Policymakers nudge companies to become more ethical


NEW DELHI: In a move aimed at making the corporates more ethical in their business practices, the listed companies will now have to tell their shareholders and the regulator about their environmental, social and corporate governance-related activities.

Capital market regulator Sebi has decided that the publicly listed companies would need to submit a ‘Business Responsibility Report’ every year to help assess the fulfillment of their environmental, social and the corporate governance responsibilities.

This new initiative, which was approved by the Sebi board in its meeting last Thursday, would apply to the country’s top 100 companies, in terms of market valuation, in the beginning and the remainder would be covered over a period of time.

Commenting on the move, financial sector law firm Finsec Law Advisors’ founder Sandeep Parekh said: “There is a clear push in the direction of more accountability and more ethical conduct.”

“This push comes not just from shareholders, but also from the policy side,” said Parekh, who has been an executive director at Sebi in the past.

Advisory and consultancy firm Corporate Professionals’ Managing Director Pavan Kumar Vijay also said that the policy makers are pushing the business in India to become more responsible and the responsible entities act ethically.

“In India, majority of people follow the voluntary guidelines, when it becomes law,” he said.

besides, when corporates expect help from the government (which means indirectly form society) to facilitate growth of the industry, then the companies should contribute to the society as well, Vijay noted.

Notwithstanding the fact that India continues to battle with vices such as poverty, illiteracy, unemployment, while, the country’s business clan has been successful in generating massive wealth for their stakeholders, experts argue.

While the government undertakes larger developmental works, the businesses are also expected to shoulder some responsibility of the society they operate in.

“Clearly there are grades to business responsibility and some have to be made mandatory like minimising environmental impact. Others are deliberately and rightly left to the good conscience of the company,” Parekh said.

Planning Commission member Arun Maira said that the “concept of ‘business responsibility’ is in a flux, around the world” and therefore it was difficult to ‘mandate’ something that is still evolving.


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