Time To Align ESG & SDGs For A Sustainable, Greener Future

The Indian business scenario is going through a phase of ambiguity along with some natural and social factors making Indian businesses to rethink strategy. A recent example for aligning Environmental, Social, Governance (ESG) and Sustainable Development Goals (SDGs) would be the COVID-19 pandemic which reinforced the importance of the ESG framework as a key approach to long-term business adaptability and sustainability. 

ESG as a concept is evolving in creating long term value for all stakeholders.  Businesses are assessing to go beyond non-financial reporting and start reporting in an integrated profit and loss approach, which attempts to correlate or monetise the positive and the negative impact of business operations thus helping in long-term value creation.

Incorporating good sustainability practices at an organisational level
It is important for all organisations to exercise responsible business practices by notifying their core values, holding themselves to the highest standards of morality, integrity and trust. At an organisation level, the executive management should regularly emphasise and demonstrate these core values to all the colleagues, and each one should annually reaffirm their responsibility towards this mission, guaranteeing that they remain at the foundation of all business operations. 

The core values should be upheld through several frameworks to ensure that they are targeted to detect and manage risks that could have a substantial impact on an organisation’s ability to achieve its strategic goals. Companies should also design ‘Business Adaptability Programmes’ to minimise exposure to threats and risks and enhance the ability to restore business in a timely manner.
 
Businesses should also ensure that safety management principles are followed diligently  to empower  ‘Safety at all Times’ culture in the organisation. These responsible business practices at organisational level can be considered as contributing factors towards a sustainable and greener future.

Adopting an integrated approach to cover crucial aspects of SDGs and ESG
The SDGs cover broad challenges that the world is facing such as economic inclusion, diminishing natural resources, geopolitical instability, environmental degradation, and the multifaceted impacts of climate change. They basically define the agenda for inclusive economic growth targeted towards 2030. SDGs are viewed as an opportunity to usher in a new and refined age of affirmative actions taken through responsible investments by businesses.

SDGs help in mainstreaming the seamless acceptance of ESG-based investment decisions while securing their wider reach in corporate circles. Stakeholders have demonstrated keen interest in investible SDGs by exercising their knowledge on responsible investment portfolio and seeking intersections with the goals and their corresponding targets.

Businesses with highly diversified portfolios have high risk exposure from environmental and social standpoint, which play an important role in SDGs as well. Therefore, companies play an essential role in indirectly rooting for formation of sustainable businesses, markets and economies. It is in this respect that the ESG considerations can offer a new strategic lens to view and assess day to day business decisions under an SDG-based scenario.

It is an imperative to incorporate ESG and SDG factors in the day-to-day functionalities of a business, considering the world is experiencing environmental, social and economic uncertainties.

Rising indications of climate change
Increasing frequency of natural disasters, supply chain interruptions, resource restraints and their economic impact has been fundamental in giving the right push to integrate ESG for future proofing businesses

Extended Product Responsibility
Businesses have been under collective pressure from different stakeholders to be accountable for the product and the associated supply chain. Off lately the world has been witnessing stakeholder activism, investor concerns and customer scrutiny, which makes it an imperative for organisations to build ESG metrics for business resilience and focus on aspects such as waste management, extended manufacturer’s responsibility and environmental footprint.

From shareholder to stakeholder
Conventionally, businesses cater to investors and shareholders to drive profits. However, the impact of other intangible parameters on profits is clear now and hence the focus has shifted from the shareholder to a stakeholder model to consider diverse needs of different stakeholders through ESG evaluation for future proofing businesses.

In this global phase of transition, which is coupled with the uncertainty for businesses, ESG framework provides businesses with long term value by holistically conserving profits, people and the planet. Imbibing ESG factors and SDGs into business becomes necessary as it goes beyond corporate responsibilities and focuses on holistic material issues to build business resilience in short, medium and long term.  These aspects fluctuate based on industry of operation, business model, geography, scale of operations, supply chain, investor base, core values and business strategy of the organisation.

--  Ketan Kulkarni is Chief Commercial Officer at Blue Dart, which is South Asia's premier express air and integrated transportation, distribution and logistics company.