Trilegal and the Federation of Indian Chambers of Commerce and Industry (FICCI) have tabled “ESG – Into the Mainstream” – a report detailing key issues that Indian industry faces if it is to meet environmental, social and governance requirements.
The report was released by Rajesh Verma, secretary at the Ministry of Corporate Affairs, at the FICCI ESG Summit 2022 in March. It comes as environmental, social and governance (ESG) considerations are increasingly influencing the way in which businesses measure success. At the same time, expectations among key business stakeholders such as investors, regulators, customers, and employees are also increasing.
The report says India needs to improve its readiness to access and deliver climate finance from all available sources – ranging from political and strategic readiness in the form of a national green policy to planning and resource allocation. Investible projects should also be created with measurement and disclosure standards adopted within a legal framework that enables innovative financing structures and investment opportunities at minimal risk.
With a population of 1.3 billion people and rated as the third largest emitter of greenhouse gases in the world, the report says India needs USD20 billion investments annually to achieve its climate targets and fund its green transition. The report’s first chapter, titled ‘Unlocking Green Finance’, analyses potential sources of finance and structuring.
India already generates 20% of its power requirements from renewable sources. The recently introduced production linked incentive (PLI) scheme for solar panels will reduce dependence on imported components allowing supply chains to be more resilient.
India announced the ‘One Sun, One World, One Grid’ programme with the UK’s Green Grids Initiative (GGI) to connect clean energy grids across continents. The report identifies this as an opportunity for India to participate in the global renewable energy value chain.
The narrative around ESG has changed significantly over the past couple of years, from being seen as a compliance imperative to taking the centre stage at boardroom discussions and driving investment and business strategy decisions. Chapter 2 of the report, ‘Redefining Corporate Citizenship – the Road to Sustainability’, tackles this subject.
Incorporating net-zero targets into domestic policy and sector-based interventions, will provide regulatory clarity to investors to finance India’s plans for decarbonisation, say the report’s authors.
Regulators are incorporating ESG and sustainability factors in the legal framework that will change how companies operate. These are detailed further in chapter 3 and 4, which explore the themes of ESG crisis readiness and regulation of ESG ratings providers in India.