India’s Top 500 Companies 2022

INDIA’S TOP 500 COMPANIES 2022 31 Each of the three elements of ESG – environmental, social, and governance – comprises a number of criteria that may be considered by socially responsible investors or companies aiming to adopt a more ESG friend- operational stance. The key components of ESG are as given below: „ Environmental: The environmental component of a ESG relates to the impact of company’s operations on the environment and the company’s ability to mitigate the same. In this aspect, the key initiatives include the company’s use of renewable energy sources, its waste management program, the way it handles potential problems of carbon emissions and toxic emissions, measures taken by the company to reduce carbon footprint and deforestation issues (if applicable). It also comprises the company’s attitude and actions around the wider climate change issue and whether it follows biodiversity practices on land it owns. „ Social: The social aspect of ESG mainly covers social relationships, including the one with other businesses, members of the community, and employees. Thus, the social component mainly addresses issues pertaining to the company’s policy towards its employees and their welfare, workforce diversity and inclusion, prevention of sexual harassment, human capital development, employee engagement, health and safety parameters. It also takes into consideration the company’s commitment towards product quality and safety, issues related to customer relationship management, privacy and data security, and responsible investments. „ Governance: Governance, in the context of ESG, pertains to how a company is managed, how well do executive management and the board of directors attend to the interests of the company’s various stakeholders, like shareholders, employees, suppliers, and customers. It also considers whether the company gives back to the community. Governance component covers a company’s internal practices and controls such as business ethics, tax transparency, anti-competitive practices, accounting methods, executive compensation, and board composition. Importance of ESG long-term returns Becoming hallmark of a healthier enterprise Reliable and resilient supply chains Building strong brand value Global investor attention providing access to capital Market expansion Dun & Bradstreet