Currently, 79% of the top 100 companies by market capitalization or N100 companies publish a standalone ESG report, according to ‘Accelerating the change: ESG reporting 2.0’ released by KPMG in India
Environment, Social and Governance (ESG) reporting is gaining momentum in India. More so, after the Securities and Exchange Board of India (SEBI) made Business Responsibility and Sustainability Report (BRSR) compulsory for the top 1,000 listed companies from 2022-2023.
Currently, 79% of the top 100 companies by market capitalization or N100 companies publish a standalone ESG report, according to ‘Accelerating the change: ESG reporting 2.0’ released by KPMG in India. International frameworks like Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB) and Task Force On Climate Related Financial Disclosures (TCFD) are in place to measure the ESG performance.
The report adds that 53% of the N100 companies report on their carbon reduction targets, out of which 36% report on carbon intensity targets, and 64% report on absolute carbon targets. A majority of the N100 companies (69%) have established targets linked to environment parameters such as waste, water and energy management and 65% have now established targets linked to social parameters such as diversity, inclusion, employee well-being and development. The N 100 sectors include alternative energy, banks, travel and leisure, financial services, oil equipment, service and distribution.
Shivananda Shetty, Partner and Head- ESG, KPMG in India, says, “Leading Indian companies have actively started disclosing their ESG performance as it helps them to showcase their commitment towards the overall sustainability agenda to their stakeholders.” He adds, “The stakeholders are expecting relevant and accurate data and it is imperative for the companies to treat the ESG disclosure with the attention and care like a financial disclosure and ensure governance around data measurement, analysis and reporting. The ESG disclosure will also help organisations to compare their own performance against the peers and will help to raise the bar for the companies.”
KPMG report elaborates on the benefits of ESG reporting for companies ranging from external to internal like ‘social license to operate’, ‘reducing regulatory intervention and ‘restored confidence among shareholders’. With the global changes in the technology, economy, health, climate change, the lens to look at “sustainability and resilience” has been affected and thus ESG as a value metric index has gained traction.
Prathmesh Raichuram, Partner, ESG, KPMG in India, adds, “Companies that align their reporting practices to rising stakeholder sentiment have a clear advantage in winning their trust and establishing themselves as an organisation with foresight.”
The report concludes that even with a plethora of frameworks available “there still exists a significant gap between stakeholder requirements and current ESG disclosures”.
Talking about the way forward, the report highlights the importance of enhancing robust governance levers to drive organization wide ESG excellence; prioritising key stakeholder insights and driving stakeholder feedback across ESG disclosures and performance; and ensuring organisational readiness for mandatory ESG disclosures. The need to enable preparedness for global harmonized ESG reporting standards and frameworks and encourage proactiveness towards voluntary ESG disclosures and initiatives has been also highlighted. Driving momentum to increase the uptake of climate disclosures and action is also advised by the report.