crisil, s & p esg index. role of society 27. the role that the society plays in nudging financial institutions to adopt nfr can be catalytic. as a society, while judging a financial institutions ’ performance, we must appreciate their contribution to social responsibility. as an illustration, when best banks ’ awards are given, only financial parameters like crar, roa, roe, npa, etc. are considered. but are the banks judged on parameters like responsible ethical lending? how they meet their social responsibility? how they are faring in serving below poverty line people? how many customers served? what is the intermediation cost? what is the treatment meted to small customers? are the charges levied for such small customers exorbitant in nature? do they have a policy of reducing carbon foot print? when these aspects are not taken into consideration, and if the society does not appreciate these while rewarding the banks, how do you expect that these will be reflected in corporate performance? were such factors taken bis central bankers ’ speeches into account, then the recipients of best banks awards would, probably, be very different from the actual recipients of today. 28. banks and financial institutions would benefit by developing a sustainability management and reporting framework, which covers, but is not limited to, identification of material issues and risks, conducting stakeholder engagements as well as environment, health safety and social ( ehss ) audits, mapping the carbon footprint of a company ’ s operations and developing sustainability reports. conclusion 29. to conclude, i once again congratulate nextgen and gri for having organised this conference which provides an important platform for creating awareness and sensitising financial institutions about non - financial reporting. it is a concept whose time has come but it has to transform into a movement. rbi has been encouraging banks to adopt greater environmental and social disclosures apart from financial. but not much has happened on this front, although, on the inclusive agenda front, there has been progress but it has not yet formed part of non - financial disclosures. in order to make an impact, banks need to integrate the concepts of inclusive growth and their risk management processes for assessing performance, csr and nfr with their business strategy. as society starts rewarding and judging performance of financial institutions by their social, environmental performance and inclusive growth agenda, apart from economic, financial institutions would be more motivated to voluntarily adopt nfr. i wish the deliberations all the success

, when they do, such reporting will be incomplete and rarely material to stakeholder interests. 10. critics to the mandatory approach to nfr maintain that government regulation is not needed in this area since : • other market - based drivers exist that provide sufficient incentives for firms to report. • pushing the regulatory track will lead to a host of diverse national nfr regimes, thereby making international comparisons of non - financial reports difficult ( if not impossible ) and adding significant regulatory burdens on companies that operate across national borders. • the approach would not allow for the continuous updating and improvement of nfr frameworks since the practice of nfr is still relatively young and requirement of a legislative process to effect changes would result in long delays. • innovation in the area of nfr will be reduced. innovation is likely to occur if companies push for higher benchmark standards in order to produce superior reports to those of their competition. in a mandatory framework, such completion is far less likely. bis central bankers ’ speeches advantages of nfr 11. there are multiple advantages to both report preparers and report readers. the advantages to the report preparers are : • tool for increased comparability and reduced cost of sustainability • brand and reputation enhancement • differentiation in the market place • protection from brand erosion due to action of suppliers or competitors • fosters innovations in order to make processes environment friendly. advantages to the report readers are : • useful benchmarking tool • corporate governance tool • avenue for long - term dialogue with reporting organisation. to sum up : • corporates that focus on sustainability reporting outperform their peers in the long run and help in consolidating their market position • in view of reliable correlation between business integrity and above average financial performance, nfr demonstrates ongoing business integrity and enhances investor and stakeholder confidence. • helps to acquire national and international listing and gain access to otherwise restricted markets • helps to attract finance through transparent relationship with credit providers, improve management systems and employee motivation and customer satisfaction. banks and financial institutions and nfr 12. banking and finance institutions ’ immediate environmental and social impacts are relatively low because most of those impacts are delivered through the activities of other businesses that rely on financial institutions – the businesses in a loan or investment portfolio. but they have a paramount role in ensuring that businesses that borrow from them and depend on them for financing understand the risk their business may pose for society and follow a sustainable agenda. so, despite the relatively indirect nature of their environmental and social impacts, banks