Development of sustainability reporting index (SRI) with special reference to companies in India

Abstract

Indian companies have not integrated sustainability into mainstream business strategy till now. Companies have adopted sustainability reporting just to strengthen the reputation. The present study has developed an index on sustainability reporting practices, considering economic, environment as well as social factors, in context of companies in India. Researchers, for instance Azapagic, (J Clean Prod 12(6):639–662, 2004), Singh et al. (Ecol Ind 7(3):565–588, 2007), Sumiani et al. (J Clean Prod 15(10):895–901, 2007), Clarkson et al. (Acc Organ Soc 33(4–5):303–327, 2008), Guthrie et al. (Account Forum 32(1):1–15, 2008), Pahuja (Soc Responsib J 5(2):227–244, 2009), Ahmed and Sundaram (Decis Support Syst 53(3):611–624, 2012) and Zhao et al. (J Clean Prod 29:277–289, 2012), have constructed reporting index considering either environmental or social factors. There is no such index which covers all dimensions of reporting applicable to all industries. The current study tries to fill the research gap. This paper is dedicated to research procedure adopted to formulate sustainability reporting index for companies in India. First part of the study focuses on theoretical framework followed by sustainability challenges faced by companies in India. Further, the study elaborates on the methodology adopted to develop SRI, which pertains to identification of initial indicators, selection of final indicators, development of hierarchical framework, factor analysis and performing data pre-treatment. It explains the scoring methodology as well. Validity and reliability of the index have also been checked and reported. The index showed high reliability coefficient which concluded that SR index could be used to assess corporate practices in sustainability reporting. Finally, applicability of the index is checked using the data for BSE 500 companies such as food and agro-products, which proves that SRI can be taken as a standard framework along with the mentioned scoring methodology.