admin

Analysis of Governance Principles of BRSR Data Authors: Aditya Kulkarni Lakshmi Murthy Anuradha Damle Raghavachari Madhavan For more details, reach out to info@altometa.online With a rapidly evolving business landscape, the importance of analysing companies based on Environmental, Social, and Governance (ESG) criteria has never been more pronounced. The Business Responsibility and Sustainability Report (BRSR) has become an essential framework for analysing the environmental, social, and governance (ESG) performance of companies. Mandated by regulatory bodies like the Securities and Exchange Board of India (SEBI), BRSR provides a standardized approach for Indian companies to disclose their sustainability practices, making it easier to evaluate and compare their commitment to responsible business operations. In this report we present an analysis of BRSR data filed by companies in FY 2022-23. Executive Summary This analysis of BRSR data focuses on Governance. While data on two principles (P1: Ethics, Transparency, and Accountability and P4: Stakeholder Engagement) are relevant for an understanding of Governance, this analysis focuses on quantitative information for P1.  Key findings include: Varied Awareness: Training Variety Score for employees and workers is significantly lower than for Key Management Personnel and Board of Directors. Data Quality Issues: Inconsistent and potentially inaccurate reporting of conflicts of interest, disciplinary actions, and fines. Market Cap impact: When companies are segmented by market capitalization level, each segment exhibits a similar distribution of varied governance practices.  The potential reasons for varied levels of Governance include level of resources dedicated for related programs, structure (or lack thereof) of implementation process, visibility, buy-in and prioritization from senior leadership and perceived value, importance and relevance of the programs. Our recommendations from this analysis are: Employee and Worker Training: Ensure appropriate Training Variety Score and coverage by designing and conducting awareness programs that reach all relevant audiences. Internal process of program implementation: Analyze the factors in “hypotheses of potential reasons” impacting the Governance level to identify and implement required changes to the process of implementing awareness programs. Data Accuracy and Transparency: Review internal data controls, and strengthen as required to ensure accurate and consistent reporting of all relevant data. Best Practices across companies: Support knowledge sharing among companies to foster best practices in ESG reporting and governance. Background & Focus Area The Business Responsibility and Sustainability report (BRSR) framework mandates annual disclosure filing by registered Indian companies to be compliant with the regulatory body SEBI. We use filing data from fiscal years 2022-23 as the basis for this analysis. Please refer to our earlier blog on a detailed review of everything about data: State of Sustainability Disclosures by Indian Companies – Altometa Consulting Our focus in this report is to perform an analysis for evaluating the state of Sustainability (specifically Governance) related disclosure, and classifying companies based on their Governance levels. Organizations can be better informed about their relative standing with respect to compliance, and interested parties (such as Investors) can make informed decisions based on Governance performance of companies. In this analysis we take the following approach: ·        Map the BRSR principles into Sustainability (ESG) components for analysis ·        Define factors for analysis of Governance related principles ·        Analyse the factors and derive insights ·        Summarize the overall impact and ways to improve Governance metrics of companies Mapping BRSR principles into Sustainability components We categorize the 9 Principles of BRSR, P1 to P9 into the Sustainability components of Environment, Social and Governance as shown in the table below:   Environment P2 – Product Lifecycle Sustainability P4 – Stakeholder Engagement P6 – Environmental Management P9 – Consumer Protection-(9.2)   Social P3 – Employee Well-being P4 – Stakeholder Engagement P5 – Human Rights P7 – Public Policy Advocacy P8 – Inclusive Growth and Equitable Development P9 – Consumer Protection Governance P1 – Ethics, Transparency, and Accountability P4 – Stakeholder Engagement   Of the two principles P1 and P4 related to our focus area of Governance, P1 related disclosures have several numeric quantitative data; however, P4 related disclosures are qualitative and non-numeric. For the purposes of this analysis, we will focus on the numeric disclosures, and hence do not include P4 related data for our analysis. In a future report, we will provide qualitative assessment of the P4 disclosures.  Governance Factors in P1 Disclosures (Ethics, Transparency, and Accountability) There are four P1-related numeric disclosure data elements in the BRSR filings: 1) Training and Awareness programs, 2) Conflicts of Interest, 3) Disciplinary Actions, and 4) Fines. 1) Training and Awareness BRSR filings contain data related to training and awareness programs that the company conducts. The goal of these programs is to ensure that people involved in company operations are completely aware of, and fully competent to conduct themselves in compliance with the company’s governance policies and procedures. We identify two aspects of awareness: a) The training variety score (average number of training types per member) and b) The prevalence of awareness within the company (percentage of members in the organization that are covered by trainings). While the prevalence of awareness is necessary for effective governance, we expect that high training variety score would encourage better skills and adherence to policies and procedures. Data on these aspects is available for specific categories of the targeted audience for training: Board of Directors (BOD), Key Management Personnel (KMP), Employees (EMP), Workers (WRK). To enable comparison of performance across companies, we normalize the reported training numbers by the size of each of these constituencies within the company and then aggregate them.  These two ratios are created as aggregations: Training Variety Score  Training Variety Score refers to the number of training session types offered per person in the target audience. Higher Training Variety Score values are desirable, as higher variety indicates a better chance that the company’s workforce is offered role-relevant training. We will provide an analysis of the Training Variety Score for each workforce segment.   Percent Coverage (of Awareness) –Awareness Coverage Since availability of training variety is not sufficient to characterize the participation levels, we also define Percent Coverage as the proportion ofindividuals reached by the training program, expressed as a percentage. We will provide an analysis of Percent Coverage for each workforce segment. 2) Conflicts of Interest 

State of Sustainability Disclosures by Indian Companies Authors: Aditya Kulkarni Lakshmi Murthy Anuradha Damle Raghavachari Madhavan For more details, reach out to info@altometa.online Executive Summary We provide an overview of the Business Responsibility & Sustainability Reporting (BRSR) data that has been disclosed by listed companies in India over FY 2022-2023 . BRSR is the equivalent framework of Environment, Social, and Governance (ESG) reporting. From 170 companies reporting in FY 2021- 2022, it has soared (by regulatory mandate) to 1,073 companies in FY 2022- 2023. We expect even more companies to disclose in FY 2023- 2024 onwards. Our focus in this report is to highlight the quantity, diversity and quality of data that has been filed, from the viewpoint of utilizing this data for investment research. In summary, we find that there is ample room for making the data more viable for ready comparison across companies, particularly those within specific industries. The data is getting better over time, but there is a lot of room for improvement – not just validating the conformance of the report format to regulatory specifications, but also with respect to standardizing the measures that are being disclosed. We have outlined ways in which validation and standardization of the data can be approached. Following these approaches, we have begun creating our own repository of cleansed data. In future reports, we will share results from specific investment research analysis of the cleansed data for focus industries. Introduction In recent years, Environmental, Social, and Governance (ESG) reporting has gained significant traction among companies globally. In India, several governmental and market regulatory agencies contribute to the governance framework mandating and overseeing BRSR disclosure/reporting including SEBI, MCA, RBI, NSE, BSE and IRDAI (see Table 1 below for their respective Role and Regulations). These regulatory bodies are working together to ensure that Indian companies not only disclose their BRSR practices but also integrate these principles into their core business strategies, thereby promoting a sustainable and responsible business environment in the country. SEBI, fulfilling their role in governing listed securities, has taken the lead in issuing several directives for public companies to make disclosures regarding BRSR. As investors, regulators, and other stakeholders increasingly focus on sustainable practices, Indian companies are stepping up their efforts to provide transparency in their BRSR practices. However, as with any evolving field, there are challenges and inconsistencies that need to be addressed to improve the overall quality and comparability of BRSR data. In this article we explore the extent of BRSR disclosures, and the current state of the data that is being disclosed. Table 1: Key Agencies in Regulating ESG disclosure in India Agency Key Regulations Securities and Exchange Board of India (SEBI) SEBI, a primary regulatory body for securities markets in India, has introduced several guidelines and frameworks to mandate sustainability reporting among listed companies. Business Responsibility and Sustainability Report (BRSR) BRSR is a mandatory reporting framework for the top 1,000 listed companies by market capitalization to disclose their ESG-related initiatives and performance in a standardized format. Listing Obligations and Disclosure Requirements (LODR) LODR regulations require listed companies to provide disclosures related to sustainability, corporate governance, and environmental practices. Ministry of Corporate Affairs (MCA) The MCA is responsible for regulating corporate governance and ensuring companies adhere to statutory requirements, including aspects related to social and environmental responsibility. National Guidelines on Responsible Business Conduct (NGRBC) The NGRBC, which is the basis of the BRSR framework, outlines the principles and guidelines companies are expected to follow to conduct their business responsibly. Corporate Social Responsibility (CSR) The MCA mandates minimum CSR spend from profits for companies under the Companies Act, 2013. Reserve Bank of India (RBI) The RBI, as the central bank, regulates financial institutions in India and has shown increasing interest in the integration of ESG factors into banking operations. Sustainable Finance: The RBI encourages banks and financial institutions to incorporate ESG factors into their lending practices and risk management. While not a reporting mandate, the RBI’s emphasis on sustainable finance influences corporate behavior in ESG matters. Stock Exchanges (NSE and BSE) The National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) play a role in enforcing SEBI’s guidelines related to BRSR reporting among listed companies. Listing Requirements: Both exchanges require companies to comply with SEBI’s BRSR and other ESG-related disclosure mandates as part of their listing obligations. Insurance Regulatory and Development Authority of India (IRDAI) IRDAI is the regulator for Insurance companies in India. Sustainable Investment Practices: IRDAI encourages insurance companies to adopt sustainable investment practices, which indirectly promotes ESG considerations in the broader market. As a result of the increased focus among regulators and more importantly investors, a growing number of Indian companies are now incorporating ESG data into their annual reports and sustainability disclosures. As of this writing, the Business Responsibility and Sustainability Report (BRSR) is mandatory for the top 1,000 listed companies in India based on market capitalization. These companies must file the BRSR disclosures with the Securities and Exchange Board (SEBI) of India. However, the extent and quality of BRSR reporting can vary significantly depending on the company’s size, sector, and market capitalization. Larger firms, especially those with international operations or significant foreign investment, are more likely to have robust BRSR reporting frameworks in place. In contrast, smaller companies and those with a domestic focus may lag in this regard, either due to limited resources or a lack of perceived necessity. Below we present our findings from an analysis of the FY2022- 2023 disclosures. Data sources The NSE hosts a data site under nseindia.com which holds Corporate Filings Business and Sustainability Reports as filed by public companies pursuant to the SEBI guidelines which go under the acronym BRSR (Business Responsibility and Sustainability Report) mentioned earlier. The BRSR contains general information related to the business (as such as company name, contact information, turnover, etc.) and the information pertaining to the report filing: filing date, ESG factors, their value, units reported in, and the reporting date.   The NSE also provides XBRL Filing Information which contains the

Understanding SEBI’s BRSR: The 9 Pillars and Their Environmental Impact Authors: Anuradha Damle For more details, reach out to info@altometa.online The Securities and Exchange Board of India (SEBI) introduced the Business Responsibility and Sustainability Reporting (BRSR) framework as part of its commitment to ensuring responsible business practices in India. The BRSR framework, mandatory for the top 1000 listed companies by market capitalization, aligns with global sustainability standards and reflects India’s commitment to achieving the United Nations Sustainable Development Goals (UN SDGs). The BRSR is built on nine pillars, each addressing a critical aspect of business responsibility and sustainability. This blog post will break down these pillars, discuss their environmental relevance, and explore how they relate to the UN SDGs.  1. Ethics, Transparency, and Accountability Goal: Promote ethical business practices and transparency in operations.  Metrics: Code of conduct adherence, anti-corruption practices, risk management, and disclosure of material information.  Environmental Impact: This pillar indirectly influences environmental outcomes by encouraging companies to disclose risks and practices related to environmental management.  Industries Most Impacted: All industries, particularly those with significant environmental risks, like manufacturing and mining.  Managing Metrics: Companies can manage these metrics by implementing strong governance structures, regular audits, and transparent reporting.  UN SDG Relation: Aligns with SDG 16 (Peace, Justice, and Strong Institutions) by fostering transparency and reducing corruption.  2. Product Lifecycle Sustainability Goal: Ensure products are sustainable throughout their lifecycle, from production to disposal.  Metrics: Resource efficiency, waste management, recycling rates, and product impact assessments.  Environmental Impact: Directly reduces environmental footprint by encouraging sustainable design, production, and disposal practices.  Industries Most Impacted: Manufacturing, consumer goods, electronics, and automotive industries.  Managing Metrics: Companies can focus on eco-design, resource-efficient processes, and extended producer responsibility (EPR) initiatives.  UN SDG Relation: Supports SDG 12 (Responsible Consumption and Production) by promoting sustainable production processes.  3. Employee Well-being Goal: Ensure fair labor practices, health and safety, and employee development.  Metrics: Health and safety incidents, training hours, employee turnover, and diversity metrics.  Environmental Impact: While this pillar focuses on social aspects, it indirectly impacts environmental outcomes by fostering a responsible corporate culture.  Industries Most Impacted: Labor-intensive industries like construction, manufacturing, and mining.  Managing Metrics: Companies can manage these metrics by adopting strong occupational health and safety (OHS) systems, diversity initiatives, and continuous employee development programs.  UN SDG Relation: Linked to SDG 8 (Decent Work and Economic Growth) by promoting safe and secure working environments.  4. Stakeholder Engagement Goal: Engage stakeholders in business decisions, particularly those affected by the company’s operations.  Metrics: Number of stakeholder engagements, grievance redressal mechanisms, and impact assessments.  Environmental Impact: Promotes environmental stewardship by involving communities and other stakeholders in environmental decision-making.  Industries Most Impacted: Industries with significant community impact, like energy, mining, and real estate.  Managing Metrics: Companies can manage these metrics by implementing stakeholder engagement frameworks, regular communication channels, and addressing stakeholder concerns.  UN SDG Relation: Connects with SDG 17 (Partnerships for the Goals) by encouraging collaboration with stakeholders.  5. Human Rights Goal: Respect and protect human rights in all business operations.  Metrics: Human rights policies, due diligence processes, and incident reporting.  Environmental Impact: Indirectly impacts the environment by ensuring that operations do not infringe on the rights to clean air, water, and land.  Industries Most Impacted: Industries with complex supply chains, like textiles, agriculture, and mining.  Managing Metrics: Companies can manage these metrics by conducting human rights impact assessments, implementing supplier codes of conduct, and ensuring compliance across the supply chain.  UN SDG Relation: Supports SDG 10 (Reduced Inequalities) by promoting fair and just treatment of all individuals.  6. Environmental Management Goal: Minimize the environmental impact of business operations.  Metrics: Greenhouse gas (GHG) emissions, energy consumption, water usage, and waste generation.  Environmental Impact: Directly addresses environmental sustainability by focusing on reducing the negative impacts of business activities.  Industries Most Impacted: Energy, manufacturing, mining, and agriculture industries.  Managing Metrics: Companies can manage these metrics by adopting renewable energy sources, improving energy efficiency, and implementing waste reduction strategies.  UN SDG Relation: Aligns with SDG 13 (Climate Action) and SDG 7 (Affordable and Clean Energy) by encouraging companies to reduce their carbon footprint.  7. Public Policy Advocacy Goal: Ensure responsible advocacy that aligns with public good and sustainability goals.  Metrics: Contributions to policy development, participation in industry associations, and public statements on policy issues.  Environmental Impact: Influences environmental policy and regulation by advocating for sustainable practices and policies.  Industries Most Impacted: All industries, especially those heavily regulated, like energy, chemicals, and automotive.  Managing Metrics: Companies can engage in responsible lobbying, participate in multi-stakeholder initiatives, and advocate for policies that support sustainability.  UN SDG Relation: Relates to SDG 16 (Peace, Justice, and Strong Institutions) by promoting inclusive and transparent policy-making processes.  8. Inclusive Growth and Equitable Development Goal: Contribute to the economic and social development of the communities in which companies operate.  Metrics: Community investments, social impact projects, and local employment generation.  Environmental Impact: Supports sustainable community development by addressing environmental challenges in local areas.  Industries Most Impacted: Extractive industries, agriculture, and infrastructure projects.  Managing Metrics: Companies can focus on community engagement, impact assessments, and sustainable development projects that address local needs.  UN SDG Relation: Tied to SDG 1 (No Poverty) and SDG 10 (Reduced Inequalities) by contributing to economic and social development.  9. Consumer Protection Goal: Ensure the safety, fairness, and sustainability of products and services.  Metrics: Product safety incidents, customer satisfaction scores, and responsible marketing practices.  Environmental Impact: Encourages companies to offer sustainable and safe products, reducing environmental harm.  Industries Most Impacted: Consumer goods, food and beverage, and pharmaceuticals.  Managing Metrics: Companies can manage these metrics by adopting stringent quality control measures, transparent labeling, and responsible advertising practices.  UN SDG Relation: Supports SDG 12 (Responsible Consumption and Production) by promoting consumer awareness and sustainable consumption.  In each of the 9 pillars, the BRSR framework is structured into three main sections: Section A, Section B, and Section C. Each section serves a distinct purpose in assessing and reporting on a company’s sustainability and responsibility practices. Below we provide an overview of each section.  Section

Analysing Bikes Shared Rides in New York City Author: Anuradha Damle Introduction In a time when ESG is a topic of everyday conversations, the introduction of shared hire-bicycles in NYC has been a transformation to lowering carbon emissions over its 15+ year history. Promoting fitness, less congestion, and a shared community effort in taming rising pollution are additional benefits. Or has it been as resounding a success as we would like to believe? This analysis delves into the who, where, when of bike usage, and analyses the adoption trend for tell-tale signs of success. Based on this study there are many users preferring the cycling to work during morning hours and back in evening. These are typically 6 to 8-hour rentals. Additionally, there are many users prefer riding the bike in parks. These are 2 to 3-hour rentals. As expected, usage of the service is more in summer than winter. There are few opportunities to optimize bike utilization, based on overused and least used bikes. Detailed findings are listed in the section below.  Citi Bike is a popular bike sharing system that provides easy and affordable bike trips around New York city and New Jersey city. 24/7 availability, convenient stations has made Citi Bike a great option for quick trips.  In this article, we explore bike rides data to generate insights for business. We begin by examining every feature of the bike data, including data quality. Next, data is analysed to generate insights on trends and important features. We conclude with advanced analysis and model fitting, we identify business impactful insights about idle bikes, sufficiency of bikes along stations and predict rides.   Acknowledgements New York City Bike makes regular open data releases (this dataset is a transformed version of the data from this link). The dataset contains 25,846,892 anonymised rides information made from Oct 2015 to Jul 2017.   This dataset is the property of NYC Bike Share, LLC and Jersey City Bike Share, LLC (“Bikeshare”) who operate New York City’s Citi Bike bicycle sharing service (for T&C click here )   I want to take a moment to express my sincere gratitude to AltoMeta Consulting and their exceptional team (Raghavachari Madhavan & Aditya Kulkarni) for their unwavering support throughout the analysis & writing process. Their expertise and guidance have been invaluable in shaping the ideas and ensuring the coherence and relevance of the content.  Also, I would like to appreciate the product “Pragya” – No-Code data analysis environment from AltoMeta Consulting, for generating simple English language insights that help understand the data quickly. This helped me reduce the overall effort and focus on important features for further analysis.  Collaborating with both AltoMeta Consulting team has been an enriching experience, and I am grateful for their dedication, professionalism, and commitment to excellence. It is through such partnerships that we can deliver meaningful and impactful content to our readers. Executive Summary: This report analyzes key trends in a bike-sharing system, focusing on user demographics, ride patterns, and predictive modeling. User demographics reveal that Subscribers and Male users are predominant, with popular age groups being Gen X, Gen Y.1, and Gen Y.2. Short rides, primarily for weekday commuting, are prevalent, with notable activity around park areas. Peak ride hours occur in the morning (7am-9am) and evening (4.30pm-6.30pm), primarily in the South-North and Southeast-Northwest directions. Evening rides surpass morning rides in frequency. The analysis indicates that bikes spend more time idle than in use, suggesting opportunities for optimizing inventory organization to increase business or ride time. The average speed falls within a safe range of 4 to 8 mph. Despite a relatively short observation period of 22 months, the forecasting model effectively captures trends and seasonality, predicting an overall increasing trend in rides.  Objectives of this exercise are –  Data Profile: Derived Features, Feature analysis  Data Quality  Insights from data: Influential features, trends, observations  Predict Rides    Data Profile Column Name and Description Column Type Data Distribution Chart Observations Bike ID, The ID of the Bikes used for riding Numeric, 5-digit identifier. .❶❷ ❸ • Total 14,063 bikes. • Bike IDs from 14,529 to 30,337 • Average 1,838 rides /bike over 22 months • Number of bikes with rides at 25% are 3517, with rides at 50% are 7034 and with rides at 75% are 10550 . (Rides percentile of the total rides) • number of bikes with rides at100th percentile: 14063 • Left skewed. Based on Duration, distribution is as follows – • Average 29,762.03 min/bike • Number of bikes with duration of rides at 25% are 3516, with duration at 50% are 7032 and with duration at 75% are 10547. (Rides percentile of the total rides) • Right skewed • 9 bikes have extreme duration (> 150,000 mins). These records will be excluded from further analysis. Trip duration Duration of each ride Numeric, time in seconds. Excluded ❶❷❸ • This is converted to minutes and derived column is ‘duration_min’. • min: 61 • max: 20,260,211. (Extreme durations >150k mins will be excluded from the further analysis). start station id, The station number at start of the ride. Numeric, 4-digit number. Excluded. ❶❷❸ • Total 741 stations • Station IDs from 72 to 3478 start station name Text • Total 749 stations. • Average Rides per Start station: 34,508.53 over 22 months. • number of start stations with rides at 25%: 188 • number of start stations with rides at 50%: 375 • number of start stations with rides at 75%: 562 • (Rides percentile of the total rides) • Every Start Station name has ID in Start Station ID. • Every Start Station name has latitude and longitude. • Start Station name is subset of end station name. • There is difference between number of station ids and number of station names. Hence combination of id-name is used for further analysis. end station id, The station number at end of the ride. Text • Total 746 stations • Station IDs from 72 to 3478 end station name Text • Total 755 station names.