India’s TOP 500 Companies 2021

INDIA’S TOP 500 COMPANIES 2021 112 “Laying the Foundations for an ESG-Ready Corporate India” is the theme of this year’s India’s Top 500 Companies event. However, ESG, which in literal terms stands for Environmental, Social and Governance, is a catchall term with no real operational definition. It is used interchangeable with the terms Sustainability and Responsible Business. There is a common misconception that Corporate Social Responsibility (CSR) is ESG – but it’s not the same. A robust ESG program is one that identifies financiallymaterial ESG factors relevant to a company’s business and strategy. These factors can pose risks and/or create opportunities for companies. They need to be measured, managed, and disclosed to key stakeholders such as investors, customers, and regulators. They provide relevant information on a broad range of topics – from human capital management and corporate culture to addressing climate change and improving board governance. In contrast, CSR has its roots in corporate philanthropy. While a CSR program can be a sub-component of a company’s ESG program – highlighting a company’s value and its contributions to community activities – it cannot be a substitute. While the probability of something going wrong due to ESG is low, when it does go wrong, it can have a catastrophic financial and reputational impact on a company’s profitability and strategy. Traditionally risk factors are identified on the probability of them occurring, irrespective of their impact on outcomes. However, if a company’s risk frameworks were expanded to include both probability and impact, ESG factors would start getting the attention they deserve. Afterall, ESG factors can also provide opportunities for companies, like highlighting the need for product innovation to meet changing customer needs or identifying new market that can fuel strategic growth. A good ESG program is considered vital to a company’s success. Yet, there is no good yardstick to measure the quality of a company’s ESG program. While European companies are perceived to be better than their global peers, we are all still at the start of the ESG journey – so there shouldn’t be a misconception that India is far behind. What is important for India is to get ESG right – both as a business community and as a nation! The World Bank estimated that changing weather if left unchecked could shave off over $1 trillion from India’s GDP. Businesses can leapfrog globally by laying a strong foundation to ESG programs rooted in three criteria: Strong leadership from the Chairman / CEO and board of directors; good integration into a company’s business strategy; and adequate funding. Large multinationals are looking to mitigate ESG risks within their operations and global supply chains. As a global supplier of goods and services, Indian companies that adopt good ESG practices stand to differentiate themselves from the competition. It’s my hope that India’s elite companies named in this report have the conviction needed to build strong programs that will make Corporate India shine as a beacon of ESG success globally. And if you are still on the fence about laying the ESG foundation in your company, you may want to ask yourself “How long will we be in business if we don’t invest in ESG?” INDIAN BUSINESSES CAN LEAPFROG GLOBALLY BY HAVING A STRONG FOUNDATION IN ESG Rakhi Kumar Senior Vice President, Sustainability Solutions Liberty Mutual Insurance Dun & Bradstreet