Focusing on the need for ESG disclosure assurance, from April 1, 2024, SEBI’s BRSR Core will mandate that India’s top 250 listed entities will have to provide value chain ESG disclosures, to be done on a ‘comply or explain’ basis
Sustainability will continue to redefine the global corporate outlook in 2024. In the midst of climate change and geopolitical upheavals, companies will be compelled to position ESG frameworks at the core of their corporate strategy.
With regulations and investors urging companies to not only adhere to stricter measuring and reporting but also take the lead in helping meet national targets and UN Sustainable Development Goals (SDGs), this year businesses can lay the groundwork for a legacy of lasting success, long-term value creation, future readiness, and resilience.
Recent findings from PwC indicate that 50 percent of Indian businesses surveyed have made a net-zero commitment. 48 percent of these aim to achieve this by 2030, underscoring the resolve to urgently tackle climate change and progress to a low-carbon economy through ambitious objectives.
Major trends set to define 2024 include collaboration, the growing importance of mental health and wellness in the workplace, carbon accountability, supply chain transparency, and the increased penetration of climate-tech solutions.
Acknowledging and navigating these trends will enable boards of directors and management teams to strike the right note between development, inclusivity, and environmental protection.
A Collaborative Approach
Reaching net zero can only be done together. As we are collectively facing a scale of challenges beyond what can be addressed alone, we will see corporates, the governments, and non-profits with common visions, goals, and priorities form alliances to enable greater economic, social, and environmental progress.
The government can foster a network connected by a common purpose in alignment with the UN SDGs. Open collaboration and the innovation it creates allow companies to go beyond their singular capabilities to benefit society from combined intelligence. Linking organisational goals to an overarching global framework will create best practices, inspire cooperation, and encourage more thoughtful giving back.
Collaboration now also extends to consumers and stakeholders in the communities where companies operate. Not only are consumers challenging businesses to go beyond greenwashing and tokenism, but there is active feedback from communities directly or indirectly impacted by businesses’ activities.
Corporates are no longer using their knowledge to dictate solutions; they are reaching out to local leaders and the government to utilise their expertise. Investing in medium- or long-term commitments stimulates stronger development for society and vulnerable groups, such as contributing towards sustainable infrastructure, including the healthcare structure, food supply chains, and livelihood support.
The Importance of Workplace Wellbeing and Mental Health
Several surveys in the last few years have highlighted the burden of burnout and stress amongst corporate employees in India. One study by MPower has revealed that around 48 percent of Indian corporate employees are at high risk of poor mental health.
Further, the country faces a significant treatment gap. This year will see more organisations acknowledging the critical correlation between employee wellbeing and successful business outcomes. When corporate leadership nurtures a culture of security and corporate responsibility by implementing frameworks that cultivate personal growth, employees are able to thrive personally and professionally.
Clear inclusive mental health policies, awareness and education, flexible work arrangements, training for managers, the promotion of work-life balance, and, above all, consistent monitoring and evaluation can foster a more caring and supportive workplace.
Carbon Accountability
Globally, there has been a focus on carbon accountability. India, as one of the world’s biggest and fastest-growing economies, faces multifaceted and complex challenges in this regard.
Beginning on January 1, 2026, the permanent Carbon Border Adjustment Mechanism (CBAM) will be in effect. The CBAM is a policy tool of the EU to address carbon leakages by subjecting imports into the EU to the same carbon pricing mechanism as domestic production.
The idea is to incentivise businesses to cut back on their carbon emissions, encouraging action towards fighting climate change. While there are various arguments for and against this proposal, it is vital that Indian businesses understand and prepare for its impact on supply chains and production costs, which will be essential to sustaining competitiveness within a constantly evolving regulatory landscape.
This can also act as a call for India to devise its own strategies towards reducing our carbon footprint in tandem with robust economic growth.
Value and Supply Chain Transparency
This year will see the environmental and societal impact of value chains take the spotlight. Focusing on the need for ESG disclosure assurance, from April 1, 2024, SEBI’s BRSR Core will mandate that India’s top 250 listed entities will have to provide value chain ESG disclosures, to be done on a ‘comply or explain’ basis.
The top 150 companies will have to do so for this financial year, with the remaining top 1000 companies soon to move from voluntary to mandatory disclosures. Necessitating going beyond regulatory compliance to collaborative stakeholder engagement, AI-powered tools can be an effective way to measure, monitor, and report on ESG and CSR efforts.
Indian companies will increasingly invest in sustainable practices across their supply chains by choosing vendors and suppliers in alignment with overall ESG targets and policies, sourcing locally wherever possible, collaborating with them to enhance their considerations, and undertaking risk assessments and regular audits.
Oversight of suppliers will allow businesses to understand their supply chains end-to-end, creating better communication and strengthening relationships with stakeholders, including suppliers, investors, and customers.
Penetration of Climate-Tech Solutions across Sectors
Fighting climate change and developing climate resilience will propel investments in climate-tech solutions. While we will continue to see solutions in the mobility (with EV taking centre stage) and energy sectors, green infrastructure is the need of the hour.
Technology can also play an essential role in supporting businesses in implementing a more organised ESG framework, including comprehensive reporting on supply chains, regional operations, value chain impact, and more.
Not only will companies have a more thorough understanding of where they stand in terms of their sustainability goals, but the scope of technology can encompass research and adoption of renewable sources of energy, the creation of eco-friendly materials, and solutions to enormous challenges such as waste management.
2024 will be the year in which ESG cements its presence. Mandatory disclosures becoming ubiquitous will drive companies to intensify the depth and scope of their reporting, as well as strengthen their existing frameworks.
Moreover, we will see integration of ESG across the board—within the company, across the supply chain, and in interactions with consumers. Now, more than ever before, it will be a true part of the business strategy, rather than just an optional extra. As we look towards the future, we will see more accountability, sustainability, and empathy driving the trajectory of social impact in India.
(Shaina Ganapathy is Head of Community Outreach at Embassy Group.)