Avinash Gupta, Managing Director and CEO, Dun and Bradstreet and Hitesh Sethi, Head of Analytics and Business Advisory, Dun and Bradstreet talks about the quality of their data, frameworks and processes
Dun and Bradstreet has a treasure trove of data of Indian companies. While the global business information company has been recognising the top 500 Indian corporates for more than two decades, it has of late ventured into Environment, Social and Governance (ESG) ranking of Indian companies. Avinash Gupta, Managing Director and CEO, and Hitesh Sethi, Head of Analytics and Business Advisory, talk to Rajiv Tikoo and Naina Gautam about the quality of their data, frameworks and processes. Edited excerpts:
How challenging or easy is it for you to do ESG ranking of companies?
Avinash Gupta: We have data sets on ESG for one million Indian companies. For the last 22 years or so we have been recognising the top 500 of the Indian corporate world. The top 500 is a very small subset of one million companies. So, it is just an organic extension of our work
What prompted you to bring out the ESG ranking of top India 500 companies?
Avinash Gupta: The top 500 sets the benchmark for the entire corporate world. They have large supply chain networks below them. So, when you do the top 500, it kind of helps to lay down the framework and trigger the discourse.
How is the Securities and Exchange Board of India or SEBI’s proposed regulation of the ESG ranking providers going to impact you?
Avinash Gupta: SEBI has been good in terms of forcing large companies to come out with very elaborate and detailed reporting as part of financial statements. Everybody has to listen to what SEBI says. It is the gatekeeper for the capital market. We are happy to work with SEBI, government and other regulators. We have got our own way of looking at things. We obviously take the best of both the worlds.
We have seen quite a few rankings on ESG in the last few years. How is your ranking different from that of others?
Hitesh Sethi: It is more bottom-up. If you see rankings by other companies, these are benchmarked at a sectoral level, at certain levels. They are focused only on large enterprises because that is where the public disclosure is. We are a business information company. We have built up bottom up data, which differentiates and gives us an advantage.
The second thing is if you look at the Greenhouse Gas (GHG) emissions, for example, internal to our company vis-à-vis external supply chain, the multiple is around 12 times. So the GHG emissions in this supply chain are nearly 12 times of what the company is having internally. So, our focus is more on how can we measure and monitor the ESG governance on the supply chain side, which will enable large enterprises to better control their Scope 3 emissions.
Thirdly, it is about how to make interventions. All the models, which are around, are qualitative in nature and analyst driven. At the same time they include the bias of the analyst. We have used AI and MLT to actually carve out these subjective aspects and bring in a scoring based database, which enable us to be actually more scalable as well as address issues pertaining to bias of models. We have been driving it more objectively. We are more data oriented, more scalable and consistent globally.
Different multinationals subscribe to different ESG frameworks in different countries, but when it comes to India how are you able to reconcile to this situation?
Hitesh Sethi: We have to differentiate between the reporting and the compliance requirements, which is where the Business Responsibility and Sustainability Reporting (BRSR) comes in. SEBI looks at all the standards. I believe that there are 35 parameters, which are important for the country. Large companies should start reporting, which is the compliance part of it.
The other part is today globally as industries are growing, there is a trend to merge standards together. So, today Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB) are coming together under one holistic global reporting initiative in the interest of consistency. Keeping that in mind, what we need to use is something which is globally consistent. When you are doing something in say Europe and doing that assessment and you are comparing that to an Indian company, then it becomes comparable and that is where I feel GRI and SASB become important for us to use.
When it comes to sustainability reporting, which is a self -initiative that these companies are driving, they are actually using multiple standards. So they will do it using GRI. They will also do it using SASB because the latter is more investor driven and more granular towards the investors. So currently they are issuing both reports in the public domain. But we see this merging and coming together globally and that is how we have built up the framework for ourselves.
How are you making your ESG ranking process more robust?
Hitesh Sethi: From a framework perspective, data is the key. We are strengthening our data sets. When it comes to data, localisation is very important. Using local data sources, working with local compliances, working with large businesses and helping them in evaluating their suppliers using ESG are important. So, the more awareness builds up, the more data becomes available. The more data is available, the more objective your scoring process would be. How deep we can go and how we can build the whole ecosystem are the two larger issues.
Avinash Gupta: How we can get the ecosystem data that is more verifiable is important.
What would be your advice for Indian companies to be ESG ready or ESG compliant?
Avinash Gupta: It is important to set a base assessment, a baseline. Most companies are happily going through that process themselves, and they are subscribing to our kind of services in terms of an ESG rating provider like ourselves, which can globally benchmark and help them. They are looking at their risks and how to mitigate these risks as part of the entire process. And then from a larger company point of view, they are doing it with a set of cross functional teams to improve their ESG benchmarks.
One of the underlying points in the discourse is about data. How good is data actually, the data you begin with or for that matters all of us use?
Avinash Gupta: We believe our data is very good. The main thing is about getting access to better and deeper data all the time. Data, which can be verified and stands the test of time, is needed. Data needs to stand out. We have been working with clients to set up systems and processes as part of the entire operating platform so that better data can be collected from a large set of suppliers and a large set of clients. This can then be verified over a period of time to make things better. That is why we believe we have a very integral and important role to play in the ecosystem because we are the biggest keeper of data globally, and we can add this as part of our entire data service.