The ABCs of ESG: The Comprehensive Guide to Adopting ESG Principles

The Comprehensive Guide to ESG Adoption In India

Environmental, Social and Governance (ESG) responsibilities have become impossible to ignore for any modern company. Even in India, businesses can no longer overlook their ESG goals while developing their long-term business strategy.

In fact, ESG has gone from being a burden to being a business growth opportunity, with most CEOs expecting significant returns within 5-10 years from ESG investments.

However, most ESG knowledge is drowned out by jargon that is difficult to understand. Take this sentence, for example. India’s businesses need to re-look at their climate impact to help India meet its NDCs and keep pace with the UN SDGs and global ESG standards.

It just means Indian businesses need to help India meet the ESG targets it has promised globally. So enough of this alphabet soup. We’ve put together a clear and easily understandable guide on how you can include ESG goals in your business strategies alongside your profitability goals.

First up, let’s bust a common myth:

ESG Cannot Can Drive Business Value

Ever since the days of mandatory CSR, companies have seen environment-friendly practices as an additional burden and legal requirement rather than a growth opportunity. While charity work is a part of ESG, it’s a much broader concept.

ESG is integral for investors and other stakeholders in your company and it will reflect in your company’s overall performance. It measures carbon emissions, diversity and inclusivity, labour practices, executive remuneration and business practices.

An OPJU Business Review study analyzed financial reports of companies listed in the Nifty Metal Index of the National Stock Exchange. It concluded that companies with high ESG scores also perform well in two critical financial performance indicators, Return on Assets (ROA) and Return on Equity (ROE).

Your company’s ESG principles will be integral to the future prospects of your company. This is something that will be important to every stakeholder - investors, employees, customers and more.

Building Stakeholder Trust in the Indian Market

The key to building stakeholder confidence is to remember the key shift in thinking that your organisation needs to make. ‘How much profit am I making?’ to ‘Am I making profits the right way?’

Here’s how you can deliver trust to each stakeholder.

●     Align your ESG goals with your business objectives

Keep in mind your environmental and social responsibilities from the outset. This will ensure that it is integrated into your company’s strategic planning.

For example, your organisation’s goals should consider India’s Panchamrit goals of 2030:

1. 500 GW non-fossil energy, 50% renewable energy integration

2. Reduction of 1 billion tonnes of carbon emissions

3. 45% reduction in carbon intensity

4. Achieving net zero by 2070

This will help you set clear objectives and make your business future-ready.

●     Include the stakeholders in the process

Consider involving key stakeholders - investors, employees, customers, suppliers, and local communities in your decision-making process and seek their perspectives. This will help ensure that your goals are aligned with their expectations.

●     Ensure your goals are clear and achievable

The best way to build trust is by ensuring your goals are measurable and achievable. While measuring your goals, ensure they meet the BRSR (Business Responsibility and Sustainability Reporting) standards to ensure transparent reporting.

Key Factors Driving ESG Initiatives

1. Access to Capital & Better Valuation

Investor expectations are notably shifting, with both global and domestic investors increasingly integrating Environmental, Social, and Governance (ESG) factors into their investment decisions. This trend suggests that Indian companies demonstrating strong ESG performance are increasingly appealing, poised to attract greater public investment, particularly from a growing pool of ESG-focused funds.

2. Lower Cost of Capital

Companies with a clear ESG roadmap and targets are often seen as less risky by investors. This is because strong ESG practices suggest better long-term management and a greater likelihood of sustainable growth. When investors perceive lower risk, they are typically willing to accept a lower return for their investment. Essentially, good ESG performance builds trust and reduces the perceived risk, making it cheaper to raise money.

3. Reputation and Brand Image

Firstly, consumer awareness is on the rise. Indian consumers, particularly the younger generation, are increasingly prioritizing the social and environmental impact of their purchases.

Secondly, for Indian companies aiming for international expansion, adhering to global ESG standards is crucial. This alignment not only bolsters their reputation but also facilitates easier entry into foreign markets.

4. Operational Efficiency

ESG also significantly improves operational efficiency. By prioritizing robust Risk Management, companies can proactively identify and mitigate potential environmental, social, and governance risks, avoiding costly disruptions and legal issues.

Simultaneously, adhering to ESG principles ensures effective resource management leading to optimized use of energy, water, and raw materials, and reducing operational costs and waste.

5. Regulatory Compliance

By proactively adopting ESG principles, businesses can ensure they are aligned with evolving government policies, such as India's commitment to net-zero emissions by 2070 and the state-level environmental enforcement measures.

Furthermore, strong ESG practices naturally lead to better adherence to specific environmental regulations, such as waste management, pollution control, and resource conservation.

10-Step Checklist to Get Started with ESG in Indian Businesses

1. Know Where You Stand

Conduct a Baseline Assessment. Use BRSR Lite for SMEs or BRSR for listed companies.

2. Identify Sector Priorities

Use India’s National Guidelines on Responsible Business Conduct (NGRBC) principles to shortlist ESG themes most relevant to your industry.

3. Set SMART Goals That Actually Work

Define SMART goals — Specific, Measurable, Achievable, Relevant, and Time-bound — that link ESG to business outcomes.

4. Build an ESG Taskforce- Your ‘A’ Team

Create a cross-functional ESG “Green Team” or appoint internal champions who will lead your ESG strategy.

5. Align ESG with Your Strategy

Integrate ESG into your core business plans — it can boost revenues by 10% and cut costs by 20%.

6. Map Out an Implementation Plan

Lay down timelines, training, communication, and change management.

7. Start ESG Reporting Early

Use BRSR format (mandatory for listed cos.), or GRI/SASB for broader benchmarks.

8. Get Leadership Onboard

Equip senior management with ESG tools, compliance know-how, and reporting skills.

9. Track What You Tackle & Improve

Set KPIs, monitor progress, and update your plans as things evolve. Use insights to iterate and manage emerging risks.

10. Communicate Your Progress

Share wins with all stakeholders to build trust and differentiate your brand.

Want to create detailed ESG reports and communicate your ESG wins effectively? Reach out to us to craft the compelling narrative that your efforts deserve.