Infosys tops list of best voluntary disclosure practices in India

26 November 2018 Authored by Consultancy.in

Global strategy consultancy FTI Consulting has released its ‘India Disclosure Index 2018,’ which evaluates the non-financial and voluntary disclosure practices for firms across the country. Nine companies have scored over 9 out of 10 on the index, while IT services firm Infosys emerged with a perfect 10.

Nestled within the domain of non-financial, voluntary disclosure, FTI’s report for this year generated minimum standards and guidelines based on new disclosure regulations that are expected to be rolled out in the near future. Overall the report relied on twelve different parameters to evaluate firms in India.

These parameters include the relevance of operating metrics, business strategy (long-term corporate goals), diversity of the board, evaluation of the board by a third party, separation between the advisory and executive roles, proportion of independent directors on the board and expertise amongst senior directors.

India disclosure index 2018

Other parameters include the whistleblowing mechanisms in place, analysis transcripts, metrics for risk management, cybersecurity and risk mitigation practices and the compliance of sustainability disclosure with global guidelines. These twelve parameters were separated into three categories, evaluating performance, board quality and risk management respectively.

The firm evaluated India’s top 100 listed companies, and the average score for all the firms on the overall voluntary disclosure index is just over 6 out of 10. Nine out of the top ten companies had a voluntary disclosure score in excess of 9, the only outlier being Wipro with a score of 8.4.

Infosys, meanwhile, emerged as the top firm in the voluntary disclosure index with a score of 10. Other firms in the top ten incude Yes Bank, Vedanta, Tata Chemicals, HCL Technologies, Cipla, Axis Bank and ACC, all of which had scores of 9.2. Kotak Mahindra Bank placed in 9th with a score of 9.

Voluntary disclosure scores (top 10)

Zooming in on specific parameters, the top 100 group had a mixed performance in the board quality category. In terms of board duality, for instance, 76% of the firms had clearly delineated differences between the role of Chairman and that of CEO. In addition, over 80% of the firms have independent directors constitute half of the board at the very least. 

However, the performance drops when it comes to accountability measures, particularly as only 10% of the boards engaged third parties to evaluate board operations. Most boards conduct self-evaluations, which are effective but lack the same degree of objectivity as those conducted by external parties. Nearly 20% of the boards, meanwhile, do not have female representation on their board.

Risk management practices were also lacking for some firms, with as many as 20% missing a user-friendly whistle-blowing system. Perhaps the biggest shortcoming, however, is that nearly 60% of the firms did not disclose their cybersecurity mechanisms in annual reports, which is of particular concern in an increasingly insecure cyber environment.

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