Merely 27% of Indian businesses feel confident about their preparedness to meet Environmental, Social, and Governance (ESG) requirements, according to India’s ESG preparedness survey by Deloitte released on Thursday. Only 15% believe their suppliers to be prepared to comply with the organisations’ ESG requirements.
The findings came at a time when the need for green and sustainable development has unequivocally become a pressing priority across sectors and ESG has evolved from a peripheral conversation to a critical component of investment decision-making.
The survey assessed the readiness of 150 organisations for ESG policies, regulations, disclosures, and compliance, with over 70% of them listed on the Indian stock exchanges. The report underscored the challenges ahead for Indian businesses, wherein commitment to ESG principles is high but there is a significant gap in actual preparedness for implementation. The respondent pool included chief executive officers (CEOs), chief financial officers (CFOs), chief sustainability officers (CSOs), heads of corporate social responsibility (CSR), and management and operations executives.
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The survey report highlighted the increasing significance of ESG in India, with nearly 88% of organisations perceiving sustainability regulations as directly impacting their businesses. Over 75% of organisations acknowledged that ESG had become an important agenda in their boardrooms, and 90% believed that ESG reporting would enhance their brand reputation. The report also highlights that socially conscious investors are holding businesses accountable for ESG actions with 75% organisations stating that their investors rate their ESG performance.
About 68% of organisations have made significant progress by integrating ESG strategies and mechanisms into their operations. In addition, although 83% organisations have designated sustainability leaders, only one-third have both internal ESG champions and sustainability leaders, indicating room for enhancing internal ESG leadership.
However, interestingly, less than half of the surveyed organisations reported a thorough understanding of ESG reporting mechanisms and regulations in India, highlighting the need for urgent attention.
“Organisations are grappling with evolving expectations on ESG compliance and disclosure from investors, boards, governments, and consumers. They need to account for emerging global regulations on sustainable finance, climate disclosures, biodiversity, and social and governance dimensions, including gender diversity and living wages, within a couple of years,” said Viral Thakker, Partner and Sustainability leader, Deloitte India.