Adopt responsible business conduct
MCA
releases national guidelines
Ministry
of Corporate Affairs has revised the National Voluntary Guidelines on Social,
Environmental and Economic Responsibilities of Business, 2011 (NVGs) and
formulated the National Guidelines on Responsible Business Conduct (NGRBC).
These guidelines urge businesses to actualise the principles in letter and
spirit.
These
principles are, 1.Businesses should conduct and govern themselves with
integrity in a manner that is Ethical, Transparent and Accountable, 2. Businesses
should provide goods and services in a manner that is sustainable and safe, 3. Businesses
should respect and promote the well-being of all employees, including those in
their value chains.
4.
Businesses should respect the interests of and be responsive to all their
stakeholders, 5. Businesses should respect and promote human rights, 6. Businesses
should respect and make efforts to protect and restore the environment, 7. Businesses,
when engaging in influencing public and regulatory policy, should do so in a
manner that is responsible and transparent.
8.
Businesses should promote inclusive growth and equitable development, 9. Businesses
should engage with and provide value to their consumers in a responsible manner;
The Ministry of Corporate Affairs has been taking various initiatives for
ensuring responsible business conduct by companies.
As
a first step towards mainstreaming the concept of business responsibility was,
the 'Voluntary Guidelines on Corporate Social Responsibility’ & that were
issued in 2009. These guidelines were subsequently revised as 'National
Voluntary Guidelines on Social, Environmental and Economic Responsibilities of
Business, 2011 (NVGS)’ after extensive consultations with business, academia,
civil society organisations and the government.
The NVGs were developed based on India’s
socio-cultural context and priorities as well as global best practices. There
have been various national and international developments in the past decade
that have nudged businesses to be sustainable and more responsible, prior most
being the United Nations Guiding Principles on Business & Human Rights
(UNGPs).
These
became the key drivers for further revision of the guidelines. Some of these
include the thrust of Companies Act, 2013 (Act) on businesses to be more
mindful of their stakeholders. The Act
casts fiduciary duties on the Directors of a Company (S. 166) requiring them to
promote the objects of the company for the benefit of its members as a whole,
and in the best interests of the company, its employees, the shareholders, the
community and for the protection of environment.
There
was also a need to demonstrate more visibly India’s implementation of the UNGPs
based on UNHRC’s ‘Protect, Respect & Remedy’ Framework and also make
evident India’s commitment to Sustainable Development Goals (SDGs).
The
Securities and Exchange Board of India (SEBI) through its ‘Listing
Regulations’ in 2012 mandated the top
100 listed entities by market capitalisation to file Business Responsibility
Reports (BRRs) from an environmental, social and governance perspective.
These
BRRs enabled business to demonstrate the adoption of the NVG principles and the
attendant core elements with the intent of engaging businesses more
meaningfully with their stakeholders going beyond regulatory financial
compliance. This was extended to top 500 companies in FY 2015-16. This, for the
first time, introduced voluntary sustainability reporting among companies in
India which is still in a nascent stage.
In
furtherance to updation of NVGs and formulation of the NGRBCs, the Ministry of
Corporate Affairs has constituted the Committee on Business Responsibility
Reporting (BRR) to develop BRR formats for listed and unlisted companies.
Non-financial reporting is increasingly forming the basis for enhancing
investor confidence in businesses and increasing their creditworthiness.
The
Committee is to develop comprehensive yet simple formats situating the various
stakeholders at the center so as to not increase or duplicate reporting burden.
The proposed formats are to reflect linkages to prevalent non-financial
reporting formats, viz, Global Reporting Initiative (GRI), Integrated Reporting
(IR) etc., and SDGs from a NGRBC perspective.
The
Ministry of Corporate Affairs is also in the process of developing India’s
National Action Plan on Business & Human Rights (NAP) in consultation with
various Ministries and State Governments by 2020. A Zero Draft of India’s NAP
demonstrating implementation of the three pillars of UNGPs has also been
released and uploaded on the website of the Ministry.
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