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NEW DELHI : Environment, social, and governance (ESG) considerations should be a part of companies’ business strategy for the country to achieve its climate goals, according to a government official.

The road to India’s aspiration of a $5 trillion economy requires concerted efforts in aligning the growth process with sustainable development goals to be achieved by 2030, said Rajesh Verma, secretary in the ministry of corporate affairs.

The government is strongly committed to the 2030 agenda, which is well converged with the policy of “development with all and for all" while the private sector is instrumental in strengthening India’s social development goals portfolio, he said in a monthly update of the corporate sector.

“It is time for corporate India to include ESG parameters while driving their business strategies to ensure that they become resilient and sustainable and deliver long-term value for all stakeholders," Verma said in the update. ESG essentially translates into responsible business practices by companies, he said.

Verma’s emphasis comes at a time regulators are pursuing greater disclosure of ESG credentials of businesses. The ministry has issued “national guidelines on responsible business conduct", while the Securities and Exchange Board of India has mandated business responsibility and sustainable reporting (BRSR) on voluntary basis for FY22 and compulsorily for FY23 for the top 1,000 listed companies by market capitalization to report on.

BRSR is intended to have quantitative and standardised disclosures on ESG parameters, Verma said.

Investors have become conscious of ESG considerations, Verma said. As on 31 January, there were 10 mutual fund schemes in India having ESG as their theme with assets under management of more than Rs12,000 crore. Also, since 2016-17, there have been 19 issuances of green bonds in India, which together mobilised Rs5,819 crore, he said. These are similar to conventional bonds but the proceeds will be invested in projects that offer environmental benefits.

The boards of companies are uniquely positioned to ensure the mainstreaming of ESG into business strategy and practices, he said. 

 

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