SEBI requires inclusion of Business Responsibility Reports as part of Annual Reports for certain listed entities

Business Responsibility Reports -
Amendment in Listing Agreement
CIRCULAR NO. CFD/DIL/8/2012, DATED 13-8-2012
1. At a time and age when enterprises are
increasingly seen as critical components of the social system, they are
accountable not merely to their shareholders from a revenue and profitability
perspective but also to the larger society which is also its stakeholder.
Hence, adoption of responsible business practices in the interest of the social
set-up and the environment are as vital as their financial and operational
performance. This is all the more relevant for listed entities which,
considering the fact that they have accessed funds from the public, have an
element of public interest involved, and are obligated to make exhaustive
continuous disclosures on a regular basis.
2. Ministry of Corporate Affairs, Government of
India, in July 2011, came out with the 'National Voluntary Guidelines on
Social, Environmental and Economic Responsibilities of Business'. These
guidelines contain comprehensive principles to be adopted by companies as part
of their business practices and a structured business responsibility reporting
format requiring certain specified disclosures, demonstrating the steps taken
by companies to implement the said principles.
3. In line with the above Guidelines and
considering the larger interest of public disclosure regarding steps taken by
listed entities from a Environmental, Social and Governance ("ESG")
perspective, it has been decided to mandate inclusion of Business
Responsibility Reports ("BR reports") as part of the Annual Reports
for listed entities. Therefore, in line with the objective to enhance the
quality of disclosures made by listed entities, certain listing conditions are
hereby specified by way of inserting Clause 55 in the equity Listing Agreement
as given in Annexure-1.
4. Certain key principles to assess the
fulfillment of listed entities and a description of the core elements under
these principles are detailed at Annexure-2.
5. Applicability
a. The requirement to include BR Reports as
part of the Annual Reports shall be mandatory for top 100 listed entities based
on market capitalisation at BSE and NSE as on March 31, 2012. BSE and NSE shall
independently draw up a list of listed entities to whom the circular would be
applicable based on the said criteria and disseminate the same in their
websites respectively. Other listed entities may voluntarily disclose BR
Reports as part of their Annual Reports.
Those listed entities which have been submitting
sustainability reports to overseas regulatory agencies/stakeholders based on
internationally accepted reporting frameworks need not prepare a separate
report for the purpose of these guidelines but only furnish the same to their
stakeholders along with the details of the framework under which their BR
Report has been prepared and a mapping of the principles contained in these
guidelines to the disclosures made in their sustainability reports.
b. The provisions of this circular shall be
applicable with effect from financial year ending on or after December 31,
2012. However, listed entities who are yet to submit their Annual Reports for
financial year ended on March 31, 2012 may also include BR Reports as part of
their Annual Reports on a voluntary basis.
6. The above listing conditions are specified
in exercise of the powers conferred under Section 11 read with Section 11A of
the Securities and Exchange Board of India Act, 1992. The said listing
conditions should form part of the existing Listing Agreement of the stock
exchange.
7. All stock exchanges are advised to ensure
compliance with this circular and carry out the amendments in their Listing
Agreement as per the Annexure to this circular.
8. This circular is available on SEBI website
at www.sebi.gov.in under the categories
"Legal Framework" and "Issues and Listing".
Annexure-1
Amendments to Listing Agreement
1.
A new Clause 55 shall be inserted to read as under, viz., "Listed entities
shall submit, as part of their Annual Reports, Business Responsibility Reports,
describing the initiatives taken by them from an environmental, social and
governance perspective, in the format suggested as under:
Business Responsibility Report - Suggested Framework
Section A: General Information about the Company
1.
Corporate Identity Number (CIN) of the Company
2.
Name of the Company
3.
Registered address
4.
Website
5.
E-mail id
6.
Financial Year reported
7.
Sector(s) that the Company is engaged in (industrial activity code-wise)
8.
List three key products/services that the Company manufactures/provides (as in
balance sheet)
9.
Total number of locations where business activity is undertaken by the Company
i. Number of
International Locations (Provide details of major 5)
ii. Number of
National Locations
10.
Markets served by the Company - Local/State/National/International/
Section B: Financial Details of the Company
1.
Paid up Capital (INR)
2.
Total Turnover (INR)
3.
Total profit after taxes (INR)
4.
Total Spending on Corporate Social Responsibility (CSR) as percentage of profit
after tax (%)
5.
List of activities in which expenditure in 4 above has been incurred:-
a.
b.
c.
Section C: Other Details
1.
Does the Company have any Subsidiary Company/ Companies?
2.
Do the Subsidiary Company/Companies participate in the BR Initiatives of the
parent company? If yes, then indicate the number of such subsidiary company(s)
3.
Do any other entity/entities (e.g. suppliers, distributors etc.) that the
Company does business with, participate in the BR initiatives of the Company?
If yes, then indicate the percentage of such entity/entities? [Less than 30%,
30-60%, More than 60%]
Section D: BR Information
1. Details of Director/Directors responsible for BR
(a) Details of the Director/Director
responsible for implementation of the BR policy/policies
• DIN Number
• Name
• Designation
(b) Details of the BR head
S.No. Particulars Details
1. DIN Number (if applicable)
2. Name
3. Designation
4. Telephone number
5. e-mail id
2. Principle-wise (as per NVGs) BR Policy/policies
(Reply in Y/N)
S.No. Questions P 1 P 2 P 3 P 4 P 5 P 6 P 7 P 8 P 9
1. Do you have a policy/policies for....
2. Has the policy being formulated in consultation with the relevant stakeholders?
3. Does the policy conform to any national /international standards? If yes, specify? (50 words)
4. Has the policy being approved by the Board?
Is yes, has it been signed by MD/owner/CEO/appropriate Board Director?
5. Does the company have a specified committee of the Board/ Director/Official to oversee the implementation of the policy?
6. Indicate the link for the policy to be viewed online?
7. Has the policy been formally communicated to all relevant internal and external stakeholders?
8. Does the company have in-house structure to implement the policy/policies.
9. Does the Company have a grievance redressal mechanism related to the policy/policies to address stakeholders' grievances related to the policy/policies?
10. Has the company carried out independent audit/evaluation of the working of this policy by an internal or external agency?
2a. If answer to S.No. 1 against any principle, is
'No', please explain why: (Tick up to 2 options)
S.No. Questions P 1 P 2 P 3 P 4 P 5 P 6 P 7 P 8 P 9
1. The company has not understood the Principles
2. The company is not at a stage where it finds itself in a position to formulate and implement the policies on specified principles
3. The company does not have financial or manpower resources available for the task
4. It is planned to be done within next 6 months
5. It is planned to be done within the next 1 year
6. Any other reason (please specify)
3. Governance related to BR
•
Indicate the frequency with which the Board of Directors, Committee of the
Board or CEO to assess the BR performance of the Company. Within 3 months, 3-6
months, Annually, More than 1 year
•
Does the Company publish a BR or a Sustainability Report? What is the hyperlink
for viewing this report? How frequently it is published?
Section E: Principle-wise performance
Principle 1
1.
Does the policy relating to ethics, bribery and corruption cover only the
company? Yes/ No. Does it extend to the Group/Joint Ventures/
Suppliers/Contractors/NGOs /Others?
2.
How many stakeholder complaints have been received in the past financial year
and what percentage was satisfactorily resolved by the management? If so, provide details thereof, in about 50 words or
so.
Principle 2
1.
List up to 3 of your products or services whose design has incorporated social
or environmental concerns, risks and/or opportunities.
i.
ii.
iii.
2.
For each such product, provide the following details in respect of resource use
(energy, water, raw material etc.) per unit of product(optional):
i. Reduction
during sourcing/production/ distribution achieved since the previous year
throughout the value chain?
ii. Reduction
during usage by consumers (energy, water) has been achieved since the previous
year?
3.
Does the company have procedures in place for sustainable sourcing (including
transportation)?
i. If yes, what
percentage of your inputs was sourced sustainably? Also, provide details
thereof, in about 50 words or so.
4.
Has the company taken any steps to procure goods and services from local &
small producers, including communities surrounding their place of work?
If yes, what steps have been taken to improve their
capacity and capability of local and small vendors?
5.
Does the company have a mechanism to recycle products and waste? If yes what is
the percentage of recycling of products and waste (separately as <5%, 5-10%,
>10%). Also, provide details thereof, in about 50 words or so.
Principle 3
1.
Please indicate the Total number of employees.
2.
Please indicate the Total number of employees hired on
temporary/contractual/casual basis.
3.
Please indicate the Number of permanent women employees.
4.
Please indicate the Number of permanent employees with disabilities
5.
Do you have an employee association that is recognized by management.
6.
What percentage of your permanent employees is members of this recognized
employee association?
7.
Please indicate the Number of complaints relating to child Labour, forced
Labour, involuntary Labour, sexual harassment in the last financial year and
pending, as on the end of the financial year.
S.No. Category No of complaints filed during the financial year No of complaints pending as on end of the financial year
1. Child labour/forced labour/ involuntary labour
2. Sexual harassment
3. Discriminatory employment
8.
What percentage of your under mentioned employees were given safety & skill
up-gradation training in the last year?
• Permanent Employees
• Permanent Women Employees
•
Casual/Temporary/Contractual Employees
•
Employees with Disabilities
Principle 4
1.
Has the company mapped its internal and external stakeholders? Yes/No
2.
Out of the above, has the company identified the disadvantaged, vulnerable
& marginalized stakeholders.
3.
Are there any special initiatives taken by the company to engage with the
disadvantaged, vulnerable and marginalized stakeholders. If so, provide details
thereof, in about 50 words or so.
Principle 5
1.
Does the policy of the company on human rights cover only the company or extend
to the Group/Joint Ventures/Suppliers/Contractors/NGOs/Others?
2.
How many stakeholder complaints have been received in the past financial year
and what percent was satisfactorily resolved by the management?
Principle 6
1.
Does the policy related to Principle 6 cover only the company or extends to the
Group/Joint Ventures /Suppliers/ Contractors/NGOs/others.
2.
Does the company have strategies/initiatives to address global environmental
issues such as climate change, global warming, etc? Y/N. If yes, please give
hyperlink for webpage etc.
3.
Does the company identify and assess potential environmental risks? Y/N
4.
Does the company have any project related to Clean Development Mechanism? If
so, provide details thereof, in about 50 words or so. Also, if Yes, whether any
environmental compliance report is filed?
5.
Has the company undertaken any other initiatives on - clean technology, energy
efficiency, renewable energy, etc. Y/N. If yes, please give hyperlink for web
page etc.
6.
Are the Emissions/Waste generated by the company within the permissible limits
given by CPCB/SPCB for the financial year being reported?
7.
Number of show cause/ legal notices received from CPCB/SPCB which are pending
(i.e. not resolved to satisfaction) as on end of Financial Year.
Principle 7
1.
Is your company a member of any trade and chamber or association? If Yes, Name
only those major ones that your business deals with:
a.
b.
c.
d.
2.
Have you advocated/lobbied through above associations for the advancement or
improvement of public good? Yes/No; if yes specify the broad areas (drop box:
Governance and Administration, Economic Reforms, Inclusive Development
Policies, Energy security, Water, Food Security, Sustainable Business
Principles, Others)
Principle 8
1.
Does the company have specified programmes/initiatives/projects in pursuit of
the policy related to Principle 8? If yes details thereof.
2.
Are the programmes/projects undertaken through in-house team/own
foundation/external NGO/government structures/any other organization?
3.
Have you done any impact assessment of your initiative?
4.
What is your company's direct contribution to community development
projects-Amount in INR and the details of the projects undertaken.
5.
Have you taken steps to ensure that this community development initiative is
successfully adopted by the community? Please explain in 50 words, or so.
Principle 9
1.
What percentage of customer complaints/consumer cases are pending as on the end
of financial year.
2.
Does the company display product information on the product label, over and
above what is mandated as per local laws? Yes/No/N.A. /Remarks(additional
information)
3.
Is there any case filed by any stakeholder against the company regarding unfair
trade practices, irresponsible advertising and/or anti-competitive behaviour
during the last five years and pending as on end of financial year. If so,
provide details thereof, in about 50 words or so.
4.
Did your company carry out any consumer survey/ consumer satisfaction trends?
Annexure-2
Principles to assess compliance with Environmental,
Social and Governance norms
Principle 1: Businesses should conduct and govern
themselves with Ethics, Transparency and Accountability
1.
Businesses should develop governance structures, procedures and practices that
ensure ethical conduct at all levels; and promote the adoption of this
principle across its value chain. Businesses should communicate transparently
and assure access to information about their decisions that impact relevant
stakeholders.
2.
Businesses should not engage in practices that are abusive, corrupt, or
anti-competition.
3.
Businesses should truthfully discharge their responsibility on financial and
other mandatory disclosures.
4.
Businesses should report on the status of their adoption of these Guidelines as
suggested in the reporting framework in this document.
5.
Businesses should avoid complicity with the actions of any third party that
violates any of the principles contained in these Guidelines
Principle 2: Businesses should provide goods and
services that are safe and contribute to sustainability throughout their life
cycle
1.
Businesses should assure safety and optimal resource use over the life-cycle of
the product - from design to disposal - and ensure that everyone connected with
it-designers, producers, value chain members, customers and recyclers are aware
of their responsibilities.
2.
Businesses should raise the consumer's awareness of their rights through
education, product labelling, appropriate and helpful marketing communication,
full details of contents and composition and promotion of safe usage and
disposal of their products and services.
3.
In designing the product, businesses should ensure that the manufacturing
processes and technologies required to produce it are resource efficient and
sustainable.
4.
Businesses should regularly review and improve upon the process of new
technology development, deployment and commercialization, incorporating social,
ethical, and environmental considerations.
5.
Businesses should recognize and respect the rights of people who may be owners
of traditional knowledge, and other forms of intellectual property.
6.
Businesses should recognize that over-consumption results in unsustainable
exploitation of our planet's resources, and should therefore promote
sustainable consumption, including recycling of resources.
Principle 3: Businesses should promote the wellbeing
of all employees
1.
Businesses should respect the right to freedom of association, participation,
collective bargaining, and provide access to appropriate grievance Redressal
mechanisms.
2.
Businesses should provide and maintain equal opportunities at the time of
recruitment as well as during the course of employment irrespective of caste,
creed, gender, race, religion, disability or sexual orientation.
3.
Businesses should not use child labour, forced labour or any form of
involuntary labour, paid or unpaid.
4.
Businesses should take cognizance of the work-life balance of its employees,
especially that of women.
5.
Businesses should provide facilities for the wellbeing of its employees
including those with special needs. They should ensure timely payment of fair
living wages to meet basic needs and economic security of the employees.
6.
Businesses should provide a workplace environment that is safe, hygienic
humane, and which upholds the dignity of the employees. Business should
communicate this provision to their employees and train them on a regular
basis.
7.
Businesses should ensure continuous skill and competence upgrading of all
employees by providing access to necessary learning opportunities, on an equal
and non-discriminatory basis. They should promote employee morale and career
development through enlightened human resource interventions.
8.
Businesses should create systems and practices to ensure a harassment free
workplace where employees feel safe and secure in discharging their
responsibilities.
Principle 4: Businesses should respect the interests
of, and be responsive towards all stakeholders, especially those who are
disadvantaged, vulnerable and marginalized.
1.
Businesses should systematically identify their stakeholders, understand their
concerns, define purpose and scope of engagement, and commit to engaging with
them.
2.
Businesses should acknowledge, assume responsibility and be transparent about
the impact of their policies, decisions, product & services and associated
operations on the stakeholders.
3.
Businesses should give special attention to stakeholders in areas that are
underdeveloped.
4.
Businesses should resolve differences with stakeholders in a just, fair and
equitable manner.
Principle 5: Businesses should respect and promote
human rights
1.
Businesses should understand the human rights content of the Constitution of
India, national laws and policies and the content of International Bill of
Human Rights. Businesses should appreciate that human rights are inherent,
universal, indivisible and interdependent in nature.
2.
Businesses should integrate respect for human rights in management systems, in
particular through assessing and managing human rights impacts of operations,
and ensuring all individuals impacted by the business have access to grievance
mechanisms.
3.
Businesses should recognize and respect the human rights of all relevant
stakeholders and groups within and beyond the workplace, including that of
communities, consumers and vulnerable and marginalized groups.
4.
Businesses should, within their sphere of influence, promote the awareness and
realization of human rights across their value chain.
5.
Businesses should not be complicit with human rights abuses by a third party.
Principle 6: Business should respect, protect, and
make efforts to restore the environment
1.
Businesses should utilize natural and manmade resources in an optimal and
responsible manner and ensure the sustainability of resources by reducing,
reusing, recycling and managing waste.
2.
Businesses should take measures to check and prevent pollution. They should
assess the environmental damage and bear the cost of pollution abatement with
due regard to public interest.
3.
Businesses should ensure that benefits arising out of access and
commercialization of biological and other natural resources and associated
traditional knowledge are shared equitably.
4.
Businesses should continuously seek to improve their environmental performance
by adopting cleaner production methods, promoting use of energy efficient and
environment friendly technologies and use of renewable energy.
5.
Businesses should develop Environment Management Systems (EMS) and contingency
plans and processes that help them in preventing, mitigating and controlling
environmental damages and disasters, which may be caused due to their
operations or that of a member of its value chain.
6.
Businesses should report their environmental performance, including the
assessment of potential environmental risks associated with their operations,
to the stakeholders in a fair and transparent manner.
7.
Businesses should proactively persuade and support its value chain to adopt
this principle.
Principle 7: Businesses, when engaged in influencing
public and regulatory policy, should do so in a responsible manner
1.
Businesses, while pursuing policy advocacy, must ensure that their advocacy
positions are consistent with the Principles and Core Elements contained in
these Guidelines.
2.
To the extent possible, businesses should utilize the trade and industry
chambers and associations and other such collective platforms to undertake such
policy advocacy.
Principle 8: Businesses should support inclusive
growth and equitable development
1.
Businesses should understand their impact on social and economic development,
and respond through appropriate action to minimise the negative impacts.
2.
Businesses should innovate and invest in products, technologies and processes
that promote the wellbeing of society.
3.
Businesses should make efforts to complement and support the development
priorities at local and national levels, and assure appropriate resettlement
and rehabilitation of communities who have been displaced owing to their
business operations.
4.
Businesses operating in regions that are underdeveloped should be especially
sensitive to local concerns.
Principle 9: Businesses should engage with and provide
value to their customers and consumers in a responsible manner
1.
Businesses, while serving the needs of their customers, should take into
account the overall well-being of the customers and that of society.
2.
Businesses should ensure that they do not restrict the freedom of choice and
free competition in any manner while designing, promoting and selling their
products.
3.
Businesses should disclose all information truthfully and factually, through
labelling and other means, including the risks to the individual, to society
and to the planet from the use of the products, so that the customers can
exercise their freedom to consume in a responsible manner. Where required,
businesses should also educate their customers on the safe and responsible
usage of their products and services.
4.
Businesses should promote and advertise their products in ways that do not
mislead or confuse the consumers or violate any of the principles in these
Guidelines.
5.
Businesses should exercise due care and caution while providing goods and
services that result in over exploitation of natural resources or lead to
excessive conspicuous consumption.
6.
Businesses should provide adequate grievance handling mechanisms to address
customer concerns and feedback.


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COURTESY: TAXMANN