Transparency in corporate reporting assessment reveals marginal improvement by Sri Lankan companies

According to the Transparency in Corporate Reporting Assessment (TRAC) 2021 publication which was unveiled today (Feb 1), companies in Sri Lanka have been deemed to be Moderately Transparent in corporate reporting. The TRAC report is compiled by Transparency International Sri Lanka (TISL).

The TRAC report assesses the top 75 Public Limited Companies on the Colombo Stock Exchange (as per market capitalization on 1st June 2021) on the level of transparency in the disclosure of information. The assessment which is being conducted for the second consecutive year scores and ranks companies on three different thematic areas crucial to fighting and preventing corruption: reporting on anti-corruption programmes, transparency in company holdings and the disclosure of key financial information in domestic operations.

The research found that companies on average are Moderately Transparent in corporate reporting, with a score of 6.93 out of 10, where 0 is the Least Transparent and 10 is Fully Transparent. The average score of 6.93 is slightly higher than the score obtained in the previous assessment (6.73) conducted in 2020. The 2020 TRAC report assessed 50 companies.

John Keells Holdings, Commercial Bank of Ceylon and Dialog Axiata are the companies which recorded the highest overall scores in the assessment. John Keells Holdings PLC ranked 1st for the second consecutive year, being the only company to obtain the full overall score for transparency in disclosure practices.

Companies were scored and ranked based on publicly available information pertaining to the company. Information was sourced from the latest Annual Reports (2020 or 2020/21) published by companies, company websites, and other publicly available company documents. Each company’s individual scoresheet may be viewed at www.tisrilanka.org/trac2021.

It is important to note that the TRAC report does not assess the implementation of companies’ anti-corruption policies or programmes. Therefore, a low score does not necessarily mean that a company does not have strong anti-corruption programmes nor does it indicate any wrongdoing on the part of the company. Likewise, while a high score may illustrate strong disclosure systems, it may not necessarily reflect operational and implementation success.

The private sector in Sri Lanka is usually seen as an enabler of corruption. This notion is further exacerbated by the fact that there is no mandatory requirement for the private sector to publish information on their community contributions, corruption mitigation strategies or their organizational structures. Committing to be fully transparent in the disclosure of key information is an important step that demonstrates a company’s level of accountability and social responsibility, which is why the TRAC assessment aims to ascertain, recognize, guide and encourage transparency in corporate reporting.

Executive Director of TISL, Nadishani Perera commenting on the report noted that “The report provides detailed recommendations for companies on how to improve their disclosure practices which would lead to better scores as well. The report also highlights the importance of regulatory change with recommendations to the government on amending the relevant laws and regulations. While congratulating the top ranked corporates as well as the most improved companies, we hope that all those assessed will use this as a catalyst for continued improvement, turning disclosure practices into operational norms.”