The 3Rs of ESG
India’s Path Toward Sustainable Corporate Stewardship
The global narrative on corporate sustainability is evolving rapidly, underscoring the paramount importance of Environmental, Social, and Governance (ESG) principles in contemporary business practices. This transformation is significantly driven by the Regulation, Reputation, and Remuneration (Investment) triad, collectively known as the 3Rs. In light of this, the article delineates the global inclination towards ESG adoption. It meticulously dissects India’s escalating focus on ESG reporting and adherence, poised to augment corporate transparency, accountability, and ESG-centered investments.
Regulation
Governments and regulatory bodies are globally tightening the reins on corporate ESG disclosure to promote sustainability and corporate responsibility. In the Indian milieu, the Securities and Exchange Board of India (SEBI) has showcased a commendable initiative by bolstering ESG reporting and disclosure frameworks. In a landmark move in 2021, SEBI decreed that the top 1,000 listed companies by market capitalization need to disclose their ESG performance through a structured format known as the Business Responsibility and Sustainability Report (BRSR), which came into effect from the financial year 2022–23. This regulatory impetus resonates with a broader global trend, fostering a culture of accountability and sustainable practices.
Reputation
Maintaining a stellar ESG reputation is not a choice but a necessity for businesses in a market increasingly dominated by informed consumers and discerning investors. Leading Indian corporations like Reliance Industries, Tata Group, and Infosys have been trailblazers in setting ambitious ESG targets and reporting their sustainability endeavours, enhancing their brand equity and investment appeal on the global stage.
Remuneration (Investment)
It has become evident that following environmental, social, and governance (ESG) guidelines can lead to financial benefits. A comprehensive study by McKinsey found that entities with high ESG ratings performed better than their peers in various financial measures. This trend is reflected in the increasing investment in ESG-focused funds and businesses by investors from around the world and India, demonstrating the economic advantages of ESG compliance..
India’s Steady Advance Towards ESG Adoption:
The adoption of Environmental, Social, and Governance (ESG) principles in India is taking a significant step forward. This progress is thanks to the combined efforts of various entities, including the government, regulatory bodies, industry associations, and investors. With their concerted efforts, ESG practices are becoming more prevalent in India, indicating a growing awareness of the importance of sustainability and ethical business practices.
Government Initiatives
The Indian government has been proactive in orchestrating various initiatives such as the National Action Plan on Climate Change, Sustainable Development Goals, and ambitious targets like achieving net-zero carbon emissions by 2070. Further, the National Solar Mission and the National Wind Mission are a testament to the government’s staunch commitment towards harnessing renewable energy resources.
Industry Initiatives:
The Confederation of Indian Industry (CII) is an essential organization that is instrumental in promoting the adoption of ESG practices. Through their efforts, CII has been able to provide valuable resources and tools to member firms to help them make a smooth transition towards sustainable practices. This has been a significant step towards creating a more sustainable future for our planet.
Investor Demand:
Investors across the globe are becoming increasingly conscious of the significance of environmental, social, and governance (ESG) factors. Consequently, it has become imperative for Indian companies to provide comprehensive and precise ESG disclosures. This trend showcases the growing realization that ESG factors are pivotal indicators of a company’s financial robustness and long-term worth.
As per recent findings by EY, more than 70% of the top 100 Indian companies listed have started to report on their sustainability efforts. This is a remarkable upsurge in ESG reporting and disclosure in recent times.
The interplay between the 3Rs underscores the strategic imperative of ESG in today’s corporate dominion. As India meticulously navigates its ESG adoption pathway, the collaborative synergy of government, regulators, industry consortia, and investors is crafting a conducive ecosystem for ESG proliferation. This is propitious not only for India as it endeavours towards its sustainable development aspirations but also sets a robust precedent for emerging economies.
TRST01’s Footprint Model Pioneers ESG Reporting in India
TRST01, an innovative India-centric ESG technology firm, has developed an ESG model named Footprint, which resonates profoundly with the burgeoning ESG reporting landscape in India. Through Footprint, TRST01 avails a comprehensive suite of ESG indicators encompassing environmental, social, and governance spheres, aligned meticulously with global benchmarks like the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB). This robust alignment facilitates seamless ESG performance comparisons and caters to stakeholder and investor expectations proficiently. Noteworthy is the deployment of two tailored variants — Footprint Lite and Footprint Enterprise, addressing the specific needs of SMEs, MSMEs, and large corporates, respectively. These solutions, epitomizing affordability and user-friendliness equip businesses across the spectrum to navigate the new BRSR format stipulated by SEBI, thus endorsing a culture of holistic ESG disclosure. The advent of TRST01’s Footprint not only democratizes ESG reporting for a broad swath of Indian enterprises but also propels them towards meeting the escalating ESG standards, embodying a substantial stride towards fostering sustainable corporate stewardship in India.
write to me prabir@trst01.com
