Environmental, Social and Governance (ESG)

ESG refers to environmental, social, and governance factors considered by companies when managing their operations, and investors when making investments, in respect of the risks, impacts, and opportunities. The word ESG was coined in 2004 in a report prepared by the United Nations Global Compact and the Swiss Federal Department of Foreign Affairs. ESG has gained increasing attention in the last few years (mainly after the Covid-19 pandemic) with many investors investing only in those companies that provide ESG performance reporting. It has highlighted the need for a more sustainable approach for companies to build their ESG performance to manage risks and build resilience. ESG may include the following issues but is not limited to.

• Environmental issues: potential or actual changes to the physical or natural environment (e.g. pollution, biodiversity impacts, carbon emissions, climate change, natural resource use); 
• Social issues: potential or actual changes in surrounding community and workers (e.g. health and safety, supply chain, diversity, and inclusion); and 
• Governance: corporate governance structures and processes by which companies are directed and controlled (e.g. board structure and diversity, ethical conduct, risk management, disclosure, and transparency), including the governance of key environmental and social policies and procedures.

We, Corpseed professionals, can assist your organizations in achieving ESG goals. We work with you to create & sustain long-term value and manage the risks & opportunities to build a resilient business. Good ESG practices help in better management of risks to businesses, communities, and the environment. They also help companies boost their reputation, reduce costs, and strengthen stakeholder relations.

As a matter of fact, there is a growing body of evidence demonstrating that companies with robust ESG practices tend to financially outperform their peers, attract and retain talent, achieve higher productivity at work, create competitive advantage, improve company reputation, better prepare for uncertainty, avoid regulatory as well as activist interventions, attract customer loyalty and maintain their social license to operate.

Our approach will be to use relevant frameworks and standards for the review process or due diligence to prepare the ESG reports as per the requirement of the company, viz. SASB (Sustainability Accounting Standards Board), GRI (Global Reporting Initiative) standards, UN Sustainable development goals and frameworks set up by international institutions such as International Finance Corporation (IFC), etc. The general steps will be as follows: 

• Literature Review
• Site inspection 
• Identification of potential material risk and financial impact, etc. 
• Risk mitigation and corrective action.

• Creating Long-Term Value:

Information on ESG management and performance is important to bridge the information gaps existing between market participants viz. companies, investors, and other stakeholders. These gaps impact may impair the ability of companies to access capital, transition to more sustainable business practices, and support building a resilient economy.

Investors are increasingly paying more attention to ESG. By integrating ESG management and performance into investment decisions, financial markets allocate capital to support sustainable societies and resilient economies.

Moreover, the Securities and Exchange Board of India (SEBI) has made it mandatory for the top 1000 listed companies (by market capitalization) for sustainability reporting using the newly developed BRSR (Business Responsibility and Sustainable Reporting) principle from the financial year 2021-22 as mentioned in the notification dated 10th May 2022 (business responsibility and sustainability reporting by listed entities). 

• Optimizing Risk Management:

ESG mismanagement can lead to serious financial costs and reputational damage. Globally, sustainability challenges are becoming even more material, reaching thresholds of importance to companies’ long-term strategies, to their customers, and to external stakeholders. From increasing demand for natural resources to economic disparity to climate change, companies are facing a more complex array of trade-offs and risks across their value chains. ESG mismanagement can have a devastating financial impact. 

• Ensuring Regulatory Compliance and Creating Competitive Advantage

Policymakers are issuing new rules on ESG factors, impacting industrial processes and value chains. Companies already embed these components in their strategy and management plans have a competitive advantage by lowering their costs of compliance.

• Refining Corporate Purpose and Addressing Stakeholder Priorities

Investors, business associations, and even governments are reconsidering corporate purpose, and board members are expected to revisit the mission, vision, and purpose of the companies they serve. The concept of stakeholder capitalism is pointing to a new direction of economic development. “Stakeholder capitalism is a form of capitalism in which companies seek long-term value creation by taking into account the needs of all their stakeholders, and society at large.

ESG impacts can influence all parties along the value chain due to their interconnectedness and dependency. The adoption of ESG aids to progress from a risk management practice to a driver of innovation and creates new opportunities for business and society. The competitive advantages of ESG are as follows:

• Reduced Risk: ESG identifies the risks and aids in mitigating risk to the enterprise.
• Increased Opportunities to Growth: ESG can help the enterprises in identification of new markets, customers, and products/services.
• Organizational Resiliency: A well-prepared ESG can anticipate and adapt to technological, customer, and regulatory changes.
• Reputation & Stakeholder Trust: With increased stakeholder trust, the corporate will have a better reputation.
• Workforce Productivity: Engages and empowers employees, increases retention, and attracts the best talent.

ESG opportunities and risks are to be integrated as part of the company’s strategic objectives, day-to-day activities, and risk management. The best solution to achieve it is the use of an environmental and social management system (ESMS).  ESMS is having nine elements READ MORE

ESG has a significant positive impact on fundamental business issues related to the long-term success of any company. Corpseed is here, to guide you with its professionals to integrate ESG and sustainability into your business strategy. Creating an ESG framework can provide a competitive advantage as ESG performance improvements directly influence operational/commercial/reputational/etc. risks & opportunities. Our team will work side by side at each step of your ESG transformation and can guide you

• ESG Reporting 
• Mitigate risk associated with the business either related to E&S components or Governance. 
• Improve decision-making and increase the effectiveness to deliver long-term value. 

Also, we can provide you with a single-window solution to prepare the ESG report or framework as well as guide your business to be sustainable through its other services like ESMS, ESDD, etc.