Sustainability reporting by India Inc firms is set to see a huge boost with the Securities and Exchange Board of India (Sebi) making it mandatory for top 1,000 listed companies to report on Business Responsibility and Sustainability, said ICAI president Debashis Mitra, adding that the institute is working to prepare professionals for such non-financial reporting.
“I see a huge thrust on reporting in areas such as environmental, social and governance norms. Sebi has mandated the top 1,000 listed companies to report on Business Responsibility and Sustainability. Because of this, we believe that in the future there will be lot of stress on non-financial reporting as compared to the financial reporting,” Mitra told FE.
Mandatory reporting on Business Responsibility and Sustainability by top 1,000 listed companies will be a part of the annual reports for the fiscal 2022-23.
ICAI, which is the national accounting rule making and standard setting body, has also started a course on Business Responsibility and Sustainability Reporting (BSRS) and nine batches have already completed the training.
“What we are doing is giving a nudge to the profession to go into newer areas in which we believe that there is lot of potential and a lot of possibilities,” Mitra said, adding that chartered accountants have been adaptable to newer developments & changes and will take up non-financial reporting areas such as carbon emissions.
In a first of its kind move, the ICAI has also released social audit standards for sustainability information.
“This social audit standard relates to the thematic area of ‘eradicating hunger, poverty, malnutrition and inequality’,” it said, adding that it would provide the social auditor with the necessary guidance of social enterprises engaged in eradicating hunger, poverty, malnutrition & inequality and the audit steps & procedures that should be applied while conducting the social impact assessment.
In all, the institute has also developed 16 social audit standards that will apply to social enterprises listed on social stock exchanges.
ICAI has also formed a Section Eight company by the name of Institute of Social Auditors of India to regulate the profession of social audit.
“The Institute has been a leader in sustainability reporting. We set up our Sustainability Reporting Standards Board way back in 2020. We have developed sustainability standards and standards on ESG. We believe that we are a leader in this,” Mitra said.
The ICAI is working with National Institute of Securities Management (NISM) for developing the course curriculum and the study material for the social auditor’s certification programme. A social auditor is defined as an individual registered with a self-regulatory organisation under the ICAI and can be chartered accountant or a cost accountant.
Both BSE and NSE have received approval to set up social stock exchanges. The proposal of a social stock exchange under the regulatory ambit of Sebi was floated in the Union Budget 2019-20. It was envisaged as a platform for listing social enterprises and voluntary organisations so that they can raise capital as equity, debt or as units like a mutual fund. The social auditor would check the utilisation of the funds raised.