As the world continues to recover from the challenges thrown by the COVID-19 pandemic, there has been an unprecedented surge in awareness about the importance of Environmental, Social, and Governance (ESG) initiatives. This growing cognizance has made it abundantly clear that ESG-related activities are no longer just optional, but a mandatory requirement for global sustainability. Particularly in India, the business landscape has been witnessing a marked shift towards ESG awareness and implementation.
Understanding the Current ESG Scenario in India
India, as a responsible global citizen, has been striving hard to meet the Sustainable Development Goals (SDGs) of the United Nations (UN). These 17 action-oriented goals serve as a universal blueprint to achieve a more sustainable future for all. According to the Sustainable Development Report 2022, India has secured the 121st position among the 193 UN member states, with a score of 60.32 out of 100. This rating serves as a testament to India's dedication towards achieving the SDGs.
A Look into Key ESG Legislations in India
In India, the ESG regulatory framework isn't unified under a single statute but is governed by several laws that deal with distinct aspects of the ESG domain. These regulations span various legal frameworks, including the Factories Act, 1948, the Environment Protection Act 1986, Rights of Persons with Disabilities Act, 2016, and others.
Evolution of Sustainability Reporting in India
Sustainability reporting in India has come a long way, with key milestones marking its evolutionary journey. The Companies Act, 2013, and the introduction of the Business Responsibility and Sustainability Report (BRSR) have been two significant landmarks. The Companies Act, 2013, has made Corporate Social Responsibility (CSR) spending and reporting mandatory, marking the first global initiative of its kind. BRSR, implemented by the Securities and Exchange Board of India (SEBI), has further pushed the top 1,000 listed companies towards sustainability.
Furthermore, the BRSR framework asks organizations to identify up to three significant challenges and their strategy for addressing them, predominantly focusing on ESG issues. This is where the Director’s Institute in India plays a crucial role, offering comprehensive courses covering all essential information about BRSR and other reporting standards.
ESG Funds: A Comparative Overview and Current Scenario in India
With only 23 ESG funds compared to the 500+ in the US and UK, the Indian ESG market may appear relatively nascent. However, Indian asset managers believe that mutual fund investors should consider ESG as a long-term investment strategy. ESG funds, which prioritize firms that have a positive impact on the environment and society, have become increasingly popular in recent years. They encompass a wide range of assets, including stocks, bonds, and real estate, offering substantial financial gains and opportunities for societal betterment.
How Indian Businesses are Adopting the Ever-Evolving ESG Framework
Indian businesses have started to integrate ESG considerations into their business models. This includes taking steps towards environmental sustainability, aligning towards ESG reporting, and creating robust ESG data management tools.
India's ESG journey is still in its early stages. Building internal capacity, implementing assessment frameworks, managing data, and acquiring independent third-party perspectives are vital for the businesses as well as the investors to assess a company's sustainability quotient.
Conclusion: The Long Road to ESG Maturity
While India may have some distance to cover before achieving maturity in ESG reporting, there's no denying that COVID-19 has been a major catalyst in accelerating the ESG journey.
The Way Forward: ESG Certification in India
As businesses adapt to the changing ESG landscape, there's a growing need for professionals with a deep understanding of ESG principles. The Director’s Institute in India offers an ESG Certification and e-learning programs, equipping professionals with the knowledge and skills to lead the industry towards a more sustainable future.
In the post-pandemic era, the demand for businesses to make the world a better, more stable place is only going to increase, making the ESG a key driving force in the global business landscape. The adoption and implementation of ESG strategies are no longer a matter of choice, but a necessity for businesses to stay competitive and sustainable in the long run.
Our Directors’ Institute- World Council of Directors can help you accelerate your board journey by training you on your roles and responsibilities to be carried out in an efficient manner helping you to make a significant contribution to the board and raise corporate governance standards within the organization.
Our ESG Expert certification will help you to amplify your understanding of corporate governance in a detailed manner paving the way for you to become a globally recognized ESG leader.