Environmental, social, and governance (ESG) considerations are no longer just a part of the corporate lexicon but have become integral to the business strategy and outlook for building sustainable brands.
A diverse range of participants at a recent round table at KPMG's Gurugram office reckoned that a paradigm shift has taken place as companies realise that sustainability and responsible business practices are not just moral imperatives but also strategic necessities to build organisations that can be future-ready.
From a traditional financial performance-oriented business model, companies are now proactively integrating ESG factors into their decision-making processes.
This evolution reflects a growing awareness of the interconnectedness between business operations, societal well-being, and environmental sustainability.
"The Future is not going to be more of the past. Multiple futures are possible, depending upon the choices we make. The Global Risks Report at WEF24 talks of interconnected and escalating risks. At the same time, unique opportunities exist for us to create a better world and not an apocalyptic future that runaway climate change will bring. Creating sustainable brands can help create a better future for all of us as it can bring the power of the collective," Namrata Rana, Partner and National Head for ESG, KPMG in India, told CNBC-TV18.
To put it into perspective, 80% of India's top 200 companies have set climate goals and are actively pursuing strategies for climate leadership, a KPMG study said.
It added that 59% of CEOs in India want to invest 6% or more in making their companies more sustainable, and 55% of them also believe that their companies' digital and ESG initiatives are related to growth.
A key theme of the discussion was the recognition of ESG as a driver of long-term value creation. The chances of companies outperforming their peers in the long term are high with effective management of ESG risks and opportunities.
Globally, investors are also increasingly factoring in ESG considerations into their investment decisions, reckoning that sustainable businesses are better equipped to navigate uncertainties and create resilient value propositions.
Nikhil Sethi, Partner, and National Leader—FMCG, KPMG India said, “India’s expanding consumer economy presents unique challenges in achieving ESG goals. Amidst regulatory pressures, changing attitudes of financial institutions, and shifting consumer preferences, there’s an urgent call for action."
"For organizations, establishing solid data foundations and internal prioritization are crucial steps. Encouragingly, aligning ESG efforts with business strategies not only fosters sustainability but also enhances brand trust,“ Sethi added.
The discussion also focused on how companies can mitigate their environmental impact through sustainable practices, energy efficiency measures, and investments in renewable energy, as these unlock opportunities for innovation and cost savings.
The participants in the roundtable also stressed that the journey towards an active ESG presents significant opportunities for innovation, differentiation, and sustainable growth.
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