The G-20 summit recently proposed a Social Audit by the Security Exchange Board of India (SEBI) as part of their agenda. This proposed social audit would examine various aspects of the corporate sector such as their transparency with regards to financial disclosure and accountability, corporate governance and fiduciary accountability, social investments and livelihood programs, management of public funds and use of natural resources, impact on human rights and working conditions. The proposal is a great step forward in terms of promoting corporate social responsibility and will help to ensure that companies are taking their responsibility to society and the environment seriously. By initiating such an audit, the G-20 leaders are showing their commitment to lifelong learning and sustainable leadership that will benefit not just the companies being audited but all stakeholders in the long run.
The Securities and Exchange Board of India (SEBI) recently conducted a seminar on social audit to present a common documents in G-20. The exercise was aimed at understanding the impact of existing financial regulations and policies in the Indian marketplace and to make sure that the regulations are in harmony with the economic and social goals of the country.
The audit was based on the principles of corporate social responsibility and social justice enshrined in the relevant law of India – the Companies Act, 2013. The audit sought to examine the compliance of Indian companies to various provisions of the act, particularly the Sustainability Reporting Framework (ESRF).
The audit included discussions and interviews with key stakeholders such as representatives of the government, regulator, industry associations, private companies and investors. The interviews were conducted with the aim of determining the efficacy and effectiveness of the existing regulations and policies in the Indian market, and to collect opinions and views on scope of improvement.
The audit revealed that most Indian companies lag behind their global counterparts in terms of disclosures under the ESRF, particularly in the areas of risk management, internal control and governance. Furthermore, most companies failed to provide necessary information to assess their performance on social responsibility and sustainability activities.
To improve the existing conditions and ensure that Indian companies comply with corporate social responsibility and other applicable laws, the Government of India recently issued a notification mandating listed companies to disclose their performance on non-financial indicators such as gender diversity and green initiatives. This move would go a long way in ensuring that Indian companies adhere to sound environmental and social principles.
In conclusion, the social audit conducted by SEBI has provided valuable insights into the shortcomings of the existing regulations and policies in India. It has indicated the need for improvements in the areas of disclosure and compliance with corporate social responsibility. Going forward, such audit exercises need to be conducted regularly to ensure that Indian companies are compliant with the laws of the country.