ESG Champions of India 2024

ESG Champions of India 2024 | 7 [ ESG AND ITS RELEVANCE IN THE CURRENT SCENARIO ] UN SUSTAINABLE DEVELOPMENT GOALS EMERGENCE AND EVOLUTION OF ESG - GLOBAL SCENARIO The spirit underlying the concept of Environmental, Social and Governance investing has been around for decades, but it has gained mainstream attention only in recent times. During the initial stages of Industrial Revolution, there was not much attention given to environmental and social issues. It was in April 1970, when US Senator Gaylord Nelson coined the idea of celebrating Earth Day to push for the inclusion of environment protection into the national agenda that environmental awareness and affirmative action caught the attention of the masses for the first time. This movement eventually led to the creation of the US Environmental Protection Agency (EPA) to tackle environmental issues. The term “ESG” was first used in 2004 in a landmark whitepaper, titled “Who Cares Wins” published by the United Nations Global Compact. The whitepaper led to the 2006 UN Principles for Responsible Investing, which laid the foundations of ESG criteria and made a case for such criteria to be incorporated in the financial evaluation of companies. The effort was aimed at developing sustainable investments. At that point in time, about 63 investment companies signed up with US$ 6.5 trillion in assets under management (AUM). As of today, there are more than 4,900 signatories with AUM to the tune of around US$ 121.3 trillion. Later, in September 2015, the 2030 Agenda for Sustainable Development, featuring 17 Sustainable Development Goals (SDGs), was launched by a UN Summit and adopted by all member nations. These SDGs, which provided the blueprint to achieve a better and sustainable future included climate change, poverty, inequality, and environmental degradation as some of the key action points. With the outbreak of Covid-19 pandemic towards the end of FY20, the world was brought to a standstill with recessionary trends never seen before since the time of World War II hitting the global economy. For the investor community and climate activists, the pandemic also marked a wakeup call on climate change and a watershed moment in terms of a more sustainable approach to investments. The crisis gradually led to a renewed focus on ESG, by bringing to the fore the linkage of social and environmental risks and the importance of strong governance in addressing such risks. Additionally, the pandemic- driven economic downturn led to increased scrutiny of companies’ financial and operational resilience, which is closely tied to their ESG performance. The pandemic also accelerated trends towards remote work and digitalization, which have increased the importance of data privacy and cybersecurity, both of which are ESG-related issues. Dun & Bradstreet