Corporate Affairs Ministry releases national guidelines on responsible business conduct
The Corporate Affairs Ministry has released the National Guidelines on responsible business conduct and revised the National Vountary Guidelines on social, environmental and economic responsibilities of business, 2011.
The Union Ministry of Corporate Affairs has released the National Guidelines on responsible business conduct and revised the National Voluntary Guidelines on social, environmental and economic responsibilities of business, 2011.
These guidelines on responsible business conduct aim to urge businesses to actualise the following principles in letter and spirit:
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.
National voluntary guidelines on social, environmental and economic responsibilities of business, 2011
The Ministry of Corporate Affairs has been taking various initiatives for ensuring responsible business conduct by companies. Hence, as the first step towards mainstreaming the concept of business responsibility, the 'Voluntary Guidelines on Corporate Social Responsibility’ were issued in 2009.
These guidelines were subsequently revised as 'National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business, 2011’ after extensive consultations with business, academia, civil society organisations and the government.
The guidelines were developed based on India’s socio-cultural context and priorities as well as global best practices.
The Securities and Exchange Board of India 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 reports enabled businesses 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 the 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 budding stage.
- 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 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 the 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).
- Further, the Corporate Affairs Ministry has constituted the Committee on Business Responsibility Reporting (BRR) to develop BRR formats for listed and unlisted companies.
- The 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 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.