Mumbai: Uncertainty has become the new normal for businesses globally as the world is facing complex climate, social and geopolitical issues. Addressing ESG priorities is more important than ever to ensure long-term success.
People throughout the world have begun to witness first-hand the devastating impacts of environmental deterioration. It is clear that there is a sense of urgency in taking action to protect the planet we live on. As a result, more organisations are striving to be sustainable in order to establish credibility and make themselves stand out in an increasingly crowded and competitive market.
With considerable concerns about climate change, increased conflict, elevated inflation and high living costs, businesses find themselves at crossroads. Those with vision and an unwavering focus on the future are more likely to pursue and accept long-term wealth creation possibilities in a purpose-led, sustainable, low-carbon economy.
Why sustainability reporting
The purpose of sustainability reporting could not be simpler to define. Corporate sustainability reporting promotes a different discourse in which companies expand their thinking and ensure that the leadership makes strategic decisions that concentrate on the triple bottom line of profit, people and planet.
A majority of customers indicate that there is a market for green enterprises, which is why most businesses globally are focusing on sustainability. Businesses must be prepared for a period when sustainability becomes the norm instead of an exception. To ensure long-term profitability and survival, businesses must invest, innovate and adapt their business models. The growth of sustainable disruptors, as well as increased consumer knowledge, will all drive the market demand for affordable sustainable alternatives.
The fundamental idea behind sustainability reporting is to demonstrate consistent thinking and a responsible approach; viewing business processes and value production as a whole rather than in isolation. It helps in improving a company’s green initiatives and strengthens its relationship with investors and clients, in line with stakeholders’ demand for transparency and accountability and global best practises. Better risk management, cost and savings optimisation, decision-making facilitation and greater business confidence and reputation are all advantages of sustainability reporting.
Sustainability reporting in India
In the past few years, sustainability reporting in India has become an integral aspect of subsistence for companies that seek business opportunities. Further, the latest circular by the Securities and Exchange Board of India (SEBI) reignited the debate on the implication of the new sustainability reporting format, which will apply to the top 1,000 listed companies by market capitalisation.
A growing number of companies have started preparing sustainability reports disclosing their performance on environmental, social and governance parameters as a part of reporting non-financial performance metrics. While the Indian government has not mandated all companies to prepare these reports, it is strongly encouraged as such monitoring and accountability provide clarity to investors and other stakeholders about the company’s responsible business conduct.
According to a new publication that maps GRI reporting against SEBI criteria, organisations in India may now fulfil national and international transparency demands more easily than ever before.
By linking the GRI Standards to the SEBI BRSR Framework, companies who create a GRI report may utilise much of the same data to meet their regulatory requirements for a Business Responsibility and Sustainability Report (BRSR). The latest version, created in partnership with the Bombay Stock Exchange (BSE), has been completely changed to reflect the GRI Universal Standards 2021, as well as the significantly expanded scope of SEBI's BRSR.
According to a GRI study released in 2021, virtually all listed firms in India provide sustainability information, although the vast majority do not adhere to internationally approved standards, such as the GRI Standards. The new linking guide will assist more Indian organisations in taking the next step in their sustainability reporting journey, satisfying stakeholders' rising need for thorough disclosure of their sustainability effects.
Playing a pivotal role in a transformative shift
Corporate sustainability reporting was essentially unknown until the late 1990s. Nonetheless, in less than a decade, it has progressed from being the unusual to the outstanding and now the expected. It is among the most impressive innovations in corporate communication procedures in recent years.
While corporate accountability and performance improvement were the initial driving forces behind the reporting movement, years of practise have revealed a deeper and more transformative purpose. That goal is to redefine business worth and value generation.
In a complex and dynamic world, reporting is crucial in redefining the concept of value. The dominance of short-term shareholder value is being scrutinised more, than at any other moment in the previous three decades. Slowly but surely, a new concept of value is evolving, one based on multiple capitals that include human, social and ecological assets in addition to financial capital.
In the future, a company's value can and must provide equal weightage to all forms of capital. The well-being of the planet and the success of businesses are both at stake. Sustainability reporting has the potential to play a pivotal role in this transformative shift.
The author of this article is Kalolwala and Associates director & chief strategy officer Jumana Vadnagarwala.
