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Domestic firms lead in impact investments, disclosures: Study

Domestic firms lead in impact investments, disclosures: Study 2

Domestic companies lead their global peers when it comes to average transparency rating about their impact investments at 29 per cent, higher than 26 per cent average for the rest of the world, according to a global survey. Also, nine in 10 domestic companies are more transparent on data related to women employees, with a transparency rating of 90 per cent, said financial markets and infrastructure data provider Refinitiv in a global study .

The study, on ‘transparency in public disclosures of environmental, social and governance (ESG) strategies’, covered 160 Indian companies that are in the MSCI Emerging Markets Index. It also covered companies in South Africa, Brazil, China and Hong Kong for the survey.

According to the study, which is based on a survey, as much 84 per cent of domestic companies publish their corporate social responsibility and sustainability reports compared to only 58 per cent globally, of which 38 per cent follow global reporting initiatives guidelines as against the global average of 35 per cent.

The higher disclosures are in spite of the fact that only under 8 per cent of domestic companies have a policy on ESG-related executive compensation, which is far lower than the global overage of 25 per cent.

Refinitiv’s ESG database covers 80 per cent of the global market cap and this study covers data from across five key markets, including China, Hong Kong, India, South Africa and Brazil, as well as the overall ESG universe covered by Refinitiv.

The top-10 variances for high transparency in India comprise factors like policy community involvement, policy for equal voting right, CSR sustainability committee, internal audit department reporting, policy skill training, energy efficiency and business ethics.

India ranks high on community involvement policy with the transparency rating standing at 99 per cent, compared to the wider universe at 80 per cent. While the transparency rating for equal voting rights stands at 98 per cent for Indian companies, it is 97 per cent for South Africa, 95 per cent for Brazil and 98 per cent for China.

But, a comparative analysis on the bottom 10 variance depicts lesser transparency in Indian companies. For instance, transparency on carbon offsets or credits is a low 1 per cent compared to 2 per cent each in Brazil and Hong Kong. Similarly, transparency for indirect energy use is a low 1 per cent, compared to 5 per cent in Brazil.

Transparency rating for business ethics policy in India stands at 94 per cent, compared with the average of 79 per cent. But, the rating for ESG-related compensation policy is only 7 per cent for India, while this is a high 66 per cent for South Africa.

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