How Indian Corporates are Putting Planet First - Entrepreneur

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The awareness of ESG issues and targeting goals beyond maximising profits and minimising risks is now a growing trend among corporates around the world. And this trend is now catching among Indian companies too.
While industrialisation has brought newer opportunities, there is no denying the fact that it also led to challenges like fast increasing global temperatures, natural calamities, extreme weather, loss of biodiversity, disease transmission and widening inequality. A sector-wise data shows that a whopping 56% of the emissions is accounted for by energy industries, followed by manufacturing and construction ones. The transport accounts for 13% share in it.
According to S&P Global , India is likely to have over 52% of its gross domestic product (GDP) exposed to physical risks like wildfire, flood, sea” level rise, or storms by 2050. Clearly, embracing sustainability has become an imperative for businesses nowadays.
The good news is that the awareness of ESG issues and targeting goals beyond maximising profits and minimising risks is now a growing trend among the corporates around the world. And this trend is now reflected among Indian companies too. Much like their global counterparts, they are also paying attention to the ESG framework. The latter, an acronym for Environment, Social and Governance, is a concept that makes the business measurable and quantifiable through a set of standardised criteria, unlike much discussed CSR, which is just about making a business responsible and accountable for its activities. So, how are Indian companies faring on the sustainability front? While in the last one year companies have improved on their ESG scores, they are low on disclosures, according to the recent Sustainability Yearbook 2022 released by Crisil.
Of the 586 companies covered, only one-fifth published a detailed sustainability report in fiscal 2021. While FMCG and hotel industries were high on disclosures, companies that showed some glimmer of hope included auto OEMs, lending and cement sectors. In the cement industry, almost half of the companies analysed disclosed the clinker ratio, while two-thirds of the companies analysed in the auto space had EVs in their portfolio. Three out of five companies in the textile sector disclosed the usage of recycled or sustainable source material. But only one adopted the Sustainable Apparel Coalition (SAC) HIGG Index, an industry standard to measure sustainability. The REITs put up a good show with 100% of them making quantitative disclosures on green building certifications in their portfolio.
However, of the total companies covered, merely 20 per cent made it in the ‘strong’ and ‘leadership’ matrix, while a whopping 80 per cent or 464 companies were placed as ‘weak’, ‘below average’ and ‘adequate’. Entrepreneur India reached out to some of these companies from IT space to Pharma to Cement ( who figured in the leadership and strong matrix of Crisil Sustainability Yearbook 2022) to understand how they are walking the talk on maximizing their organisation’s environmental, social, and governance (ESG) impact.

INFOSYS
This IT giant has not only made it to the Crisil’s ESG rankings for a second year in a row, but also finds a place in the Dow Jones Sustainability Index, which assesses the ESG performance of companies globally. Starting its climate action journey in 2008, the company turned carbon neutral in 2020, 30 years ahead of the timeline set by the Paris Agreement. By 2030, it aims to reduce absolute Scope 1 and 2 greenhouse gas emissions by 75% and scope 3 emissions by 30%, recycling 100% of used water, and zero waste to landfill.
The company’s social commitments include more women in the workforce in the future. Says Bose Koorliyil Varghese, Head of Green Initiatives, Infosys, “We plan to have 45% women in the workforce by 2030. Also, we want to enable digital skills to over 10 million people, energize local communities through flexible work options, empower over 80 million people with tech-for-good programs, and facilitate best-in-class employee wellness. Our governance ambitions include a diverse and empowered board driving compliance, integrity, and transparency.”
The company is committed to leading data privacy standard and industry leadership in informal security practices. Many of these goals are directly measurable, adds Varghese.
MARICO
In the FMCG space, a number of initiatives are being taken like reduction in
lamination based paper packaging, eliminating the use of single plastic, usage of recyclable packing material and water conservation.
Marico’s water stewardship program, ‘Jalashay,’ focuses on replenishing more water for the community than that consumed in its own operations, year-on-year. Through this, it has successfully created 263 crore litres of water conservation capacities pan-India, till date which is over three times of total water that the company consumed in its operations in FY22. “We aim to build 412 crore litres of total water harvesting capacity across India by FY25,” says Saugata Gupta, MD and CEO, Marico.
The FMCG company also launched the ESG 2.0 framework this year. Through this it plans to phase out hazardous substances such as PVCs while introducing at least 30% r-PCR in the packaging portfolio, wherever applicable. By FY25, it also aims to have a 100% recyclable, reusable or compostable packaging portfolio. “In parallel with this, we have set our net zero emissions target in global operations by 2040. In India, we aim to achieve net zero in operations by 2030, ” adds Gupta.

DR. REDDY’S LABS
The pharma giant identified its first set of six ESG goals in 2010 for the following decade. By 2020, it had met three goals fully water consumption, waste reduction, and stopping hazardous waste and three partially-water neutrality, energy consumption and renewable energy. It became the first pharma company in India and the third in Asia to join the Science-based Targets initiative (SBTi) for reducing the carbon footprint. Recognised by the S&P Corporate Sustainability Assessment, the Dow Jones Sustainability Index, Frost & Sullivan TERI among others, it is the only Indian pharma company to be featured on the Bloomberg Gender- Equality Index. Its ESG goals for 2030 include 100% renewable power, carbon neutral
in direct emissions (Scope 1 & 2), 12.5% reduction in indirect carbon emissions (Scope 3) and being water-positive by 2025.
For external patients, it aims to triple existing reach to serve over 1.5 billion
patients by 2030, 25% of new launches to be first to market by 2027. Internally, it aims to contribute to a fairer and more socially inclusive world with at least 35% women in senior leadership. On the governance front, it is focused on enhancing trust with its stakeholders.
“This year, we have renewed our goals for the next decade. Today, commitment to ESG demands a mindset change – the focus must move from being “less bad” to doing “maximal good”, from being incremental to being bold, from merely focusing on mandatory corporate social responsibility to making sustainability core to business and strategy, says G.V. Prasad, Co-Chairman & Managing Director, Dr. Reddy’s.

MINDTREE
The IT company scores high on ESG goals and has won several awards for the same. All its campuses are zero discharge locations. It implements WOW initiative- a program where the recyclable waste is scientifically disposed and sent for recycling. Through its 3R strategy (Reduce, reuse, recycle), it ensures minimal freshwater usage. The rainwater harvesting and installaton of recharging pit initiative at its Bengaluru facility helped it reduce private water purchases by 12.370 KL in FY22. It is committed to invest in green new buildings at all its locations, increase EV vehicles, and a large-scale data command center.
The company ensures 100% compliance on laws and regulation. It has also promoted women leadership development and career progression programmes; and impacts four million lives globally through improved access to medical treatment for persons with disabilities. It has also introduced vocational training programmes to enhance employment opportunities, promote education through digital skilling and teaching initiatives, and encourage employees to volunteer for a cause close to their heart.
Going forward, it aims to achieve carbon neutrality by using 100% renewable energy for internal operation by 2030, a whopping 30% reduction in scope 1 & 2 emissions and 20% reduction in scope 3 emissions by 2025. It has also has a target of inclusion of women to the tune of 40% in the workforce and 20% in senior management by 2030. “Our strong ESG framework and governance hold us accountable and ensure that we stay the course in terms of translating our goals into visible impact,” says Paneesh Rao, Advisor, Sustainability, Mindtree.
ULTRATECH CEMENT
Cement industry is a massive Co2 emitter. However, manufacturers are taking several steps to lower emissions. They are adding solar and wind power generating capacities along with utilising every potential of waste heat recovering system (WHRS) in the plant. They are also pushing for blended cement to reduce clinker ratio to reduce emissions. UltraTech cement, the industry leader, is committed to Net Zero Concrete by 2050 under the GCCA Climate Ambition 2050 and to the Science Based Targets Initiative (SBTi) of reducing Scope 1 CO2 intensity by 27% by 2032 from the 2017 levels. “Our work with customers has resulted in reducing more than two million tons of Co2 in FY22 alone. Our decarbonization efforts have resulted in a 9.1% reduction of Scope 1 Co2 intensity against our SBTi target,” says UltraTech spokesperson.
Apart from this, it has taken measures like rain water harvesting & water
recharge within its manufacturing units (mines, plant area and unit residential colonies) as well as through watershed projects in the local communities around the units, resulting in giving back 73+million m3 of water to nature in FY22 alone making it 3.8 times water positive.

It launched a sustainable supply chain called ‘Project Sahyog’, in 2019 and integrated ESG criteria into it. “Our focus is on ‘accelerating ESGbility, strengthening sustainability’, wherein we are reporting on the comprehensive measures taken and planned for the future to enhance our ESG quotient and ability to sustain. We have now embarked on the ABG ‘Sustain-ability Journey 2.0’. We have committed to reduce Co2 intensity by 22.2% by 2030 from 2017,” adds UltraTech Spokesperson.
In the textile space, Welspun group, is making great strides by restoring
ecological balance in the domains of air, water and land. It is reducing its energy & carbon footprint through dedicated efforts towards energy efficiency, cleaner fuels and replacement of virgin raw materials with recycled raw materials. Moreover, it is monitoring its Scope 1 & Scope 2 emissions and reporting in the public domain. It has also initiated Scope 3 emissions calculation as per the global standards and shall report the same. Its facilities are located in waterstarved zones and processing operations are highly water-intensive, making it imperative to be judicious in its usage. It has implemented a unique project in the area of water management at Anjar through the establishment of a 30 MLD Sewage treatment plant to meet its water requirement.
The trend of sustainability is being witnessed in brick manufacturing companies too. Recently, Jindal Bricks, one of India’s leading manufacturers of superior machine-made bricks and other construction materials, introduced Sensilo – a premium brand of specialized cladding tiles and pavers. With the construction industry being one of the biggest users of natural resources, more and more builders and homeowners today are prioritising sustainable construction, using recyclable and renewable materials, and minimizing energy consumption and waste production. The bricks are made entirely using natural ingredients. They are completely free of any chemicals or even artificial colors, giving them their natural look and texture. And when used in buildings, they also help significantly bring down the toxins or allergens released, making for a healthier and more environment-friendly home.

NEW NORMS
Till now, the top 1,000 listed companies in India (by market capitalisation) had to publish a relatively shorter ‘business responsibility report’ ( BRR) for ESG disclosures. But from the financial year 2022-2023, they will need to prepare a ‘business responsibility and sustainability report’ (BRSR), containing detailed disclosures. The latter has to be a part of the annual report, which gets notified to the stock exchanges, published on official company websites, and separately provided to shareholders.
While both the BRSR and the BRR were designed around the nine business
sustainability principles identified by the Ministry of Corporate Affairs in their voluntary ESG guidelines published in 2011, the BRR was not well received (since it based its ESG disclosure requirements almost entirely on the nine sustainability principles from the MCA ESG Guidelines, providing very little meaningful ESG data) The BRSR, on the other hand, built upon the framework of the MCA ESG Guidelines, derives inspiration from international reporting frameworks like the GRI standards, and provides for detailed ESG data, both qualitative and quantitative.
According to experts tracking the sector, BRSR was much needed. “While sudden changes in reporting requirements may require updating specific processes, policies and tracking of quantitative KPI as the number of questions is increased making it more comprehensive, it was needed for Indian listed companies. BRSR creates a standalone compliance requirement by integrating all major reporting standards and will be pushing businesses to contribute positively rather than focusing on neutrality which will require performance from different stakeholder groups.” says Shailesh Tyagi, Partner, Climate Change and Sustainaiblity, EY India.
WHY ESG MATTERS MORE TO BUSINESSES THAN BEFORE
Attention to ESG issues is fast becoming critical to long-term competitive success of businesses nowadays than earlier when it was considered merely a public relations tactic. Says Prasad, “The definition of ESG has evolved over the years. Today, ESG must go beyond ticking off the compliance checklist At the same time, taking complete ownership of the impact and consequences of its business in every way, working on creating positive returns for all stakeholders, thinking in terms of long-term value for the business and society, and partnering with the relevant groups to drive systemic change, all need to come from within organisations.
Adds Tyagi, “For years, activists have used governance flaws as a campaign and proxy battle tool. Companies that proactively address ESG issues can simultaneously lead the industry and protect themselves from activist intervention.”
KEY TO INVESTMENT DECISIONS
The investor focus has changed from ‘profit to the source of profit’ down the years. They’re keen to know the impact of businesses on society at large. ESG can impact a company’s market valuation and is likely to be a critical factor to gauge IPO readiness of the company. Investor roadshows and offer documents address ESG matters separately. For instance, the board of Life Insurance Corporation reconstituted its Risk Management Committee to seek an ESG rating by including the formulation of a Risk Management Policy for identification of ESG-related risks prior to listing. “Major institutional investors are looking for businesses focusing on accepting ESG issues before investing,” says Tyagi.
“Market forces, investors, and regulatory regimes are increasingly pushing for ESG action. Access to capital, cost of capital, stock price, IPO valuation, and market cap – all are within the sphere of influence of ESG today and will increasingly be so going forward,” says Varghese.

“In the current environment, clients, governments, investors, regulators as well as existing and prospective employees are increasingly looking to partner with organisations who have ESG as an inextricable part of their strategy,” says Rao. ESG investing offers Indian investors the ability to express their ESG preferences in their investments. “Our strong ESG credentials and performance made it possible to have a good response from global investors,” says UltraTech spokesperson.
ATTRACTING & RETAINING HUMAN CAPITAL
Attracting human capital has often been an overlooked source of growth. But studies show a strong ESG proposition can help companies attract and retain quality talent and motivate employees, increasing overall productivity. “To attract and keep customers and employees, management teams must embrace the macrotrend of ESG. Businesses can spot strategic opportunities and overcome competitive challenges better when they understand the value of adapting to changing socioeconomic and environmental conditions,” adds Tyagi.
Organisations are realising this. “Millennials, who represent the workforce of tomorrow, are increasingly choosing to engage with organisations that have a significant sustainable impact,” adds Gupta.
Says Prasad, “Strong ESG practices in an organisation mean a culture of transparency, trust and pursuit of excellence. Employees feel connected
to their organisation when it has a clear sense of purpose and addresses societal challenges.”
VALUE CREATION
A strong ESG proposition helps companies tap new markets while expanding existing ones. “Our ESG-first culture is proving to be a big asset for us today. Our proactive approach and ESG risk management has helped us future-proof our business from impending climate and other ESG regulations across markets,” says Varghese.
For Mindtree, the strong ESG programme has helped it reduce the cost of business operations and improve efficiency, “The proactive efforts in this direction and enhanced transparency through timely reporting have helped garner support from the government and standards bodies, create market
differentiation, and enhance value creation for customers, investors, and
shareholders,” says Rao.
ROOM FOR MORE
No doubt, the Indian companies are taking strides to improve communities and the world, but they still have a long way to go. According to Crisil, most of the companies covered in its report didn’t have a roadmap to achieve Net Zero and those that do lack short or medium term targets and tracking.
On its part the government has been taking steps such as the 2070 Net Zero
goal, a sovereign green bond issuance, but there is room for more to create a favorable environment for ESG in India. One is that smaller companies should also start thinking about ESG reporting, especially those looking for private investments from VC or PE funds, as the reporting remains a priority only for large-listed companies as of now.
Second, more disclosures outside of BRSR should be made. There are very few mandatory ESG disclosure requirements in India like disclosures regarding energy consumption in the annual reports of companies and statements in board reports regarding compliances with laws prohibiting sexual harassment.
Soumya Duggal
Christopher Massimine
Dave Conway
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