In recent years, Environmental, Social, and Governance (ESG) considerations have gained traction among corporate boardrooms in India. ESG is increasingly becoming a critical aspect of board discussions as companies realize that compliance with ESG frameworks can significantly impact their long-term growth and sustainability.
Don’t CSR activities cover for ESG? How different is BRSR reporting from BRR? Is it really going to affect my organization as the size is comparatively smaller?
These are some of the frequent questions that come my way during my preliminary interactions with organizations that consult me for ESG. Through a series of articles, I will try and clarify the doubts. What I have realized is, awareness in terms of narratives will play a crucial part in shaping the NET ZERO journey.
Today, I want to touch upon the CSR vs ESG topic.
CSR or ESG?
Firstly, it is important to understand the difference between CSR (Corporate Social Responsibility) and ESG. CSR is the voluntary commitment by companies to contribute to society, while ESG factors a broader range of issues such as climate change, human rights, supply chain management, and diversity and inclusion. While CSR initiatives are crucial for companies, they do not necessarily cover all aspects of ESG. On the other hand, ESG is essential in assessing a company’s overall sustainability.
It is essential to note that ESG discussions in the boardroom are not about philanthropy or charity. Instead, ESG considerations are strategic decisions that can impact a company’s long-term success. In recent years, CXOs (Chief Executive Officers, Chief Financial Officers, and Chief Operating Officers) have come to recognize the potential risks associated with ESG and are taking a proactive role in managing them. They understand that ESG issues can impact their company’s reputation, financial performance, and shareholder value. As a result, the visibility of ESG discussions at the CXO level has significantly increased.
In particular, the Sustainability Officer or Chief Sustainability Officer (CSO) role is gaining prominence in the boardroom. The CSO is responsible for overseeing the company’s ESG initiatives and ensuring they align with its overall business strategy. The CSO provides a vital link between the board and the company’s ESG objectives and ensures that ESG considerations are integrated into the company’s decision-making processes.
Another meaningful change in the boardroom is the increased transparency and accountability regarding ESG issues. Companies are now disclosing more information about their ESG initiatives in their annual reports, sustainability reports, and other public disclosures. This increased transparency allows stakeholders to evaluate a company’s ESG performance and hold it accountable for its actions.
I will come back soon with my POV on BRR Vs BRSR. Soon!