Trends of The Day

How to conduct due diligence? “Start with an open mind,” advises the Institute of Chartered Accountants of India in ‘Background Material on Due Diligence’ (www.icai.org). “Do not assume that anything wrong will be found and look for it. What needs to be done is to identify trouble spots and ask for explanations.”

Another advice in the publication is about the need to remember that the exercise is about managing risk. Double-check, therefore, the financials, tax returns, patents, and customer lists, and make sure the company does not face a lawsuit or criminal investigation, the Institute instructs. “Extra caution needs to be exercised if the company has never undergone an audit from an outside accounting firm. The company’s customers can also be quite informative.”

Sustainable performance measures

Sanjay K. Agarwal devotes a chapter to ‘triple bottom line’ in ‘Corporate Social Responsibility in India’ (www.sagepublications.com). The phrase, abbreviated as TBL, and coined by SustainAbility, advocates the need to measure business performance on three gauges, viz. economic, environmental, and social.

“A newer concept, far superior to the TBL concept, called ‘Triple Green Rating,’ is slowly emerging,” the author informs. The parameters here are: being water-positive, being carbon-positive, and having zero solid waste.

The measurement of the success of any business has moved far away from merely bloating bottom lines to its all-round sustainability, writes Agarwal. “Even an assessment of the social and environmental impacts of business has moved away from the mere reduction of emissions or offering of assistance in case of natural calamites to raising of questions as to how a particular product was manufactured, and how and to whom it is marketed.”