Cracking The Sustainability Quotient

The BW Businessworld India’s Most Sustainable Companies list is the result of an intensely research-driven and data-backed assessment of India’s 200 largest companies by revenue each year. The assessment process by Sustain Labs Paris using the SLP Cube assessment framework commences in April every year and thereafter takes 10 months to complete. All 200 companies are assessed free of cost.  

In the second edition of BW Businessword India’s Most Sustainable Companies, for the first time, the opportunity to be assessed was opened up to companies beyond the research universe as well. Six additional companies were included such that we assessed 206 companies during the year.

Initial screening 
As a first step, companies that were convicted at court for wrongdoing in the past three years were sifted out of the research universe. This year there were no such companies found. Data from audited company reports for FY2020-21 was then gathered for the remaining companies for 31 KPIs across six sides of the SLP Cube framework. As the next step, BW Businessworld and Sustain Labs Paris reaches out to CXOs of each of the companies assessed for conversations. These conversations serve to provide a deeper understanding of the company’s sustainability performance as well as to fill the data gaps for assessing the company as per the SLP Cube assessment framework. This year we had in-depth conversations with 52 companies. All 206 companies were sent their ‘data sheets’ that contained the data that we had collected for all 31 KPIs for their company. Companies were asked to inform us of discrepancies if any, or add details if required. The final data sheets were verified using a data triangulation process.  



Step 2: Sectoral assessment 
Next, a sectoral assessment is conducted of the data gathered such that all 206 companies belonging to 11 different sectors were peer benchmarked within their specific sector. This year, we introduced three sector experts for each sector. In order to ensure we receive unbiased advice, our sector experts were chosen from academia, research, think tanks, and none were from the private sector. The subsequent step was to put together the verified data sheets for each company as well as the comments and scores provided by the sector experts for each company. This led to a sector level company ranking as per their sustainability performance for the year. All 11 sectors were then merged to create a single list of 206 companies as per their sustainability performance.    

Final step: The jury round  
For the second edition of the BW Businessworld India’s Most Sustainable Companies list, we introduced a final step, the jury round. In this step, 12 jury members, each well-established experts across diverse industries, deliberated and validated the ranking for the top 20 companies in the list.      

In the banking and NBFC sector, two companies featured amongst the top 20 of our list whereas the rest were dragged down because of overall higher customer complaints in companies in this sector largely due to the pandemic putting pressure on digital banking. HDFC moved to rank 1 this year owing to the admirable great leap in the company’s waste management – 100 per cent e-waste recycling, 100 per cent paper scrap recycled and sales proceeds donated to cancer patients, zero plastic water bottle rule across offices. At ICICI, of the bank’s network of 5,266 branches, 51 per cent are in rural and semi-urban areas with 649 branches in villages that were previously unbanked. ICICI bank’s data availability, reporting and transparency slumped heavily, bringing down ICICI’s overall sustainability performance.

Telecom & IT Sectors Shine
Seven out of 10 companies in the telecom and IT sector feature in the top 20 of this year’s list, making it the best performing sector in India on sustainability parameters. All IT companies, with the exception of MphasiS publish integrated/ GRI/ ESG reports. Tech Mahindra has a high performance across KPIs. It has the most in-depth data driven sustainability practices, data transparency and sophisticated reporting practices across sectors. It is also the top performer on gender parity in leadership. Both Tech Mahindra and Wipro score high on philanthropy. Tata Communications (last year ranked 41 and this year 5) scored well on all KPIs but lost points on gender parity in leadership, litigations and waste-to- wealth practices. Airtel has an improved performance this year across several KPIs but is dragged down by its financial health.

Four companies in the consumer goods sector have made it to the top 30 -- Marico (3), HUL (4), GCPL (6) and Asian Paints (27), making it the second best performing sector in the BW Businessworld India’s Most Sustainable Companies list. Marico wins across KPIs, with an aspirational performance in supply chain management, scoring low only on diversity related KPIs.

In the automotive, aviation and logistics sector, Maruti Suzuki India is the highest ranking company at rank 10 in India’s Most Sustainable Companies list for FY2021 while SpiceJet ranked the least amongst the top 200. Maruti Suzuki recycles 100 per cent of its steel scrap with zero waste to landfill. Further, the Maruti-Toyota JV started a vehicle scrapping and recycling unit in FY2021.  

Automotives Slip 
There has been a decline in the performance of automotive companies in the ranking this year. In FY2020, Maruti Suzuki was ranked #2 and Tata Motors has moved from #15 to #74. Maruti Suzuki falls a few ranks due to a slump in its financial health. Eicher lost points on lifecycle pollution and waste to wealth KPIs as it disposed 28 per cent or 277 tonnes of its hazardous waste in landfill.  

Amongst the nine diversified companies, two (Godrej Industries at #13 & PEL at #12) are in the top 20 list. Godrej Industries has one of the best data backed and scientific approach to corporate sustainability across sectors, pushed up especially by sustainability practices at GCPL. Piramal Enterprises is especially strong on philanthropy and social entrepreneurship. Both Godrej Industries and Piramal Enterprises have zero fatalities, whereas Reliance continues to not report on fatalities. However, Reliance is strong in innovation.

There is a YoY increase in sustainability performance across the companies assessed in the Indian cement industry. Ultratech launched India’s first sustainability-linked bonds and raised $400 Million. In this sector, the CEOs of two companies -- GMR and ACC -- relinquished their salaries in whole or partly in FY20. Four of the top 30 companies in the list belong to the engineering and construction sector -- UltraTech (#15), ACC (#16), Ambuja (#23) and Visaka Industries (#24). Diversity is overall low across the sector, with UltraTech and IRB Infrastructure being outliers.

Amongst companies in the natural resources and mining sector, Tata Power towers ahead of peers with its plans to phase out of coal-based capacity by 2048. Dr Reddy’s and Glenmark are the two pharmaceutical sector companies in the top 30 of our list. The pharma sector has scored poorly overall on the employee wellbeing KPIs, transparency, and litigations. Two companies from the chemicals and agriculture sector feature in the top 30 -- Tata Chemicals (#21 for FY21 and #10 for FY20) and Galaxy Surfactants (#28 for FY21). The latter is a new entrant to the list.