Environmental, Social and Governance (ESG) – An old wine in a new bottle!
That discussing sustainability in the boardroom is just ‘a good thing to do’ or carrying an opinion that sustainability is ‘a feather in the cap’ is an old school of thought!
Stakeholders of companies, with a special mention to the shareholders, market regulators and local community are no longer ignorant of the monumental disaster that failed businesses could have, not only on the environment and the society but also on the economy of the country, as well. Since the past two and half decades, the dynamic subject of ‘sustainability’ has kept on evolving and so has its ‘nomenclature’– the recent form being ‘ESG’.
From an age-old concept of ‘single materiality’ focused matters, on account of the hawk’s eyes of primarily the investors and regulators, the concept of ‘double materiality’ is now taking a precedence, which is incidentally gaining more traction and attention in the boardrooms. Capital markets across the globe are therefore focused on value creation by organizations, through improved financial returns and governance, while ensuring reduced environmental burden and larger benefits to the society, to ensure long term sustenance of the business, as well as, act more responsibly towards the stakeholders, the environment and the society, within which the business thrives.