Experts in India say that the adoption of ESG practices, carbon regulations and sustainability mandates has become a mission-critical business priority. Environmental, social and governance (ESG) performance and carbon compliance are gaining importance in India, with businesses is increasingly looking to incorporate ESG into their strategic planning and not as a peripheral role anymore, experts say, as regulations and stakeholder expectations push ESG to the centre of businesses.

Experts at the business forum said new developments in the global marketplace and in India were making carbon management and sustainability more significant to gain competitive advantage. Businesses that fail to adapt speed will have to deal with increased financial costs, financing challenges and decreased stakeholder confidence. Experts noted that sustainability is evolving from a voluntary corporate initiative to a compliance requirement and a long-term value creation strategy.

The stricter carbon reporting rules – at global and domestic levels – also contribute to this transition, whereby companies are obliged to report GHGs and set targets for decrease.

Standards for deciding what gets reported are now becoming associated with foreign investment and access to international markets, where investors, customers and regulators are now more professionally minded and careful about the importance to consider ESG performance.

They also noted a rise in the reporting requirements of financial institutions for such strong disclosures regarding sustainability as part of their credit and investment decisions. ESG has become part and parcel of the lender's risk assessment process, and the companies that require funding need to convince the lenders of their sustainability strategy's credibility if they are to fund it on favourable terms. Leading the companies that demonstrate good governance, a low carbon footprint and strong social responsibility activities are more likely to appear as less risky and future-proof.

For many organisations more than just compliance, taking a proactive approach to sustainability opens up opportunities to improve operational efficiency (e.g. energy efficiency, waste minimisation and circular economy solutions), as well as augment brand reputation. Consumers are turning also more towards sustainable products and services and ESG is becoming a differentiator in the market.

Experts say, however, that sustainability is not yet fully part of business processes in many Indian companies because of internal capacity constraints, the lack of adequate data management, and a lack of clarity about regulations. They called on enhanced government-industry bodies-professional services partnerships to develop frameworks and tools for supporting businesses to cope with changing sustainability requirements.