India’s TOP 500 Companies 2021

INDIA’S TOP 500 COMPANIES 2021 110 There have been multiple ESG measurement and reporting frameworks, which have resulted in lack of consistency and comparability of metrics. In this regard, the World Economic Forum (WEF) and its International Business Council (IBC) consolidated five reporting frameworks and published ‘Stakeholder CapitalismMetrics’ to enable meaningful and credible measurement of long-term value creation. These 21 core metrics and 34 expanded metrics can be used by companies to align their mainstream reporting on performance against ESG indicators and track their contributions towards the sustainable development goals on a consistent basis. Growing Significance – The World and India The significance of ESG has been gaining ground in recent years with more institutional investors turning to ESG-compliant companies. In January 2020, BlackRock became a signatory to Climate Action 100+, a global investor engagement initiative, to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change. With this move, the world’s largest asset management firm announced its transition from financial strategy towards more climate-centric focus. There has been growing interest around stakeholder capitalism and the need to create long-term value. Stakeholder capitalism refers to the notion that a company should focus on meeting the needs of all stakeholders and not just the owners. These stakeholders include employees, partners, customers, community and the society. Why ESG is Good for Companies Enhances Transparency Can lead to Reliable Supply Chains Enhances Brand Value Showcases Ethical Approach Attracts ‘Sticky’ ESG Investors Helps Expand Markets Apart from investors and the general members of the community, there is increasing pressure from Governments too. Global sustainability challenges are growing at a faster pace with floods, rising sea levels, demographic shifts posing unprecedented risks and prompting governments to take proactive steps. In fact, in many countries, the government response to COVID-19 has included large stimulus packages that are focused towards achieving more sustainable outcomes and for building a zero-carbon economy. The European Commission proposed that at least 25% of all the EU’s expenditure for the budget period 2021 to 2027 would contribute to climate action. This also applies to the proposed €750 bn coronavirus recovery package it had outlined. In India, although there is no ESG compliance mandated for companies, Corporate Social Responsibility (CSR) has been implemented as a tool to achieve sustainable development goals. As amatter of fact, India was the first country in the world to impose a statutory obligation of CSR for corporations meeting certain criteria. The Government has defined broad areas under which the funding can be channelled with a clear objective of visibly and positively impacting the society. Moreover, there have been efforts to keep the CSR legislation aligned with the United Nations Sustainable Development Goals. By the end of FY19, a total of nearly ` 713 bn had been spent on about 1,05,358 CSR projects, with education, health and rural development being the top beneficiary segments. Another key area receiving significant funds is environmental sustainability. However, between FY15 and FY18, animal-welfare, conservation of resources (including Clean Ganga Fund) accounted for only 3% of the total CSR expenditure, according to the report of the High-Level Committee on Corporate Social Responsibility 2018. Dun & Bradstreet