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.

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.

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 72 for manufacturing versus 64 for service companies) overall and across criteria.

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.

Industries

Information Technology and Energy are the top performing industries, while Other Financials are laggards.