Answering the top 5 sustainability questions from the Company Secretary today
Anveshi GuttaAuthor: Anveshi Gutta
Answering the top 5 sustainability questions from the Company Secretary today

For any enterprise to be able to demonstrate effective governance, regulatory compliance, transparency through regular reporting, the responsibilities lie with the leadership team. While such responsibilities can be jointly assigned to different individuals from the leadership team, the common role that traverses these responsibilities is that of the Company Secretary. The Company Secretary (CS) has the primary advisory role to ensure that the conduct of business is well within the set framework.

With the increasing buzz around ESG in the leadership conversations, the expectations from the CS role are also undergoing a sea shift. It must be understood that the CS does not have a Sustainability or ESG background (typically!) and yet he/she is expected to shoulder a significant part of the responsibility along the Sustainability roadmap. This blog draws attention to the top-of-the-mind questions on the CS’s mind.

1.    How do I gear my organization towards true and effective sustainability reports?

Financial reporting has been the mainstay of investor relations for a few decades now. These reports have included management commentary and financial statements to address the shareholder and investor community. With the transition being seen from capitalism to stakeholder capitalism, there is a growing demand for non-financial performance reports. In India, SEBI has issued the BRSR mandate for top 1000 companies. At the same time, there is growing pressure from investors to publish ESG metrics. Addressing this requires a significant rigour in capturing quantitative data across the operations and reporting it. 

We suggest you work with your operational teams on the ground, to ensure that they understand the essence of their role in driving sustainability. In the process, it would be prudent to develop a relevant KPI matrix for your ongoing initiatives, and further, sensitize the on-ground teams towards it. Capturing these data points that uplink to your requirements on sustainability reporting will ease your organization’s compliance against the expectations like the BRSR. This will also prepare your team to gradually transition towards the imperative Integrated Reports for your organization. 

2.    How do I ensure appropriate measurement and capture of non-financial indicators aligned with financial metrics?

Today, financial management in enterprises is evolving into an avatar that requires additional wiring across operational numbers to add the greenline to the topline and bottomline. It needs to be ascertained that the data points required to connect the sustainability-centric greenline with the core financials are available. Such data points should evoke a significant level of confidence for the signatories of financial statements. It is only then that there will be the much-demanded marriage between the financial and non-financial metrics and commentary.

We firmly see Integrated Reporting to be the way forward. However, one must understand that Integrated report goes way beyond gluing the financial/annual/mainstream report with the non-financial/sustainable/impact/ESG reports. The alignment should be implemented at various levels across the organization so that it helps evolve a true Integrated Report. The integrated reporting principles should be implemented in letter and spirit for you to publish your integrated reports with absolute confidence.

3.    What checks and balances should be in place so that my organization steers clear of any intentional or unintentional greenwashing?

Businesses have the onus to act responsibly and demonstrate their corporate citizenship credentials in true earnest. When it comes to ESG credentials, it calls for a healthy balance between Environmental aspects such as ecosystem restoration or emission reductions and social ones like gender parity and livelihoods. At the same time, it is important that businesses avoid greenwashing or good washing their impact, to earn brownie points with their stakeholders. There is a significant scrutiny of reported information and misleading guidance, even if unintentional, could result in significant reputational damage. Challenges crop up when there is an insufficient assessment of impacts, poor program structuring, inefficient procedures, or a combination of these factors.

To allay these fears, we suggest significant prudence when selecting various initiatives to address carbon reduction and carbon removal, collectively geared towards carbon neutrality. Ensuring financial viability of these projects upfront, checking all the required clearances from various public authorities, stakeholder engagement at regular intervals to ensure their buy-in are all ways to ensure that the initiatives do not lose ground at any point. Every initiative should have its own detailed Monitoring & Evaluation guide to ensure meaningful impact on planet and people.

4.   How do I stay in control with the constantly-evolving ESG expectations from the regulatory bodies?

Enterprises today operate in a multi-stakeholder environment to manage their end-to-end operations. From employees across the hierarchy to partners across the value chain, it is important to have a constant awareness of their pulse. At the same time, it is important for the enterprise to be in contact with regulatory and external bodies. Being proactive to regulatory moves rather than reactive helps in establishing plans and roadmaps that can stand the test of time.

We suggest that you have a regular channel of communication with the authorities that matter for your business. While this be challenging to begin with, such communication channels are very helpful in guiding the sustainability strategy and thereby, the business strategy for your organization. We further believe that a thorough assessment of these regulatory changes has to be executed to spot potential risks or opportunities for your business.

5.   What sustainability standards and frameworks should I align my organization's efforts with?

As organizations progressively take up sustainability initiatives aligned with their vision, there is also increasing scrutiny on the approach taken along the journey. It is imperative that the approach is based on a sound foundation of credible standards and frameworks, that have gained a wider acceptance across the world.

We suggest a strong analysis of the globally recognized standards as they evolve and mature with each passing day. There is no alternative to staying abreast with these updates and announcements. It is important that every sustainability initiative is structured with thorough due diligence to ensure a wider acceptance of the outputs, outcomes, and impacts. This is achieved by drawing strong alignment of every initiative with ever-evolving norms, while accommodating the need to course-correct, if required.

The CS is entrusted with significant responsibility for compliance with relevant legislation and regulation and keeping the leadership team informed of their legal responsibilities. Of late, a significant amount of effort from the CS goes towards shaping the enterprise’s sustainability reports or integrated reports. The CS role is also responsible to ward the enterprise of any potential legal or regulatory risks, lending the much needed support to the CRO’s agenda

Watch this short video from Sus360 Bytes that summarises the Company Secretary's Sustainability agenda.

Anveshi Gutta
Author: Anveshi Gutta

Driving Sustainability for corporates, schools, society | TEDx Speaker | Corporate Sustainability SME at Emeritus | ex-PwC, IBM |