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In today’s corporate world, sustainability has become a crucial priority. As investor mindsets shift, businesses must prioritize sustainability growth and create wealth. Therefore, companies are expected to display ethical and moral responsibility towards society.

ESG reporting involves disclosing a company’s data related to its operations in three key areas: environmental, social, and corporate governance. It is an essential tool for organizations to identify risks, monitor sustainability, and report their performance. The data that falls under ESG reporting includes:

  • Environmental: Biodiversity, climate change strategy, energy efficiency, and more
  • Social: Equal opportunities, human rights, health and safety, and more
  • Governance: Business ethics, shareholder democracy, compliance, and more

Current Landscape of ESG in India

In 2009, the Ministry of Corporate Affairs [MCA] introduced voluntary guidelines on Corporate Social Responsibility, marking the beginning of ESG reporting in India and the first step towards promoting business responsibility. Since then, ESG reporting in India has progressed significantly, moving from the Business Responsibility Report to the National Guidelines on Responsible Business Conduct and, ultimately, to the Business Responsibility and Sustainability Report framework.

Effective from the fiscal year 2022-23, on 10th May 2021, the Securities and Exchange Board of India [SEBI] has mandated filing Business Reporting and Sustainability Reporting [BRSR] for the top 1,000 listed companies by market capitalization. So, as a part of their annual reports, these companies in India must currently provide Business Reporting and Sustainability Reporting (BRSR) to the stock exchanges. 

The New BRSR Framework

The new BRSR framework is based on the Indian government’s “National Guidelines on Responsible Business Conduct” (RBC Guidelines), which comprise nine principles that define responsible business conduct for Indian companies. These principles are aligned with leading international standards and practices such as the UN Guiding Principles on Business and Human Rights, UN Sustainable Development Goals, the Paris Agreement, and the ILO Core Conventions. The principles cover various sustainability issues, including business ethics and transparency, human rights, environmental safety, and fair labor practices.

BRSR: Benefits for Businesses

While BRSR is often considered a regulatory obligation, it can bring various advantages to businesses. After all, ESG reporting has shown numerous benefits worldwide, such as:

  • Increased value creation – Several studies indicate that businesses that integrate ESG principles into their fundamental operational procedures surpass their counterparts. It also holds valid for India, where the MSCI India ESG leaders index demonstrated steady outperformance of the broader market, as exemplified by the MSCI India IMI index, throughout 12 years.
  • Access to markets and increased market share – Organizations have started acknowledging that allocating resources towards social and environmental concerns will enhance their operational resilience and establish a more advantageous position with their clients and business associates. It will also help them gain new customers.
  • Increased access to capital – Some prominent international reporting frameworks include the Global Reporting Initiative, Integrated Reporting, CDP, and the Sustainability Accounting Standards Board [SASB]. These frameworks involve substantial participation from investors during their development, as they are among the primary users of this information. Furthermore, various Asset Management Companies [AMC] have introduced ESG funds that rely on a company’s ESG performance to determine investment decisions. 
  • Reduced financial risks – Energy companies face lawsuits for contributing to and exacerbating global warming and have been pressured to disclose their greenhouse gas emissions. Additionally, hedge funds have been holding directors responsible for disclosing information about pollution.
  • Obtaining a “social license to operate” – In most democracies, civil society has been instrumental in heightening public awareness of social and environmental issues through their research and advocacy. Hence, Sustainability reporting enables companies to reveal their strategies and undertakings and obtain this social endorsement to conduct business.
  • Attracting and retaining talent – Organizations are now integrating sustainability practices to meet the changing preferences of employees who seek responsible behavior and a purposeful organization. This shift is necessary to retain human talent, meet consumer expectations, and stay relevant in the market.

The BRSR framework is based on three main sections:

A) Policy Commitments and Governance, which requires companies to adopt policies and establish governance structures that support the respect for human rights.
B) Human Rights Due Diligence requires companies to identify and assess potential human rights impacts of their operations, take actions to prevent or mitigate negative impacts, and track their effectiveness.
C) Remedy requires companies to provide an effective remedy to those their operations or value chain has adversely impacted.

Under Section C, nine principles are adopted from the National Guiding Principles on Business and Human Rights (NGBRC) and repurposed for the BRSR framework. Essential Indicators and Leadership Indicators accompany each principle. While the Essential Indicators are mandatory, the Leadership Indicators are voluntary, which are detailed below:  

  • Organizations are expected to conduct themselves ethically, transparently, and with accountability.
  • Businesses should ensure that their goods and services are sustainable and safe.
  • All employees, including those in the value chain, should have their well-being respected and promoted by businesses.
  • Businesses should prioritize stakeholder interests and be responsive to them.
  • Human rights should be respected and promoted by organizations.
  • Enterprises should protect and restore the environment and make an effort toward this end.
  • Businesses should engage in responsible and transparent behavior while trying to influence public and regulatory policy.
  • Organizations should promote equitable development and inclusive growth.
  • Businesses should provide value to their consumers in a responsible manner and engage with them.

By adopting the BRSR framework, companies can demonstrate their commitment to respecting human rights, manage their human rights risks, and create positive impacts in the communities where they operate.

How Indian Companies are Adapting to ESG

In India, several prominent companies have incorporated environmental, social, and governance goals as a part of the top management’s key result areas [KRAs] for computing their variable pay. This change is motivated by investor demand for socially responsible investments that generate financial returns and contribute to the greater good. 

Non-financial considerations are now considered significant for investors seeking to assess risks and growth potential. Additionally, the COVID-19 pandemic and growing recognition of the expenses associated with climate change have intensified discussions surrounding ESG issues, leading many boards to prioritize these topics during their strategy meetings.

Examples of some big enterprise companies for whom ESG is now a priority include –

  • Consumer goods maker Marico
  • Tata Group companies
  • Textile major – Welspun
  • Tech Mahindra
  • Infosys
  • Wipro
  • Blue-chips stock, such as TCS and Reliance Industries 

Also, many early-stage venture capital investors are interested in supporting start-ups actively facilitating ESG goals.

How Conneqt Helps With ESG-as-a-Service

We help companies accelerate their ESG adoption with our professional, expert service that helps them focus on their core competencies.  Our structured approach is to Assess, Measure, Quantify and Integrate ESG into your business. Additionally, we take end-to-end responsibility for ESG Plan creation and execution.

Our step-by-step, strategic approach to driving ESG includes the following:

  • ESG Readiness Assessment – We diagnose current ESG readiness by conducting ESG Maturity Survey and generate peer benchmarking and sentiment analysis using the deep tech platform ImGrows from our partner BillionLives.
  • Materiality Assessment – Conduct a multi-stakeholder survey and get a materiality matrix mapped.
  • ESG Strategy – We design and implement your ESG/sustainability strategy, including vision, strategic targets, and implementation action plans.
  • Reporting – We prepare impactful ESG/Sustainability reports following domestic and international standards such as BRSR, GRI, and SASB.
  • Assurance / Verification – Facilitate assurance process with auditing and assurance firms.
  • Performance Monitoring – We help you improve ESG Performance through multiple initiatives.

We always remember that the Customer, Society, and Investors are at the core of ESG.

To Summarize

ESG is now a top priority for organizations worldwide. So, India being the 5th largest economy in the world, has prioritized ESG adoption, with SEBI making it mandatory for the top 1,000 listed companies to submit Business Responsibility and Sustainability Report [BRSR]. With numerous business benefits as an overcome of adopting ESG, the most intelligent business decision is to prioritize it today and seek help from the experts to make the process seamless. 

Conneqt with us to learn how we can help you adopt ESG seamlessly to enable you to reap the multiple business benefits it brings with it.