With sustainable development and climate change movement gaining momentum, the sustainability reporting landscape is rapidly changing and becoming more demanding of companies to be more transparent with stakeholders.
Five forces: Planet, People, Customers, Governments, and Investors will operate on innovation, changed mindsets, and a commitment to a better tomorrow. Unless all of us pull together, we won’t achieve the exponential results that we are capable of delivering. The Shangri-la of Reporting will have integrated thinking and a love for the planet reflected fully!
A method by which businesses of all sizes can complement these demands is by adopting the concept of ESG in their functioning. Environment looks at the impact of the company on the greenhouse effect (carbon footprint), water consumption, and waste management. Social looks at the company’s interaction with the stakeholders it engages with both internal and external, and the reputation it fosters. Governance comprises the policies that lead to effective decision-making within the organisation.
The following are the advantages that investors will get if business follow ESG practices.
Competitive Advantage: Companies that take steps to enhance diversity, improve health and safety policies, give back to their communities, and following sustainable environmental policies strengthen their competitive positions.
Long-Term Growth: Companies with strong ESG initiatives focus on improved risk management and innovation. This provides the benefit of protection during an economic or social crisis.
Increased Opportunities For Businesses: Pursuing sustainable and inclusive business models have the potential to unlock economic opportunities worth at least $12 trillion a year by 2030 and generate up to 380 million jobs.
Efficiency And Cost Savings: ESG fosters cleaner and more efficient practices that drive down a company’s operating costs and environmental footprint.
The readiness of corporate India for the ESG movement is evidenced by the dynamic introduction of the Business Responsibility and Sustainability Report (BRSR) by the Securities and Exchange Board of India (Sebi), which encompasses requirements from global standards, such as the Global Reporting Initiative (GRI) and the Sustainable Development Goals (SDGs). India is certainly enabling the corporate commitment to creating a better future for our next generations. BRSR is an effective compliance and communication tool for assisting companies in their non-financial disclosures and helping bring comparability among companies to guide investors and other stakeholders.
These rapid changes demand the creation of tools to help companies in their compliance. Here, a sustainability platform/ tool can help:
1] Companies assess where it stands as per the global best practices, as per the global guidelines on sustainability.
2] Companies understand the gaps between its performance and the guidelines.
3] Implement enhanced actions to continuously improve and reach global best practices.
The key concerns of focus are:
1) Science-based commitments and targets.
2) Materiality and review of priorities.
3) Measurement of data sets.
4) Elimination of Greenwashing.
5) Clarity and purpose of processes, outcomes, and end reports.
6) Attest the accuracy of end results.
The need to harness the benefits that technology offers becomes important as it is one of the biggest drivers of business change. Digitalisation helps the new age reporting become facile and accurate at all times. It enables the scalability of solutions. Technology helps facilitate organisation-wide involvement in forms of digital workflows for execution.
Likewise, the materiality or parameters of analysis can be customised for every business unit, based on their sphere of operations. This assists in accurate sustainability reporting by companies to all stakeholders. Embracing ML-AI-Analytics, IoT, Web 3.0, and Blockchain and a capability to stimulate outcomes as risks emerge on the horizon.
One such sustainability tool that’s pioneering in the ESG sector is GovEVA. This is an ESG Lifecycle Management software that aids companies in their end-to-end ESG journey through a Saas-based platform, turning the value creation power of ESG into measurable outcomes.
Facilitating the concept of ESG throughout an organisation is a very important task for each business that the entire management of a business must comprehend. Right from the Board of Directors to the employees, supply chains, and end consumers, all should be enlightened about this concept if the business truly wants to move in a sustainable direction.
The author is an independent director at L&T Finance Holdings.
(Disclaimer: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.)
