratories Ltd. |
| Materials | 72.9 | Tata Chemicals Ltd. |
| Diversified | 72.7 | ITC Ltd. |
| Other Industrials | 72.0 | Cummins India |
| Consumer Discretionary | 71.1 | Mahindra & Mahindra Ltd. |
| Telecommunication Services | 71.0 | Vodafone Idea Ltd. |
| Consumer Staples | 69.6 | Hindustan Unilever Ltd. |
| Financials | 67.4 | YES Bank Ltd. |
| Capital Goods | 64.2 | Larsen & Toubro Ltd. |
| Other Financials | 45.3 | Mahindra & Mahindra Financial Services Ltd. |
| All | 70.0 | Tata Chemicals Ltd. |