Two GoI officials recently underscored the significance to integrate ESG into business practices and the significance of an ESG framework.
The two officials are V Anantha Nageswaran, Chief Economic Advisor; and Inderdeep Singh Dhariwal, Joint Secretary, Corporate Affairs Ministry, Government of India. They addressed CXOs at an Indian Institute of Corporate Affairs (IICA) conference recently.
Integrating ESG into Business:
Mr Nageswaran emphasized India’s need for improved ESG practices, citing resistance from international bodies and forums to these measures.
He said that responsible business in India differs from Western interpretations, and urged companies to consider ESG integration into their business practices.
The CEA said that India should prioritize climate adaptation over emission mitigation, as it is not the primary contributor to emissions.
He alleged that developed countries are imposing standards on developing countries after reaching a certain income threshold at national and social level.
He took a dig at global leaders and organization heads for flying private jets to attend climate change or ESG conferences, stating that such behavior undermines credibility.
“In the process of earning the current top line and bottom line if businesses end up destroying the productivity and income earning capacity of today’s younger cohort then down the road it rebounds on businesses in terms of much lower aggregate demand and economic growth. It becomes a lose-lose proposition down the road,” he said.
Mr Nageswaran said that imposing costs on MSMEs may hinder their freedom of operation and global competition, and should be balanced based on national and social context.
The ESG framework:
Mr. Dhariwal said that the government wants to set guidelines for businesses regarding ESG practices, rather than imposing regulations.
According to him, the regulations might need to be sector-specific and different for mining companies and service-oriented businesses.
“We will provide a framework. The companies must contribute to evolve it. It is a trust-based relationship. We are listening to the stakeholders. The requirement has to echo from the source,” he said.