India Transforms its ESG Landscape to be Future-Ready, EggheadFoundation
03 Sep

India Transforms its ESG Landscape to be Future-Ready

Global Environmental, Social, and Governance (ESG) investing gained steam after the epidemic as investors viewed COVID-19 as the first "sustainability" catastrophe of the century. According to a report by EY, 90% of foreign investors looked at a company's hashtag#ESG performance, and 86% prioritised corporate decarbonization when making investment decisions.

Only 25 out of 5,180 investors in India have signed the United Nations Principles of Responsible Investing (UNPRI), indicating that ESG is still in its infancy there. However, numerous clean energy firms and environmentally friendly commercial ventures began to receive funding from global asset managers, private equity funds, sovereign wealth funds, and pension funds.

blog details, EggheadFoundation
blog details, EggheadFoundation

What makes ESG significant in India?

India's Prime Minister pledged to achieve net zero emissions by 2070 in the Paris Agreement of the United Nations Climate Change Conference in 2021. In order to protect the environment, the interests of numerous stakeholders, and business sustainability as a whole, corporate organizations must include ESG principles.

Indian businesses are quickly integrating ESG into their overarching business strategy, spurred on by a multi-trillion-dollar global pool of ESG-driven finance. They realize that their obligations go beyond generating financial gains and include having a beneficial impact on society and the environment. The implementation of ESG will increase corporate growth, improve public perception, and assist businesses in raising finance more cheaply.

Status of ESG implementation in India

The government imposes strict regulations on businesses operating in high-emitting industries including industry and energy. ESG disclosures are now required for the top 1,000 listed businesses by the Securities and Exchange Board of India (SEBI) as part of its Business Responsibility and Sustainability Reporting (BRSR) initiative. For businesses with a net worth of Rs. 5 billion, a revenue of Rs. 10 billion, or a net profit of Rs. 50 million, India has established guidelines for Corporate Social Responsibility (CSR). To get funding from international ESG investors and financiers, these businesses must invest at least 2% of their net profits in CSR initiatives and reveal their ESG profiles.

India's banking and non-banking sectors have swiftly shifted their attention to sustainable development in the wake of COVID. The RBI joined the Network for Greening the Financial System (NGFS) to advance India's financial industry's development of climatic risk resilience and to contribute to global green finance. In order to address climate risk challenges, the bank also concentrated on stress testing, strategy development, capacity training, and risk governance structures. Additionally, the State Bank of India developed lending guidelines for businesses that are ESG compliant, encouraging them to take more responsible actions.

Forward-thinking companies began disclosing their ESG performance in accordance with internationally recognised frameworks like GRI, TCFD, and IR. Even privately held businesses willingly share their ESG initiatives using the BRSR-lite format. In their due diligence and investment monitoring processes, numerous sizable international investors have implemented clearly defined ESG standards. They take advantage of chances to promote environmentally sustainable investing and the preservation of the environment. On the other hand, investors do exclusionary screening for socially conscious businesses and steer clear of those with subpar ESG metrics. The Indian corporate #ecosystem is still in the early stages of optimising its ESG profiles, funding needs and transition plan.

Where is the ESG adoption gap that businesses need to fill?

Although ESG commitments are supported by three pillars, the letter "S" is frequently absent from the chain connecting corporate strategy and regulatory compliance. India faces a significant issue in creating jobs, thus the government is working hard to employable youths through massive employment programmes. It intends to fill 890,000 openings in ministries and central departments, which will result in the creation of 1 million new jobs.

Similar to this, as part of their #CSR programmes, private enterprises can think about hiring apprentices and diversifying their workforces. Startups are attempting to survive the fundraising cold, nevertheless. Since measuring social effect is challenging, SEBI established an advisory council with the goal of improving BRSR and creating a parallel strategy for standardising social metrics.

What are the top 5 ESG entry points for beginners?

If Indian businesses do not create strong ESG frameworks as a top priority, they risk losing Rs. 7,138 billion in the next five years as a result of climate-related risks. Businesses should exhibit climate resilience and work to reduce emissions as a preventative measure to draw investors in the following ways.

Maximising the use of resources

Businesses of all sizes should adopt the growing ESG frameworks to meet compliance requirements. Sustainable sourcing, resource allocation, and efficient use of resources including fuel, raw materials, air, and water are crucial for environmentally conscious businesses. Waste management, scope emissions, water use, 3R practises, Extended Producer Responsibility (EPR), and Life Cycle Assessment (LCA) requirements should all be taken into consideration.

Using sustainable energy sources instead

Industry-leading energy efficiency of up to 98.8% can be obtained from best-in-class, high-efficiency solar and wind energy products from reputable manufacturers. Modern site controllers, inverters, bi-directional batteries, and cloud-based management systems work together to provide comprehensive energy storage for renewable energy smoothing, power dispatch, and demand management.

Taking care of the broken link

The SEBI mandates examine the firm's interactions with internal and external stakeholders as well as how it safeguards the welfare of its employees.

Therefore, job opportunities, employee welfare, worker safety and training, preservation of human rights, social impact evaluation, gender equality, and women's empowerment should all be included in a company's social indicators. Similar to this, anti-corruption and anti-bribery rules, conflict management, remuneration policies, staff retention plans, and stakeholder engagement initiatives should all be part of corporate governance.

Streamlining personnel and operations

According to a PwC analysis, firms' ESG agendas include reporting, strategy development, and business transformation. Senior executives will be crucial in formulating strategy, directing performance, reporting results, and guiding a company's ESG transition, according to this prediction. To streamline operations, supply chains, and customers, businesses should assign qualified personnel to gather and analyse data, develop customised datasets, and use ESG data tools.

Eliminating ESG washing

To prevent unintentional ESG washing, businesses should identify and track ESG-driven risks and opportunities as well as deal with transparency challenges. To make ESG standardisation evaluation simple for investors, financial decision-making should include data visibility, compliance with global disclosures, and data comparability. Particularly, export-oriented industries like steel, iron, and cement must set their net-zero goals in order to lower their carbon footprint and maintain their competitiveness on a global scale.

Final Word

Through audio, video, text, and social media, evidence-based storytelling of ESG-driven operations establishes a company's credibility, deepens stakeholder connections, boosts public perception, and improves risk communication. From an economic, social, and regulatory standpoint, creating a 360-degree ESG architecture has become essential for risk management, adaptability, accountability, and compliance. In order to fulfil its promise of achieving net zero emissions in the future, India is therefore focusing on integrating environmental and human health, collaboration and transparency, and transformation of diverse production modes.


  • Kevin martin, EggheadFoundation

    Kevin martin

    March 20, 2024 at 2:37 pm


    It's Fascinating To See The Changes In India's ESG Landscape And Their Push For A Sustainable Future.

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