ShareAction launches inaugural India disclosure drive

The programme was launched to take advantage of new mandatory disclosure requirements.

India flag flying

ShareAction’s corporate disclosure initiative has launched an India-focused programme for the first time, in support of new disclosure regulations introduced earlier this year.

The shareholder campaign group publishes an annual global survey and engagement report on employment practices via its Workforce Disclosure Initiative (WDI), which includes information on health and safety standards, labour conditions and actions relating to supply chain management.

The WDI has a target group of around 1,000 major companies every year, which are selected based on the size of their market capitalisation and individual requests from the 60 investors that have signed to support the initiative. Signatories can request the inclusion of up to 20 portfolio companies in the survey.

Only two Indian companies responded to the survey in 2022, out of a total of 44 contacted.

ShareAction has now added an additional cohort made up of the largest 300 Indian companies to the WDI, on the back of ESG disclosure regulations introduced by the Indian financial regulator, the Securities and Exchange Board of India (SEBI).

The new rules will see India’s largest 1,000 listed companies file mandatory ESG disclosures from this year, based on FY2022-23 information, for topics including gender pay gaps, GHG emissions, water consumption and incidence of sexual harassment.

From 2024 onwards, the 250 largest listed Indian companies will be required to seek mandatory assurance for a limited number of key and measurable ESG metrics. This requirement will be gradually broadened to the largest 500 companies in the following year, and to the top 1,000 companies in the third year.

The move by SEBI means firms will already be required to disclose a portion of the information covered by the WDI, reducing the disclosure burden by more than a quarter, according to ShareAction.

A key proponent of the programme is Chirag Mehta, CIO of local manager Quantum AM, who also sits on the WDI advisory board.

Mehta pushed for the inclusion of Indian companies after previously taking part in the WDI survey and realising the opportunity for broader constructive engagements on disclosure, he told Responsible Investor.

“We see a huge opportunity for Indian companies distinguish themselves as leaders by reporting to the WDI, which we consider one of the gold standards for voluntary company disclosures. We expect to see a huge leap this year in terms of disclosures as companies already face mandatory requirements to do so,” he said.

“If companies see more foreign investor interest on this topic, and we think there will be as there are many WDI signatories with investments in India, then it could create the right incentives for more disclosures and transparency across the board.”

ShareAction engagement manager Samuel Recko said: “The WDI applauds SEBI’s move to a more comprehensive disclosure regime, and hopes to support it by inviting Indian companies to further demonstrate attentiveness to the workforce and disclosure by inviting them to respond to the WDI survey.

“With this move, SEBI signals India’s commitment to meet global expectations around corporate accountability and disclosure and begins to instil vital confidence in investors with an eye on the Indian market.”

Companies are due to receive the first batch of survey requests today.

The outreach in India represents a broadening of ShareAction’s engagement activities, which have previously focused on developed market issues, and will be the first of a series of programmes to target emerging markets.