ESG Reporting

Environmental, Social, and Governance (ESG) Reporting

ESG reporting is the disclosure of environmental, social and corporate governance data. As with all disclosures, its purpose is to shed light on a company’s ESG activities while improving investor transparency and inspiring other organizations to do the same. ESG reports summarize the qualitative and quantitative benefits of a company’s ESG activities, investors can screen investments, align investments to their values, and avoid companies with the risk of environmental damage, social missteps or corruption. 

Environmental criteria consider how a company performs as a steward of nature. Social measures examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights. With the push for the Sustainable Development Goals and the climate action movement gaining momentum, the sustainability reporting landscape is changing rapidly around the globe. It is essential to understand the concept of business responsibility and the evolution of ESG reporting in India. ESG reporting in India started in 2009 with the Ministry of Corporate Affairs, Government of India, issuing the National Voluntary Guidelines on Corporate Social Responsibility (NVGs).

What are ESG regulations?

Currently, the EU has the most sophisticated set of ESG regulations, which were developed to help the EU increase sustainable investing and to further the EU Green deal, which is the EU’s promise to combat climate change and environmental degradation by:

• Eliminating net emissions of greenhouse gases by 2050
• Decoupling economic growth from resource use, and
• Leaving no person or place behind. 

In order to meet their climate objectives, the EU currently has the most established framework around ESG regulations. The strategy hinges on two pillars: 

1 – A reimagining of incentives for financial markets and corporate governance. These are primarily covered by the Sustainable Finance Agenda and the Sustainable Corporate Governance Initiative. 

2 – Transparency into the ESG impacts, good and bad, of an organization’s activities and their sustainability initiatives.