Sustainability Version 2.0 - Revisiting ESG

In light of recent changes and AI-augmented awareness of society, the ESG-oriented approach has an indispensable role to play in its applied linkage to sustainability revisited in the contemporary version. As per India Finance Corporation's definition, sustainability is an approach that ensures long-term business success along with socioeconomic development and a healthy environment. Keep reading to know more...

- Dr Megha Jain

The ESG framework, in general, operates through three buckets, that is, Environmental, Social, and Governance, each of which is measured by metrics. The environmental bucket typically includes parameters related to the state of the environment, climate, and natural ecosystems. The social bucket includes parameters that look at the relationship of the business with various stakeholders. The governance bucket covers parameters related to fair conduct and accountability of the business. While each bucket has several parameters under them, their importance would vary from sector to sector, and company to company.

Alternatively, a holistic approach to achieve this sustainability lies in the identification of non-financial risks and opportunities with respect to issues related to Environmental, Social, and Governance, respectively. Gone are the days when ESG used to find its relevance only in terms of qualitative mapping of activities under green/sustainability space by most organizations. Especially, on E parameter of ESG that connects it to the applied sustainability landscape is 'Sustainalytics! This is one of the most popular themes that contain the aim of decarbonization to reach net-zero goals ultimately. Internationally, ESG themes are picking up, such as clean energy, e-mobility, gender, diversity and inclusion, business and human rights, and sustainable supply chains.