Governance improving in India Inc.

Indian companies in general display a greater awareness of environmental issues than their Asian peers, but at a national level, India seems to be lagging in articulating its response to climate change, according to a recent report on corporate governance.

The Asian Corporate Governance Association along with research firm CLSA Asia Pacific Markets last fortnight brought out Corporate Governance Watch 2007—the fourth such survey. Titled “On a Wing and a Prayer: The Greening of Governance”, the report assesses the quality of corporate governance in 11 Asian markets and provides aggregate data from 582 listed companies. For the first time, “clean and green” scores were included in the ranking.

The survey says that in Asia growth is a priority over the environment and companies do not appear to be conscious of the need to implement green strategies. However, as the author of the report, Amar Gill, points out: “They will need to be mindful of this as consumer activism gains momentum and the call for companies to proactively measure and reduce their environmental impact increases.”

A large proportion (83 per cent) of the 70-plus Indian companies surveyed responded to the “green” questionnaire. Nearly a tenth of the companies achieving scores of more than 50 per cent were from India. That, however, tells the story only partially as less than a fifth of all Indian companies showed these high scores.

Those numbers look good in the context of the other Asian companies, notably Chinese. However, the corporate awareness does not seem to translate to a national-level action. The first meeting of the National Council on Climate Change chaired by the Prime Minister was held only in July 2007 and a national policy on climate change is expected soon.

Environmental scores apart, India ranks third in the region on corporate governance largely on the back of the excellent practices followed by some of the larger companies.