Sustainability and ESG Solutions: An Overview
The Indian business environment is quite dynamic, where the stakeholders and market regulators are equally important as the shareholders of the company. The stakeholders are well aware of the inseparability of business and the environment and how the business operations can impact the environment therefore they prefer investing in a company which is conscious towards protecting the environment, thereby necessitating Sustainability and ESG Compliance by companies.
TAP GLOBAL Sustainability practice helps organizations in planning, sourcing, delivering, financing and measuring the wider impact of their products and services. We are helping to future-proof businesses by making them more agile resilient, and sustainable, together with spotting the risks and harnessing the opportunities.
Our team provides guidance on a wide range of issues, working with clients from the corporate, private equity and public sector.
Meaning of ESG
ESG is an acronym for Environmental, Social, and Governance, which refers to the specific data designed for the use of investors for evaluation of the material risk taken by the organization on the basis of the externalities generated by it
Such data can also be used within an organization as metrics for strategic and managerial purposes as well as by the investors for purposes beyond the same such as evaluation of enterprise value, specifically by designing models based on assumptions like identification, assessment and management of sustainability-related risks and opportunities in respect to all organizational stakeholders which lead to a higher long-term risk-adjusted return. Organizational stakeholders include but are not limited to customers, suppliers, employees, leadership, and the environment.
Regulatory Framework for ESG
- Ministry of Corporate Affairs
The ESG reporting commenced in India in 2009 through the issuance of Voluntary Guidelines on Corporate Social Responsibility by MCA, followed by the introduction of Business Responsibility Reporting ("BRR"), Corporate Social Responsibility (CSR), and National Guidelines on Responsible Business Conduct (NGRBC)
The Indian Companies Act introduced one of the very first ESG disclosure requirements for companies wherein the Indian companies must include in their report their Board of Director's details regarding the conservation of energy, along with annual financial statements. Further, the director of an Indian company shall have a statutory duty to act in good faith for promoting the objectives of the company for the benefit of its members as a whole and in the best interests of the company, the shareholders, employees, the community and for the protection of the environment.
A new reporting requirement for ESG parameters was introduced by SEBI on 10 May 2021, known as the Business Responsibility and Sustainability Report ("BRSR), which amended regulation 34 (2) (f) of SEBI (Listing Obligation and Disclosure Requirements) Regulation, 2015 ("LODR Regulations"). It was accompanied by a guidance note for enabling the companies to interpret the scope of disclosures. The BRSR seeks disclosures from listed entities on their performance against the nine principles of the 'National Guidelines on Responsible Business Conduct' (NGBRCs), and reporting under each principle is divided into essential and leadership indicators which should be mandatorily reported, whereas the reporting of leadership indicators are voluntary. Listed entities should endeavour to report the leading indicators as well.
Benefits of ESG for Business
ESG can benefit the business in the following ways
- Reduced Costs and increased profits
The implementation of the ESG approach to operations can enhance the efficiency of the business by decreasing the number of resources needed to operate, which shall lead to lower costs, increased profits and better decision-making. Additionally, sustainability initiatives often result in up-front capital expenditures, along with delivering long-term benefits such as a competitive advantage, productivity gains and reduced risk exposure. Such investments often yield lower operational costs in the future.
- The attraction of new customers, investors and lenders
The incorporation of ESG standards can also benefit the business through the attraction of new customers, investors and lenders as ESG can demonstrate the company's seriousness towards its social responsibility, thereby attracting the people that align with its vision and values, helping the company to find potential partners and collaborators that may share similar goals or interests. This can lead to increased referrals, as these individuals often share their experiences with the businesses they support.
- Mitigation of risks and building resilience
The ESG standards help the business to minimize risk and maximize efficiency. However, one of the greatest challenges faced by today's business leaders is the uncertainty created by the dynamic business environment and disruptive technologies. Applying ESG standards can address product design, distribution strategy, customer service, sourcing strategy and workforce management and help the business to create a resilient organisation.
- Attract Talent and Improve Employee Loyalty
Appreciating the employees can make them feel happier, included and respected, which holds true for all workers and not just the managerial personnel who are typically vocal about how they feel. As a sustainable business, the company can create an inclusive culture and empower employees to express their opinions without fear of retribution, thereby enhancing the productivity, engagement and loyalty of the employees towards the company.
- Improved corporate /image and higher brand value
A great deal of evidence indicates companies with sustainable practices are viewed more favourably and more trustworthy than others as the consumers are curious to know about the efforts taken by the company towards reducing their carbon footprint and ensuring the responsible use of resources.
When a company applies ESG standards to their business, it can help it in maintaining a positive /image and build trust by ensuring that the company is living up to its values and meeting its customers' needs. This leads to higher brand value and a competitive advantage in an industry where most companies struggle to balance profit margins with ethical considerations.
Services Offered By TAP GLOBAL
Sustainability and ESG solutions can help companies in protecting and creating value for the business, people, society and the world, which can be done through the guidance of a recognized leader in ESG and sustainability consulting like TAP GLOBAL.
TAP GLOBAL offers the following services in this regard
Environmental, Social and Governance Norms
TAP GLOBAL has a vast team of experienced professionals with expertise in Environmental Registrations and Compliance with applicable laws, regulations and guidelines, which can provide the following solutions in respect of ESG.
- Drafting of Sustainability/ESG Policy
- Development of a framework for Implementation, Monitoring, Review & Sustainability/ESG performance Reporting
- Consulting and Engaging the stakeholders for identifying the matters which impact the stakeholders and business
- Single and Double Materiality assessment for identifying the material matters relevant to the organization, followed by developing a policy for the same
- Analysis of Techno-economic feasibility of material issues
- Strategy development for the improvement of the ESG/Sustainability performance
- ESG Cost Accounting for reducing liabilities and improving monetized returns
- Improving ESG Credit Rating for Enhancing Investor's confidence in Improved Investment
- Development of ESG Report in accordance with the national/global reporting frameworks
- Analysing the trend of past ESG performance for predicting future performance
The abovementioned services can help businesses towards the implementation of ESG seamlessly
ESG Health
Incorporating ESG strategies can be quite beneficial for the healthcare industry as it can help them in gaining insights into the practices that have the highest carbon impact. TAP GLOBAL offers the following services in this regard -
- Drafting of Environmental, Health, Safety & Social (EHS&S) Policy
- Formulating the framework for Implementation, Monitoring, Review & Reporting of EHS&S performance
- Assessing compliance with EHS&S legal requirements,
- Techno-economic feasibility analysis of EHS&S-based material issues
- Development of a strategy for improving EHS&S performance
- Trend analysis of past EHS&S performance for predicting future performance
The services offered by TAP GLOBAL can enable the healthcare company in planning, resourcing and measuring remediation action and continue to provide quality care and services, thereby improving their environmental rating
Bench Marking of ESG/ Developmental Performance
ESG Benchmarking enables the company to have a heightened sense of direction, thereby facilitating the reorientation of their actions and operations as per their ESG goals and objectives. This can be achieved through the below-mentioned services provided by TAP GLOBAL.
- Converting the identified ESG/CSR-specific material and other priority matters into performance indicators
- Assessing the baseline and scientifically drawn targets for performance indicators
- Benchmarking of the performance indicators with the peers, business sector and national-level metrics
- Sustainability cost accounting for reducing liabilities and improving monetized returns
- Developing a strategy for improving the performance of the indicators
Availing of the benchmarking services of TAP GLOBAL can provide a competitive advantage to the business over their competitors
Sustainability and Social Returns on Investment
Social Return on Investment (SROI) refers to an outcomes-based measurement tool which helps organizations in understanding and quantifying the social, environmental and economic value created by them.
- Identifying the ESG matters adverse effect on stakeholders and organization
- Assessment of cost of liabilities emerging from such adverse matters, or projects undertaken; cost of opportunities arising from ESG projects; wealth created from social projects at the community level.
- Assessment of impact at the country economic level due to the ESG and Social welfare activities of organizations
- Analysis of Techno-Economic-Commercial feasibility to explore options to reduce liabilities
- Strategy development for improved monetized returns
These services can facilitate the evaluation of social impact through ‘return on investment, by businesses which are widely understood by investors, commissioners and lenders.
Decarbonisation
In the most literal sense, decarbonization refers to the reduction of carbon, i.e. conversion to an economic system that sustainably reduces and compensates for the emissions of (COâ‚‚). The services provided by TAP GLOBAL in respect this are
- Greenhouse gas accounting of products/services, inclusive of operations in the supply chain
- Lifecycle assessment of Green-house gas emissions of products and services
- Assessment of baseline and scientifically drawn targets
- Strategy development for decarbonization through the application of various climate change frameworks
Businesses can contribute to a sustainable environment and do their bit towards the reduction of CO2 in the environment
Climate Change and Carbon Credits
A carbon credit is a type of permit which represents the removal of 1 ton of carbon dioxide from the atmosphere. Such credits can be purchased by an individual or, more commonly, a company to make up for carbon dioxide emissions that come from industrial production, delivery vehicles or travel. Our team can assist the clients in the following
- Climate Change an Adaptation and Mitigation
- Climate change action plan for cities
Carbon Credits and Trading
TAP GLOBAL can provide consultancy on the the below-mentioned aspects
- Identifying the projects that result in carbon sequestration and abatement of carbon emissions, resulting in potential tradeable carbon credits
- Registration of projects with national/voluntary carbon credit registration authorities
- Facilitating periodic monitoring of the carbon credit accrual projects
- Identification of carbon credit buyers and facilitation in carbon credit trading
This can help companies to achieve their climate change goals
Corporate Social Responsibility
Corporate Social Responsibility refers to a self-regulatory mechanism that helps a company to be socially accountable to the general public, its shareholders and stakeholders. It includes a set of practices and policies undertaken by a company to contribute to society. TAP GLOBAL can provide guidance on the following matters.
- Identification of projects that result in carbon sequestration and abatement of carbon emissions, resulting in potential tradeable carbon credits
- Registration of projects with national/voluntary carbon credit registration authorities
- Facilitation in periodic monitoring of the carbon credit accrual projects
- Identification of carbon credit buyers and facilitation in carbon credit trading
- Identification of CSR projects and Implementing Agencies prior to onboarding them for implementation
- Sourcing of CSR funds for implementation of CSR projects
- Stakeholder Consultation and Engagement for identification of matters that impact stakeholders, primarily the beneficiaries and business
- Double Materiality assessment for identification of matters relevant to the organization
- Techno-economic feasibility analysis of CSR-based material matters
- Development of CSR Policy
- Development/Design of a CSR framework to facilitate Identification, Planning, Implementation, Monitoring, Review and Reporting of CSR performance
- Strategy development for improving CSR performance
- Trend analysis of past CSR performance for predicting future performance
Our guidance will ensure that the organization is complying with CSR, which can help them to enhance its goodwill and credibility whilst serving society.
Supply Chain Management
TAP GLOBAL is the go-to partner for any assistance related to managing supply chain solutions. Our team of experts provide end-to-end assistance in developing a supply chain solution for our client's business through providing assistance in the following
- Assessment of ESG performance of Supply Chain and matters that may pose a threat upstream or downstream of the supply of products/services
- Sustainability/ESG Policy and Framework Development for Implementation, Monitoring, Review & Reporting of ESG performance by suppliers
- Development of frameworks for periodic monitoring and evaluation of ESG performance of suppliers
- Development of an ESG Rating model for suppliers
The supply chain management assistance of TAP GLOBAL can easily help evaluate the ESG performance of suppliers.
Digital Support
Digitalization has made its way into each sector, and the environmental domains form a part of the same. Therefore TAP GLOBAL provides digital support for the following-
- Development of a platform for assessment of ESG performance of Supply Chain
- Digital assurance of ESG/CSR performance
Digital support can help businesses to track ESG/ CSR without any hassle.
Due Diligence Review
The due diligence review facilities companies to make a decision whether to enter into any transaction with the target company before making any deal regarding merger/acquisition or other relevant transactions.
- DDR of ESG or specifically Environmental, Health, Safety and Social operations and related performance prior to merger/acquisition
- DDR of ESG performance prior to investment
- DDR of compliance requirements against applicable laws prior to merger, acquisition or investment
- DDR of Developmental/CSR programs prior to implementation
- DDR of CSR Implementing Agencies prior to onboarding them for implementation
Our services can provide a true picture of the company with regard to ESG and help them make an informed decision
Investor Focused Services
Our Investor Focused services include the following -
- Identification of ESG risks in ESG funds, where invested, with a focus on compliance requirements against applicable laws, prior to investment
- Development of a monitoring and verification mechanism for periodic review of ESG-specific material matters
- Assessment of opportunities and liabilities arising from ESG-specific matters, wherever practicable, in a monetized form for assessing the impact on investment
- Strategy development for mitigating adverse impacts arising from ESG matters
The services can help to mitigate the risks as well as grasp the opportunities regarding ESG
Sustainable Finance ESF Bonds
Sustainable finance is the process of taking into account environmental, social and governance (ESG) considerations while making investment decisions in the financial sector, leading to more long-term investments in sustainable economic activities and projects.
- Applying universal financial instrument frameworks to raise money for sustainability, social and green bonds earmarked for green and socially beneficial projects
- Facilitating in registration of the project with the relevant green bond framework and approval of the same from relevant authorities/market regulator
- Development of a monitoring and verification mechanism for periodic review of the ESG performance of the projects
This can attract better investments for the companies, thereby facilitating the growth of the business.
Natural Resource Management and Circular Economy
A circular economy entails markets facilitating incentives for reusing items instead of disposing of them, followed by extracting new resources. In a Circular economy, all types of waste, such as scrap metal, clothes, and expired electrical appliances, are returned to the economy or used more wisely.
Our team can assist businesses in the following.
- Water-Water Neutrality, Socio-Economic Impacts on account of ground-water recharge, impact on the food security and national economy
- Waste – Waste minimization, recycling of wastes and monetization from wastes
- Development of NRM and Circular Economy policy
- Development of a framework for Implementation, Monitoring, Review & Reporting of NRM and CE performance
- Biodiversity – Stakeholder Engagement & Consultation; Development of Implementation, Monitoring, Review and Evaluation Framework; Preparation of Report
- Water-Water Neutrality, Socio-Economic Impacts on account of ground-water recharge, impact on the food security and national economy
- Waste – Waste minimization, recycling of wastes and monetization from wastes
- Development of NRM and Circular Economy policy
- Development of a framework for Implementation, Monitoring, Review & Reporting of NRM and CE performance
- Biodiversity Stakeholder Engagement & Consultation; Development of Implementation, Monitoring, Review and Evaluation Framework; Preparation of Report
The circular economy model provides an opportunity for innovation and synchronization between natural ecosystems businesses, our lifestyle, and waste management.
Human Rights
The protection of Human Rights is extremely important for employee satisfaction. Our team can provide assistance to clients in the following areas.
- Development of Human Rights Policy
- Development of a framework for Implementation, Monitoring, Review & Reporting of Human Rights performance
- Stakeholder Consultation and Engagement for identification of human rights-based matters that impact stakeholders and business
- Materiality assessment for identification of material matters relevant to the organization
- Strategy development for improving human rights performance
The protection of Human rights can ensure that the employees of the organization actively contribute towards the growth of the business
Governance of Organisation
Governance is important to ensure the smooth functioning of the organization, which can be achieved through the following advisory services of TAP GLOBAL.
- Development of Anti-Corruption, Ethics, Transparency and Governance Policy
- Development of a framework for Implementation, Monitoring, Review & Reporting of Anti-Corruption, Ethics, Transparency and Governance performance
- Materiality assessment for identification of governance-based material matters relevant to the organization
- Strategy development for improving the performance of governance in organizations
Our experts work towards avoiding any governance-related issues for the clients.
Governance of Organization
The judicious use of energy is essential for the protection and sustainable development of the environment. Our team can provide assistance in the following.
- Energy “ Demand and Supply
- Strategy development for reducing energy consumption
- Renewable Energy & Renewable Energy Credits
Our services can ensure that the clients work towards the development of their business without neglecting the environment.
Capacity Building & Training Programs
Our team can provide the below-mentioned guidance in respect of capacity building and training programs
- National/international sustainability frameworks relevant to Sustainability, ESG and Developmental/CSR segments
- Specific areas of Sustainability/Developmental/CSR services
- of India-specific notifications
- New/Upcoming ESG, Sustainability and CSR frameworks
- Audit/Assurance of non-financial performance
The guidance can ensure awareness about the sustainability and CSR frameworks