Building enterprise sustainability requires multi-pronged approach to rethink an organization’s stand on environmental stewardship by analysing its risk management system, net emissions, and other commitments towards environment responsibility. It has become paramount for the CEOs to have a hygiene strategy to sanitize wide variety of data available by investing in the correct talent pool, optimizing direct and indirect costs, business continuity planning, and identifying problems in all the phases of operations, even the supplementary ones.
At this juncture, it’s obvious that sustainability is more than just being environmentally friendly anymore; it’s about ensuring a prosperous future for future generations. This is especially true as we move into an era where climate change is having a negative impact on our society in ways that are difficult to predict or even imagine. The triple bottom line provides for a fairer understanding into the necessity of ensuring a balance between the three P’s of sustainability – people, planet, and profit. The word “planet” basically signifies that we should protect our natural environment (such as reducing carbon emissions, rebuilding biodiversity, desertification). Working together to better the lives of everyone in the community is what “people” is all about (diversity, equity, inclusion). Profit is about opportunities for long-term innovation. It keeps us moving in the direction of a brighter future. We will all gain if we work together to continuously enhance all three criteria. The following article talks about ensuring the balance between people, planet, and profits through the route of upping ESG-led interventions.
Integration of sustainability in business processes
With enterprises realizing the necessity to make sustainability the core of their business processes, senior leadership has started rethinking their business priorities and strategies to streamline their business processes with the sustainable agenda for their corporations. The sense of urgency around establishing one’s business as a responsible business has put the emphasis in ensuring technological integration in an innovative corporate environment. Global industrial leaders have now widely accepted the sustainability as a major driver to facilitate innovation in business models and make the businesses more purpose driven. The emergence of unprecedented changes in the climate and the aftermath caused due to the unfathomable pandemic has made it indispensable for the leaders of the fast-paced and ever-growing corporations to adopt to digital technologies with full vigour strategically and in business processes to further sustainability goals and ensure growth in economic opportunities.
Scaling-up ESG led interventions to further business goals
ESG’s individual components are linked since it is an integral part of how businesses operate. For instance, when businesses try to abide by environmental rules and more general sustainability concerns, social criteria might overlap with environmental criteria and governance. Although most of our attention is on environmental and social factors, governance cannot be hermetically divided, as every leader is aware. Indeed, mastering both the letter and the spirit of the law is necessary for effective governance. For example, preventing violations before they happen by maintaining transparency and open communication with regulators rather than submitting reports formally and letting the findings speak for themselves. On analysing ESG reporting framework, metrics such as energy emissions, waste generation, philanthropic initiatives undertaken, diversity, digital inclusion, technological integration, and ethical governance codes have become essential to ascertain penetration of sustainable values into the business processes and determine the accountability of the companies towards the planet.
ESG investment was first used in the 1960s. Socially responsible investing (SRI), which barred companies or entire industries from investments due to commercial operations like tobacco, firearms, or items from conflict-ridden regions, gave rise to environmental, social, and governance (ESG) investing. The unfathomable corona pandemic has made it crystal clear that human beings are not the masters of the planet but rather stewards of nature. Therefore, it has become non-negotiable for the corporations to ensure ethical decisions in the business processes related to environmental, social and governance aspects. The vast amount of data that is disclosed by the companies as a part of their ESG reporting is far less valuable than the detailed information that is obtained after a series of complicated processes, extensive due diligence, collaborations, and sector-specific insights. There also exists a trade-off between providing the standardized data verses the esoteric detailed analysis which form the basis of the business strategies that can ensure market outperformance. ESG is probably going to have a stronger impact on how stakeholders like consumers and investors as well as investors evaluate companies.
Propelling ESG parameters into the upper echelons of Management
With SEBI introducing the new ESG parameters called the Business Responsibility and Sustainability Report (BRSR), the goal to become a responsible business has become indispensable for the listed entities. The inclusion of leadership indicators in the new ESG reporting framework has put the onus of integrating sustainability into the corporate DNA on the senior management by ensuring having quantitative and standardized disclosures on ESG parameters to enable comparability across companies, sectors, and time. The idea behind the new change is that such disclosures will be helpful for investors to make better investment decisions. Adopting to the new changes in the reporting framework will also enable companies to engage more meaningfully with their stakeholders, by encouraging them to look beyond financials and towards social and environmental impacts.
In sum, we need to establish an ESG culture, an atmosphere in which sustainable and socially conscious business practises serve as the primary drivers of all decisions. Making this transformation cannot be the sole duty of one person; rather, all interested parties must band together for a brighter future. For this, investors must take the lead and encourage the adoption of sustainable policies that improve welfare by the businesses they fund.
Authored by
Umang Vats
