Mumbai (India CSR): Business Ethics has emerged to occupy major portion of controversies both in service and manufacturing sector with as much as 72.6%, as per the research and analysis carried out by ESGRisk with NSE 600 companies in the financial year 2020-21. This is despite the fact that corporates are taking measures for sustainable business practices.
The ESG parameters are gaining a lot of traction these days and the banking and financial services industry (BFSI) is no different. Offering sustainable financing to customers, refinancing existing debts with sustainable instruments, and incorporating positive screening of lending portfolio are some of the significant ESG issues.
Analysis suggests that the BFSI sector has jumped on the ESG bandwagon with an improvement in performance on critical issues such as data privacy & security, equal opportunity, employee development and audit committee functioning. However, on the flip side, the BFSI sector accounts for most of the controversies happening in the ESG space.
The controversies in the key issue of business ethics grew significantly between FY2020 and FY2021.
Several of the controversies are predominantly with respect to business ethics and stem from violations of insider trading rules, money laundering and non-compliance with SEBI LODR guidelines. BSFI sector is at the heart of ESG integration, the industry should set up policies, undertake initiatives and curate training programs apart from just following the regulations.
Among the industries that have experienced the most controversies after Banking & Financial Services, are Pharmaceuticals and Metals.
The study has also recognised a rise in contentions over environmental management issues in FY2021. In several cases, pollution control boards’ regulations with respect to emissions, water pollution and environmental management were violated. In the social category, a rise in controversies related to employee safety has been observed.
Occupational health and safety hazards are largely attributed to plant fires and explosions, inadequate maintenance of machinery, and poor handling by workers. Corporate frauds in India are frequent – whistle blower complaints, corrupt audit practices and compliance fines are typical corporate governance controversies. According to the research, the controversies in the key issue of business ethics grew significantly between FY2020 and FY2021. Several of the controversies stem from violations of insider trading rules and non-compliance with SEBI LODR guidelines.
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