ESG In India: Its Time To Take Notice
ESG has been a trending topic for some time now, and lately it has also come onto the radar of U.S. Securities and Exchange Commission, which has been investigating potential greenwashing by financial institutions and associated investment funds.
Recently, the SEC investigated one of the world's largest banks on ESG claims and levied fines on another large financial institution for alleged fraudulent ESG credentials.
How can companies yield results by implementing robust ESG program and conducting periodic ESG assessments? Reduction in costs: investors and promoters of companies are shifting from a mindset that considered ESG implementation as a cost, to ESG as a long-term investment.
Companies can now have a unique arrangement with their financiers where the company can link its ESG rating to interest rates, and be penalised if the set goals are not achieved.
Such an arrangement can work as a motivator for companies to incorporate ESG compliance into their corporate strategy and leaves no place for greenwashing as companies must report the set metrics at regular intervals to the financial institutions.
How can ESG reviews make an impact on the most crucial components of any ESG framework? Efficient energy and water consumption.
Organisations that have advanced ESG frameworks in place but lack recording of measurable data points and continuous monitoring of key ESG metrics often lead to inefficient implementation of otherwise impressive ESG initiatives.