International ESG Day 2023: As Indian companies prepare for a future where ESG preparedness is not just a choice but a necessity, the path forward involves a comprehensive rethink of strategies, an embrace of technological innovation, and a commitment to collaborative, transparent, and sustainable practises
In the rapidly evolving landscape of Environmental, Social, and Governance (ESG) standards, Indian corporations are at a pivotal juncture. The intertwining of sustainability performance with climate action is now more pronounced, influenced significantly by an intricate system of regulatory rewards and penalties. This changing dynamic necessitates a multifaceted approach towards investment in sustainable practises throughout the corporate value chain.
At the forefront of this shift is the recognition that a one-size-fits-all strategy is no longer viable. There is a need for highly tailored strategies, specific to the maturity levels of different sectors and industries. A comprehensive strategic refresh across corporate India is essential, encompassing not only the scale and size of operations but also integrating unique, sector-specific nuances.
Key to this strategic overhaul is the innovative use of technology in ESG data management. The concept of "sensorisation" and "intelligentisation" involves employing advanced tech solutions to glean real-time, actionable insights from vast arrays of ESG data. This technological leap is expected to be a cornerstone in the realisation of more nuanced and effective sustainability strategies.
Moreover, the onus of driving these initiatives should not be limited to operational levels but should also involve an enhancement of capabilities at the board and leadership levels. This top-down approach is crucial for setting a clear direction in sustainable value creation.
The growing pressure on businesses to establish ambitious emission reduction targets and weave sustainability into the fabric of corporate strategy offers a significant opportunity. This transition is not just about meeting regulatory requirements but also about harnessing innovation and technology for sustainable growth. Engaging employees and stakeholders in this journey is equally important, fostering a culture of sustainability across all levels of the organisation.
To effectively navigate climate change risks and stride towards net-zero targets, businesses must consider several critical dimensions:
Incorporating sustainability into corporate strategy: It's imperative for companies to integrate sustainability goals into their core business strategies, ensuring these goals translate into tangible actions.
Strategy execution: Executable strategies in key areas like energy consumption, waste management, recycling, and reuse are vital. Breaking down these strategies into annual and quarterly targets, with designated internal champions, is essential for effective implementation.
Ambitious emission reduction targets: Aligning with the Paris Agreement to limit global warming to 1.5°C, companies should set science-based emission reduction goals that encompass their entire value chain, including supply chain and product usage.
Disclosing climate-related risks and opportunities: Transparency in disclosing climate-related risks and progress towards emission reduction is crucial for stakeholder trust and effective risk management.
Collaboration across the ecosystem: Achieving net-zero targets demands collaboration across various sectors, including governments and other stakeholders. This involves a collective commitment to sustainability goals and the development of innovative low-carbon solutions.
Innovation and technological investment: To reduce greenhouse gas emissions and achieve net-zero targets, companies must invest in research and development of new technologies and sustainable solutions.
Employee and stakeholder engagement: Companies must involve employees and stakeholders in sustainability efforts, fostering a culture of sustainable practises and awareness.
Underpinning these efforts is the role of corporate governance, which is essential in managing climate change risks and achieving net-zero targets. The governance models of today and tomorrow must extend beyond traditional issues to encompass sustainability, reduce carbon footprints, and ensure fair and decent working conditions.
As Indian companies prepare for a future where ESG preparedness is not just a choice but a necessity, the path forward involves a comprehensive rethink of strategies, an embrace of technological innovation, and a commitment to collaborative, transparent, and sustainable practises. This journey, while challenging, presents a unique opportunity for corporate India to lead in the global sustainability arena.
(Viral Thakker, Partner and Sustainability leader, Deloitte India.)