The International Finance Corporation (IFC), a member of the World Bank Group, and Asia’s oldest exchange, the Bombay Stock Exchange (BSE), have developed a corporate governance scorecard tool to improve corporate governance in India.
The tool aims to aid companies in identifying areas of improvement against accepted good practices and promote effective decision-making, risk management and governance structures.
The scorecard was finalized through a process of in-depth review and public consultation with key stakeholders, with the tool being used to assess the top 30 companies on the BSE.
The scorecard will help companies measure their corporate governance practices against local regulations and international benchmarks.
Institutional Investor Advisory Services, an Indian advisory firm that provides opinion, research and data on corporate governance issues, was the technical partner responsible for drafting the scorecard questionnaire and methodology.
‘The launch of this scorecard will help companies to go the extra mile beyond compliance,’ says Ashish Chauhan, managing director and CEO of BSE.
India has been looking to raise its corporate governance bar and the scorecard aims to generate incentives for reform, help direct change and ensure a process of continual improvement.
Jun Zhang, country manager for IFC India, says: ‘The scorecard will encourage Indian companies to strengthen corporate governance practices, which will enable easier access to capital from global markets, improve transparency and enhance investor confidence.’
Globally, IFC’s work on corporate governance has resulted in the adoption of 95 laws, regulations and codes.
India is IFC’s top country exposure globally, with a committed portfolio in the region of over $5 bn.
In South Asia, IFC is implementing a regional corporate governance project with donor support from Japan’s Ministry of Finance. This five-year project provides advisory services to individual firms and partners with local institutions, such as the Indian Institute of Corporate Affairs, to strengthen sector-level work on corporate governance.
