The Ministry of Corporate Affairs had constituted a two-member expert committee to update the National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business (NVGs). A draft of which has now been placed on its website, www.mca.gov.in for public comment till 20.07.2018. The updated version will be finalised after an assessment and review of suggestions and inputs received from stakeholders and wide consultations with the relevant Ministries, Business and Stakeholders at large.
There have been several notable national and international developments in the wider sustainability and business responsibility domains since the release of NVGs requiring their updating. The adoption of Sustainable Development Goals (SDGs), debates on Climate Change and enhanced role of Business in engendering Human Rights in their functioning are to mention a few.
The Ministry of Corporate Affairs first issued the National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business (NVGs) in July 2011 with a view to make business socially responsible and partake in the development of the nation through its expertise and efficiency and be internationally relevant. The NVGs comprise nine interrelated and interconnected Principles and their attendant Core elements and represent a holistic approach to business responsibility.
The Securities and Exchanges Board of India (SEBI) in 2012 on the basis of these guidelines mandated the top 100 companies (presently top 500) to furnish Annual Business Responsibility Report (ABRR) providing an impetus to the uptake of NVGs by business.
National Guidelines on Economic, Social and Environmental Responsibilities of Business 2018
Chapter 1: Introduction
The National Guidelines on the Economic, Social and Environmental Responsibilities of Business (Guidelines) presented herein are the outcome of a process initiated by the Ministry of Corporate Affairs (MCA) in September 2015. After extensive discussions between the MCA and the Indian Institute of Corporate Affairs (IICA), it was decided to update the National Voluntary Guidelines on the Social, Environmental and Economic Responsibilities of Business (NVGs), which were released in 2011.
Mandate & Rationale: The primary rationale for the update was to capture key national and international developments in the development agenda and business responsibility field that had occurred over the five years that have elapsed since the release of the NVGs. In addition to this primary rationale, it was felt that the updated version would also benefit by a more comprehensive resources section that would strengthen the overall guidance to the leadership and owners of businesses, large and small, in their efforts to implement the NVGs within their organisations. It was further decided that the process of updating the NVGs should be completed at an early date to enable further processes of public comment and its launch within 2016. It is pertinent to note that, as in 2011, these Guidelines are designed to assist businesses to perform above and beyond the requirements of regulatory compliance.
Process: It was decided to entrust the task of updating the NVGs to a Two-person Committee. The process commenced with a meeting in December 2015 between the IICA and the Two-person Committee at which key areas of update and processes and timelines for the exercise were discussed and agreed upon. The team started its work in January 2016 and was generously assisted by domain experts, many of whom were members of the erstwhile Guidelines Drafting Committee (GDC) that had developed the 2011 version of the NVGs. The names of those who contributed to the process of updating the NVGs is provided at the end of this document.
The Two-person Committee submitted its report to the IICA in July 2016, in the form of an updated version of the NVGs including a proposed renaming to the National Guidelines on Economic, Environment and Social Responsibilities of Business (Guidelines). The IICA, subsequent to detailed discussions on the draft with the MCA, then placed the draft document in the public domain for public comment and received substantial input from diverse stakeholders. These inputs were comprehensively reviewed, and where necessary, modifications made to the draft document.
Applicability: As was the case with the NVG’s in 2011, the present Guidelines are designed to be used by all businesses, irrespective of their ownership, size, sector, or location. It is expected that all businesses investing or operating in India, including foreign multi-national corporations (MNCs) will make efforts to follow the Guidelines. Correspondingly, the Guidelines also provide a useful framework for guiding Indian MNCs in their overseas operations.
As was the case in 2011, the present Guidelines reiterate the need to encourage Businesses to ensure that not only do they follow the Guidelines in business contexts directly within their control or influence, but that they also encourage and support theirs suppliers, vendors, distributors, partners and other collaborators to follow the Guidelines. In consistency with the 2011 NVGs, a separate chapter of guidance has been once again included for use by MSMEs (Micro, Small & Medium Enterprises).
Responsibility for Adoption: Whilst the 2011 NVGs made several references to the critical role of the Governance Structure and Companies’ leadership in ensuring adoption and review of the Guidelines, the Guidelines has taken this requirement a step further by identifying specific aspects of each Principle as part of the duty and responsibility of the highest Governance Structure of the Business, irrespective of its form or terminology, to oversee the implementation and adherence to the Guidelines in their Business. Whilst the highest governance structure, in the case of companies and corporations is the Board, the responsibility for adoption of the Guidelines in Proprietorships, Partnerships and other types of business is assumed in the present context to rest with the owner /s, partner/s, and or, any other structure responsible for the highest-level of decision-making and governance functions in the business.
It is worthwhile to emphasize that all Principles of the Guidelines are equally important, inter-related, inter-dependent and non-divisible, and Businesses should adopt them to demonstrate its commitment to being a responsible business, and accrue the full benefits of sustainable business strategies.
Content & Structure: As was the case in 2011, the present Guidelines comprise five (5) chapters and an expanded set of annexures. The present Guidelines have retained its articulation and description of updated nine (9) Principles with attendant Core Elements, formulated to enhance actualization of each of the Principles, and is followed by separate chapters devoted to providing practical guidance to businesses on the adoption and implementation of the Guidelines. In continued recognition of the unique socio-economic context of the Micro, Small and Medium Enterprises (MSMEs) Sector, a separate chapter is devoted to commentary and practical guidance for MSMEs to support their uptake of these Guidelines. In recognition of the growing importance and imperatives of transparency, Chapter 5 devotes itself to an updated framework for disclosure and reporting by businesses. The Chapter reflects a greater coherence between the Principles & Core Elements and the information sought in the Disclosure and Reporting Framework, (as also with the Annual Business Responsibility Report (ABRR) requirements of the Securities and Exchange Bureau of India (SEBI)). The Guidelines conclude with an annexure that contains a set of useful references and resources which businesses may consult as part of their efforts to implement these Guidelines.
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