The COVID-19 pandemic appears to have fuelled a long-standing need for change in India’s corporate policy-making. The corporations, which are essentially the most tangible outcomes of the post-liberalisation economic boom of the ‘90s, have now been compelled to shift the goalpost from the singular focus on the fiscal bottom-line. Out and about, the primacy to Elkington’s ‘triple-bottom line’ approach combining financial outputs with environmental and social concerns has received a renewed focus as India Inc. sets on a new road of transformation past the pandemic’s arduous experience.
With the incorporation of the entire gamut of environmental, social and governance-based (ESG) decision-making into organisational behaviour, a holistic new way of thinking has emerged after the pandemic, seeking to decrease the distance between the state, the market and the civil society in ways never before. Corporate success is no longer solely envisioned by fiscal determinants as the world continues to overcome the pandemic-led disruptions to progress made over the years. Albeit, the very definition of ‘profit’ has been overhauled by a sustainable, holistic perspective, that is now stimulating corporate giants as the hubs of change and concern for the society in its entirety.
The inclusion of ESG issues under the UN Principles of Responsible Investment in 2006 first gave leading business analysts focused on ‘responsible corporate behaviour’ the impetus to gauge investor viability. This outlook was only strengthened in the year 2015 as world leaders stood together for the criticality of achieving concretely identified and determined 17 thematic sustainable development goals (SDGs) by 2030.
Now, while the global community attempts to redecide priorities and build strategies to bring the SDG agenda back on track, which has been adversely affected by the pandemic’s abrupt challenges, as per the SDGs Report 2021, corporations will have to lead the movement from the front. They will have to become the key vehicles to restrengthen the three central pillars of Agenda 2030 – environment, society and economy – upon which the utopia of all-round sustainability has been founded.
Evident from its recent COP26 commitments for net-zero emissions by 2070, the Government of India is attempting to cushion the international environment through the SDG agenda to facilitate the soft and structural powerhouses within its territory through new promises, efforts, evidence and, in turn, FDI. It is only natural that corporations will also have to respond in kind by adhering to new model regulatory and policy frameworks. They will have to strive to not only shift the compass for tangible indicators like ‘reputation’ and ‘stakes’, but also bring forth comprehensive outputs in the form of long-term environmental and social reform in the world they are closely dealing with.
All of this will have to be closely tethered with the active company culture by way of environmentally concerned, socially inclusive and structurally flexible and transparent business practices. Current climactic issues, be it those driven forward by climate change, inter-continental social uprisings, privacy concerns, and even abrupt crises such as that of COVID-19, have provided concrete evidence to the fact that companies will have to keep with the time if they wish to remain viable in the eyes of all their stakeholders, who have already been deeply impacted by these contemporary scenarios.
For the companies themselves, Milton Friedman’s theory from the ‘70s, divorcing social responsibility from long-term financial gains, no longer holds water. Studies over and over again have suggested that traditional metrics determining long-term company sustainability in the market, be it quality of investment, employee retention-rate and productivity, rate of volatility, company costs, legal interventions, and, perhaps, most importantly, long-term financial outputs, have all begun to be centred around ESG-based thinking.
As investors continue seeking the inclusion of ESG goals in core company values and praxis, corporate moguls are now prompted to be better equipped with the rapidly changing world in the third decade of the 21st century. Latest studies have shown that ESG-based investments in India have seen a resurgence during the pandemic marking a 184% increase between June 2020 and 2021. In turn, companies have also begun to open their eyes not just to the importance of being socially, environmentally and ethically conscious, but also ever-responsive on the same counts.
A recent ESG-risk assessment of 586 Indian companies across 53 sectors based on 2021 fiscal data, conducted by CRISIL, has shown how companies are now better-performing on these measures than ever before ‘by demonstrating clear ESG commitments’ and, consequently, better financial performance.
It is only about time that ESG focus accentuates further in India as SEBI intends to make its annual Business Responsibility and Sustainability Report (BRSR) standards, applicable to top 1000 companies, mandatory by the 2022-23 financial year. This commendable move will help push the envelope in awakening more and more companies to take the right step and integrate ESG goals in their broader corporate vision and objectives.
Nonetheless, as proponents of free-but-responsible market, the corporates must rise to the occasion and go one step beyond the CSR-paradigm to envision their existence in matrimony with their concerned peoples and the environs, both internally and externally, top-down and bottom-up.
An intrinsic belief in the company’s all-round approach towards the ESG manifesto will not just position it on a much higher grounding in the eyes of an ever-vigilant audience but also keep it ahead of the times by leaving an everlasting impact on the complex global ecosystem. It is inevitable then that India Inc. shall grab the opportunity to harness its potential in the post-COVID economy and pledge to lead substantial change-making through sustainable and transformative action.