India at Crossroads: Embracing ESG for a sustainable future

The Securities and Exchange Board of India (SEBI) mandates that the top 1,000 listed companies report on ESG parameters. This regulation sets a vital precedent for corporations to align with global sustainability trends. Moreover, between 2020 and 2022, ESG reporting among India's top 1,000 companies surged over 160 percent, a testament to the urgent need for effective ESG strategies.

Also read: Powering sustainability through partnerships

Pain Points: Bridging Gaps in ESG Knowledge and Implementation

Despite the growing recognition of ESG's importance, significant gaps exist in businesses' awareness and understanding of ESG principles. The challenges are manifold: a shortage of skilled ESG professionals, inadequate data collection and reporting mechanisms, and difficulties aligning with complex evolving regulations all impede progress.

Indian firms pioneering ESG initiatives encounter hurdles in capturing and reporting essential ESG data, notably Scope 3 emissions from their supply chain. The lack of resources and existing knowledge results in a reliance on one-size-fits-all approaches, which fail to meet the unique needs of different sectors or organisations. A critical transformation is required to develop tailored strategies catering to various industry needs, promoting effective decarbonisation and sustainability.

Also read: 'Outsourcing' ESG: How mandatory disclosure is affecting supply chains

Key Strategies for Advancing ESG Practices in India 

Firstly, there is an urgent need for more consulting firms specialising in ESG practices to support Indian organisations aligning with SEBI regulations. Firms can take the lead by offering a complete suite of consulting services that address the unique challenges faced by diverse businesses. Secondly, they can provide a more profound understanding of ESG practices by offering comprehensive education and training programs. The training initiatives should target employees, senior leadership, and stakeholders alike. Firms can work in collaboration with universities to facilitate the development of certified curricula to prepare the next generation of C-suite leaders to champion ESG efforts.

Thirdly, change management frameworks that are the core of ESG must be customised to address the goals effectively and help businesses adapt to adjustments of all kinds. Change management should create the engine room for the ESG strategy by spreading awareness for change, setting realistic targets, enhancing communication and engagement strategies, ensuring effective stakeholder collaboration, monitoring the change, and continuously improving whenever needed. Given India's diverse socio-economic fabric, versatile approaches are necessary to engage multiple stakeholders effectively. Fourthly, specialised knowledge in Business Responsibility and Sustainability Reporting (BRSR) can help organisations navigate regulatory requirements effectively. An expert grasp of data collection and analysis processes is indispensable for transparently showcasing a company's sustainability initiatives.

Furthermore, implementing streamlined and automated data collection processes will significantly enhance the efficiency of ESG reporting. Organisations should adopt ESG management software that simplifies the documentation and reporting process, allowing for more accurate and timely disclosures. Lastly, by consolidating ESG-related data and integrating it into decision-making processes, companies can enhance compliance and optimise their ESG strategies. A data-driven approach to sustainability fosters transparency and fortifies stakeholder confidence, ultimately driving the success of ESG efforts across the Indian corporate landscape.

Also read: Why decarbonisation is so hard

The Global Spotlight on India

As the world increasingly gravitates towards sustainable development, India stands at a pivotal crossroads. The nation's commitment to ambitious ESG targets reflects a response to global climate imperatives and an acknowledgement of the economic and reputational opportunities that arise from responsible governance, environmental stewardship, and social accountability. 

With its projected growth as the largest emitter by 2030, India has a unique chance to redefine what leadership in sustainability looks like transforming its challenges into advantages while positioning itself as a frontrunner in the global ESG landscape. The Indian ESG consulting market is poised for considerable expansion, driven by regulatory mandates and an emerging corporate consciousness regarding environmental and social responsibilities.

However, realising this potential requires concerted action from all sectors—government, industry, and civil society—to bridge existing knowledge, capability, and implementation gaps. By investing in education, fostering tailored strategies for change, and embracing innovative solutions, India can not only meet its decarbonisation targets but also inspire other nations on their sustainability journeys.

In this global moment of urgency and opportunity, India has the chance to shape a sustainable future, showcasing that its path to progress is not just about economic growth but also includes a commitment to preserving the planet for future generations. The world is watching, and India has the opportunity to become a beacon of sustainable development that leads us all towards a brighter, greener future.

 

This write-up is part of the General Management Program (GMP) at the Indian School of Business (ISB). The program is designed to cultivate future-ready leaders with the technological acumen and interpersonal skills to navigate complex business landscapes. 

Anjal Prakash is a Clinical Associate Professor (Research) and Research Director at Bharti Institute of Public Policy, Indian School of Business (ISB). He teaches sustainability at ISB and contributes to IPCC reports.

Jitendra Sharma is a Consulting Product Manager at the Australian Election Commission.

Shashank Mittal is a business leader who has worked in hospitality and health-tech startups in India and Southeast Asia.  

Avneet Singh Bassi is the Department Head of Software Engineering at Forvia Hella India Lighting Ltd.

Gagan Chourasia is an automotive aftermarket marketing expert working with CNH Industrial, Noida, India.

Dipti Sharma leads the Formulation of Product Portfolio and Strategy at MSN Labs, Hyderabad.

Manoj Saini is a Management professional at NVT Power.

Anup G Nair is a Core team member at Piramal Foundation.

T V S Vasudeva Rao is Senior Vice President of Marketing at SBILife Insurance Co Ltd.