India’s TOP 500 Companies 2021

INDIA’S TOP 500 COMPANIES 2021 108 LAYING THE FOUNDATIONS FOR AN ESG-READY CORPORATE INDIA The outbreak of the COVID-19 pandemic has not only set inmotion the possibility of the greatest recession sinceWorldWar II but has also led to a looming threat of the 21st century’s first sustainability crisis. Given its impact on global economies in such a short space of time, it has led to a renewed focus on climate change and other uncertainties. Truly speaking, the concept of ESG is not really a new one. Its roots can be traced back to corporate social responsibility (CSR), the starting point for businesses taking ownership of their impact on society. Interestingly, India was the first country in the world to make CSR a statutory obligation for corporations. Amid the pandemic situation, ESG-compliant companied were found to bemore resilient as compared to their counterparts in the face of economic shocks and downturns. Therefore, COVID-19 has only reinforced the importance of employee, social and customer wellbeing to a company’s business. As for the non-financial factors, the focus on ESG factors has historically been limited to environmental and governance dimensions. In the current scenario, corporates themselves are keen to change their image as mere revenue-generating and profit- focused entities. The present corporate ecosystem values entities that project a layer of moral duty and responsibility towards the environment, society and society at large. This has added gravitas to the concept of ESG, with investors and other stakeholders demanding greater transparency and accountability in the functioning of business organisations. Hence, amid disrupted supply chains, shrinking revenues and difficult business conditions, companies are rising to the challenge of driving social innovation – be it through ensuring and encouraging employee welfare, providing financial security or essential supplies to the needy or supporting other small businesses. Going forward, ESG is likely to be among the top priorities for corporate boards and investors alike, even as governments across the world pledge to build better economies while addressing social and environmental issues. The Pillars of ESG The practice of ESG investing began in the 1960s, as investors looked for more socially responsible investing options to steer clear of stocks or industries that were involved in unethical business practices such as, tobacco production or the South African apartheid system. In today’s context, ESG involves much broader concepts of ethical, environmental, social as well as personal values; its ambit is also rapidly expanding, as more investors seek to incorporate non-financial values into their investment approach alongside traditional financial analysis. Companies are not onlymotivated by investors/shareholders but also by broader range of stakeholders including customers, employees, suppliers and community members, to switch to more ethical and moral practices. This is one of the prime reasons why corporate sector is increasingly feeling the need to incorporate ESG compliance into their operations. Dun & Bradstreet