Institutional EYE

Commentary on Corporate Governance Issues

Corporate India needs to have an unwavering commitment towards gender diversity

Corporate India has absorbed the benefits of gender diversity. More companies now have one woman on their boards, and several boards have more than one. Regulations, it appears, have rejuvenated the focus on gender diversity in boardrooms. Yet, progress is slow compared to global benchmarks. Having more women in the workforce and at leadership levels requires a focussed effort from corporate India. There is enough research that suggests that diversity and inclusion factors correlate with better financial performance of companies. A 2018 McKinsey study shows that companies in the top quartile for gender diversity on executive teams were 21% more likely to outperform on profitability and 27%

India Inc.’s CSR spends are increasingly project driven

Corporate Social Responsibility (CSR) spend by companies listed on BSE-100 witnessed an increase of 15 per cent to Rs. 85.4 bn in 2018-19 from Rs. 74.6 bn in 2017-18. Over a five-year period, the CSR Spend of BSE 100 companies increased 12.8% while net profits increased by 5.2%. While this can be explained by the fact that these 100 companies were in the aggregate spending less than 2% of profits on CSR five years ago, there is also no doubt that Indian companies are taking active ownership of their CSR endeavors. Data also suggests that most spends are project driven and, in a sense, not linked to company profitability. Impact assessment studies are now an important part of the CSR toolkit.

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