ESG Compliance – Conscious and Continuous Steps in India
As the newbie in the UKIBC team and after seeing all the excellent blogs written recently from my colleagues, I thought I should post my first UKIBC blog. I joined UKIBC in April 2021 having previously worked across Government in India. For my first blog I wanted to concentrate on a matter very close to all of us at UKIBC which is ESG or Environment, Social and Governance.
Inclusive growth and sustainable development are indispensable ingredients for both India and the UK. We all want a better quality of life, high environmental standards and good governance structures. The underlying perspective and fundamentals of the ESG principles provide the foundation to develop robust frameworks within the larger economic context. They enhance the scope of building and institutionalising practices that assure a commitment as well as responsibility towards a sustainable life.
The Government of India implanted ESG in its system over a decade ago with the introduction of Corporate Social Responsibility requiring all companies to support activities that address the larger social issues in the society. This formally set the stage for businesses to take social responsibility in India and showcase to the world that India meant business, sustainable business! The growing needs were thereafter addressed by the National Voluntary Guidelines on Social, Environmental, and Economic Responsibilities of Business (NVG) in 2011. The NVG advocated a comprehensive set of nine principles as the code of conduct of ESG fundamentals in the Indian context. Emphasis was laid on disseminating and operationalising these principles by focusing on governance structures, sustainable policies, procedures and practices. The new National Guidelines on Responsible Business Conduct, urges greater participation across businesses and business partners/collaborators towards the path of sustainable development.
In the financial sector, the Securities and Exchange Board of India (SEBI) introduced in 2012 the Business Responsibility Reports (BRRs) in the spirit of widening the ESG reporting practices. It became mandatory for the top 100 listed companies based on market capitalisation to report BRR in their Annual Report. In 2015 scope of reporting was expanded to the top 500 listed companies. To keep up with the agenda of sustainable development in line with the UN’s Sustainable Development Goals (SDGs), the most recent circular issued by SEBI announced that the BRR has been modified to Business Responsibility and Sustainability Reporting with compliance reporting for top 1000 listed companies. It prescribes disclosure of many relevant and critical issues such as resource usage, GHG emissions, circular economy, waste generation and management, value chains and communities. With these additions, it not only establishes better accountability and transparency but ensures businesses keep SDGs at the heart of their business planning and investments.
India has come a long way after taking continuous and conscious steps towards ESG compliance. The transparency, benchmarking and disclosures steps undertaken so far have ensured that business planning and performance is engraved in sustainable development thereby making it beneficial for everyone. Upon joining UKIBC, I was fascinated to find that many UK companies have bought into the ethos of sustainable development, as highlighted in UKIBC’s report ‘Supporting India’s Sustainable Development Goals: The Socio-Economic Impact of UK Businesses in India’. Going forward, I believe these compliance endeavours will strengthen the ESG impact factor for business in both countries.