How ESG Reporting Helps SME Technology Companies In India.￼
First let us discuss the basics of ESG-
- The E in ESG captures energy efficiencies, greenhouse gas emissions, carbon footprints, biodiversity, climate change and pollution mitigation, waste management and water usage.
- The S covers labour standards, wages and benefits, workplace and board diversity, racial justice, pay equity, human rights, privacy and data protection, health and safety, supply-chain management and social justice issues.
- The G covers the governing of the E and S categories-corporate board composition and structure, strategic sustainability oversight and compliance, executive compensation and political contributions.
Why E, S and G are needed can be summarised, as-
- Environmental- to gauge how a company works acts in its role as a steward of nature.
- Social- how well a company manages its equations with people including employees and the community at large.
- Governance- concerned with policies, internal controls, audits, shareholders’ rights
There are multiple ways in which an organization accepts ESG and these can include- Keeping a track of your Carbon emissions and actively reduce them, setting realistic goals and measuring your progress, clearly communicating your position through an ESG report and getting ESG advisory for the generating a maintained ESG report.
We shall focus on how an ESG report as highlighted in the previous line can actually help an organization–
- Investment– Investors choose to examine the ESG rating of an acquisition target, and with the change of the spirit of times, they definitely look beyond just financial parameters.
- Customer Expectations– Customers are aware and actively look into ESG performance.
Additionally, with the advent of social media, non ESG compliant business practices can come to the limelight cause serious reputational damage. It is therefore considered by CEOs to be smart about ESG performance.
- Social Responsibility– With good resources come a responsibility of being good corporate citizens. This is widely recognised by investors and clients.
- Profit Correlation– Environment and social change continue interacting with the business landscape. Unpredictable incidents might result in loss of business but companies which are ESG compliant are better positioned to combat such incidents and thrive.
What ESG reporting can get you–
- More investment, as a robust ESG trust builds trust with investors.
- It helps you get an edge over your competitors, as a socially and environmentally aware organization.
- It helps build trust with stakeholders.
- It helps the company in the run up to the future IPO
- It helps the company be insulated against policy shifts
Coming to SMEs, we want businesses to not just make money now but in 10 years. According to the current scenario, private equity investors are also pushing for ESG to be built into their portfolio companies. Private companies will have to look more closely at ESG when they need to raise capital. The point of sustainability is not just the environment but also the durability of the business model, which is why companies need to be ESG compliant. SME investors will always look for investment returns where risk mitigation is strong. A few years ago, it was only a minority of investors who considered ESG factors. Today, around two-thirds of investors consider ESG factors, according to EY’s Global Private Equity Survey 2021. Allow us to add that if your organization is looking to expand internationally, huge importance shall eb laid down on ESG.
Investors seek and depend on reliable information through the sustainability ESG report before choosing how to allocate capital and where to invest. This explains the current emphasis on ESG disclosure and reporting, not just by investors and lenders but by governments and regulators as well.
Simple steps which a company can take to embark on the ESG journey, include-
- Obtain key environmental data points – energy consumption, CO2 production, water consumption and waste production.
- Prepare and apply the most important policies – sustainability policy, discrimination policy, ethics policy and discrimination policy.
- Address diversity in the boardroom.
Additionally, apart from ESG reporting set to become a mandate for listed companies, the role of ESG is evolving to be one of the important factors for stakeholders at the Initial Public Offering (IPO) readiness stage as well.
When we are offering ESG reporting, we are offering to prepare a report will be a clear reflection of these, and other factors reflecting the health of your company, which can be crucial in portraying you in the right light while approaching investors, while attracting the new age conscious customers, keeping stakeholders happy, maintaining a healthy environment in the company, raking in profits, and giving back to the society and environment.
Contact us to learn more about ESG Compliance and Sustainability report for any business.