The Business Responsibility and Sustainability Report (BRSR) format aims to bring India’s sustainability reporting to global reporting standards. Odgers Berndtson, a leading global executive search firm, recently brought together board members across eminent companies in India, for a roundtable to understand how leaders are aligning business goals with sustainability.
Changing landscape of sustainability in India
The 7 key takeaways by business leaders on the changing landscape of sustainability in India are:
1. Choosing the right framework is important & often a challenge for businesses starting their journey on sustainability. Currently there is a lot of confusion around which charter a company should adopt. As per the latest guidelines by SEBI, the BRSR reporting format will become mandatory from FY 2022-23. “BRSR has been structured in a manner that allows companies to migrate towards globally converged frameworks and standards rather easily. BRSR is a good way companies can get disciplined on sustainability reporting. It is a magnet to pull the ESG story forward,” affirms Shailesh Haribhakti, Non-Executive Chairman, L&T Financial Services.
2. Collaboration is key to achieve the goal of sustainability.
All the energy that has been produced in the last 300 years by the primary elements, will go through dramatic shifts within the next 10-15 years. Keeping this context in the background, collaboration is the only way forward to make an impact. “Industry must come together to collaborate & establish norms under sustainability that work for their sector. Though this may be a tough challenge, but keeping the larger goal in mind, they must share innovation and sustainability best practices rather than use it as a competitive advantage,” says Naina Lal Kidwai, Member of the Board of Directors and member of the Health, Safety & Sustainability Committee of Holcim Group.
3. Do markets favour companies working on sustainability?
The harsh reality is that markets and global investors only look at those company that have strong balance sheets. However, markets do favour those companies that have adopted sustainability within their business ethics. “When investors are deciding on which company to invest in, they will go for the option where both profitability as well as sustainability are present. The market is extremely competitive, with many options for global investors to choose from. So, a company that does not work towards sustainability will lose out,” remarks Anand Kripalu, Managing Director and Global CEO, EPL Ltd.
4. Imbibing sustainability within the supply chain. Educating vendors & MSMEs who don’t have the necessary know-how.
“Although larger corporates have set their goals towards sustainability and increased their focus, it is also important that they take that one step further and imbibe sustainability within their supply chains as well. This means to reach out & educate vendors about the value in being cognizant about water consumption, using clean energy and other benefits of focusing on sustainability,” says Gita Nayyar, Independent Director PNB Housing Finance Ltd, Ind. Director – Glenmark Life Sciences, Non-Executive Ind. Director Transport Corporation of India.
5. Sustainability is no longer a choice but a way to do business
“I believe the current thrust towards sustainability can be taken as a life changing opportunity in the organization life cycle. Whether one takes this in the right spirit and catapults oneself, or gets bogged down by all the risks that are involved, is a choice. I would say it’s best to change before the world forces you to change,” says Ashish Bhandari, MD & CEO, Thermax Group.
6. Young talent giving the necessary push towards sustainability.
Young talent expects their recruiting firms to be environment conscious. Unlike before, companies have started to ensure their ESG goals reflect clearly in the mission & value statements. “The awareness and intent to achieve a sustainable business model spreads across the board and is not restricted to only a generation or a certain industry or a certain size of company. The ability to make a difference is what matters. Companies that are trying very hard and put in a lot of money and resources to move the needle on sustainability, because of the industry they operate in and the compulsions they must live with, are often not given adequate credit,” says Bhavana Bindra, Managing Director South Asia, REHAU Polymers.
7. Linking of executive compensation & ESG goals
The seriousness with which some corporates are looking at driving their ESG commitments can be seen with the recent trend of linking of executive compensation with ESG goals. “Executive compensation must be linked with ESG goals if the organization is serious towards achieving them. By human nature we are only driven to achieve those things we are incentivized for. If the incentive is not there, then that agenda point usually takes a backseat. The challenge is to incentivize executives to take up bigger, more challenging ESG goals that may not be necessarily quantifiable in the short to medium term,” says Vikas Kulkarni, Managing Director, Bostik India.
“Leaders may not be comfortable to link executive compensation with ESG goals due to challenges of defining appropriate metrics and well-defined targets. However, it does not mean it cannot be done. The key lies in breaking down broader goals into achievable targets and metrics that can be mapped in a given time frame that is acceptable to all concerned. The light at the end of the tunnel shouldn’t seem so remote, that one gets discouraged to even attempt to cross it. If ESG goals are set too broadly and leaders aren’t incentivized to drive it, then they will remain a distant dream,” says Dr. Prasad Medury, MD India, Odgers Berndtson.
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