ESG Demystified

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Globally, ESG has come under fire, which, experts say, is of its own making. Conceived a decade ago to rein in rogue companies from worsening the climate crisis, ESG is in all sorts of trouble today. 

Recent articles with headlines such as ‘The End of ESG’ in the Wall Street Journal, and ‘ESG is Beyond Redemption – May it RIP’ in the Financial Times, are certain to confuse investors, consumers and regulators who had high hopes about ESG’s potential positive impact. In India, ESG is still at a nascent stage. Maybe India can learn from the West’s current conundrums and come up with a better model. 

Just like most Indian regulations that are either ambiguous, opaque, or cumbersome to implement, ESGs too are regulated by multiple pieces of statutes such as the Companies Act 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) and many more. 

There is however a keen and growing interest in India on how companies are managing their Environmental, Social and Governance (ESG) footprint. But for ESG to move from a nascent stage to even a moderately mature stage in, say, three to five years, Indian consumers and civil society should push for comprehensive, simple, stringent, and yet practical ESG regulations. 

It is good to see a few books in the last couple of years on ESG written mostly by Indian consultants who want to be seen as thought leaders in the field. They are largely about how adopting ESG can benefit businesses in the long run. What about the short and medium runs? The big question is: When India is not yet ready for sustainability, how can it be ready for ESG?

A recent Kearney survey, excerpts published in SustainabilityNext, found that 72% of the Indian respondents view sustainability as a cost to business rather than an opportunity. And that this perception could be hindering the integration of sustainability into business operations. What’s worse, more than half the businesses in India (52%) view sustainability trends as a risk rather than an opportunity.   

Where are the ESG Professionals?

One of the key factors hindering India’s progress on the ESG front is a severe shortage of professionals at the middle and lower rungs. India not only needs to fill this shortage soon but will need to build a world-class talent pool for the future. It is common today to find people who call themselves ‘ESG Experts’ in their resumes and profiles after taking a couple of online ESG courses. 

Vipul Arora, Author – Essence of ESG – A Practitioner’s Perspective

Vipul Arora aspires to galvanize aspiring and early-stage professionals into making ESG a serious professional choice. His book Essence of ESG – A Practitioner’s Perspective published by Pendown Press, in early 2024, has tried to demystify ESG to the bone. Prof. Stuart Hart, the global guru of Corporate Sustainability, has endorsed his student Vipul’s book saying: “It takes deep understanding, mastery, and experience to simplify and boil things down to their essence….”  

Vipul has tried to make his book conversational and accessible. For a weary reader, Vipul’s credibility in the Sustainability field will matter. Vipul is a pioneer in building ESG ratings in India. He started Solaron in 2007 in Bangalore when no one in India was even talking about ESG. His firm expanded to 15 emerging markets briskly. He even created an Emerging Market ESG Rating Framework in 2010. By 2014, $13 trillion firms representing investments, he writes, had signed up to use Solaron’s methodology. His rating methodology helped several global investors understand current risks better so that they could prevent future risks from taking them down.

The Essence of ESG offers more than just the essence. It asks deeper questions and tries to answer them lucidly. It will help current and future professionals realize that sustainability, ESG and climate change need deeper understanding, learning and engagement if they are to pursue meaningful and fulfilling careers.

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