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"What is ESG ?" - The a-b-c of ESG series
"What is ESG ?" - The a-b-c of ESG series

August 6, 2022

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Hello! This is the first in an ongoing series of easy to digest information on a topic that merits our undivided attention. I have tried to make it interesting, non-preachy yet informative, and most importantly, action-oriented. So, let's get started!!

Environmental, Social and Governance (ESG) are three key themes increasingly being factored to measure the sustainable and ethical impact of a company's performance. The progress made on the underlying factors in these ESG themes supplement the traditional financial indicators more commonly used to present a holistic view of the company's health especially towards long-term sustainable growth.

 

Illustrative E, S and G sub-themes

 

 

 

 

 

 

 

 

Let's do a deep dive on these.

Environmental Factors: These are some of the pressing challenges confronting us today. Top of the list is our Carbon Footprint which is adversely impacting the environment in multiple ways especially with climate change and reduced biodiversity. Carbon Footprint is measured in terms of greenhouse gas (GHG) emissions. The main ones are carbon dioxide, methane, nitrous oxide and ozone. Next is conservation of natural resources especially water which contrary to our belief is not easily available to everyone on our planet especially portable water for drinking & cooking. Another key topic is waste management especially its segregation & recycling (where possible).

 

Social Factors: Companies have realised that besides their shareholders/ investors they have an increasing responsibility towards other key stakeholders especially their employees, local communities, and their supply chain partners (e.g. customers and vendors). Of paramount importance is to inculcate & promote DEI (Diversity, Equity & Inclusion) focused practices in the company and its ecosystem of influence. It is also critical for companies to create an engaging employee experience with safe working conditions, policies that promote employee health & well-being, and opportunities for professional learning & development. Companies are increasing focusing, and rightly so, on impactful interventions towards the local communities in which they operate. Our collective response to the COVID-19 pandemic is proof of the immeasurable collective strength when individuals, organizations, local communities and governments come together for a common higher purpose.


Governance Factors: Being a good corporate citizen goes beyond compliance to local laws and tax transparency. It's important that companies, their leadership and boards, exude trust, integrity & ethical behaviour through their actions/ interactions. Boards themselves should be empowered, diverse and inclusive. Responsible tech practices by companies reflected in safeguarding data privacy, information security and promoting ethical use of ML/AI is becoming increasing important in our digital world. Lastly, it is critical for companies to embed ESG considerations in their Enterprise Risk Management framework & management decision-making to ensure a systemic approach towards ESG factors material to them, their potential implications. and plan proactively towards potential mitigation/ avoidance.


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Anuj D
Head - Sustainability & ESG

I'm passionate about dovetailing business strategy with agile execution to drive impactful strategic initiatives at progressive organizations which focus on sustainable business outcomes. Current focus is driving ESG (focus Sustainability) awareness and best practices at scales across organizations.

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