AMCHAM’s Tamil Nadu Chapter organized a meeting on demystifying ESG on March 30th in Chennai. The meeting commenced with Mr. Rajan Aiyer, Chairman – Tamil Nadu Chapter, AMCHAM making opening remarks wherein he said that environmental, social, and governance (ESG) investing refers to a set of standards for a company’s behavior used by socially conscious investors to screen potential investments and for businesses to do the right things to stay focussed on the three pillars of ESG. Environmental criteria consider how a company safeguards the environment, including corporate policies addressing climate change, for example. Successful businesses focus on three core essentials: people, process, and product. He emphasized that ESG frameworks were important to sustainable investing because they can help individuals or other corporations determine whether the company is in alignment with their values, as well as analyze the ultimate worth of a company for their purposes. The 5 main benefits for a business include: ESG offers a competitive advantage; attracts investors and lenders; improves financial performance; builds customer loyalty and makes company operations sustainable.
Mr. Sandeep Mohanty, Partner, PwC, through a presentation spoke about how ESG was a business imperative and how it helps in futureproofing the business. He elaborated on the evolution of sustainability focus and described the key milestones and motivation. He mentioned the three main thrust areas of the environmental pillar were climate change, pollution and waste, biodiversity and resource utilization. The next was the social pillar which encompassed human capital, social capital and market stakeholders. The governance pillar included independence/governance and ethical behavior. Mr. Mohanty shared about the status of ESG in major countries around the world including India. He said that governments were coming out with enablers while regulators were tightening compliance requirements and broke it down to two sub areas of essential indicators and leadership indicators. He added that climate-related physical and transition risks both affect performance and have financial implications. He spoke about how businesses can solve societal issues and that globally investors were adopting responsible investment principles. He emphasized that “a comprehensive, transformational ESG journey can unlock significant value.” The other areas he explained were material issues impacting business, material topics identification based on stakeholders expectation, an integrated ESG journey for future strategy, implementation and reporting.
The next speaker, Mr. Arun Rajagopalan, Partner, PwC, spoke on the reporting landscape and ESG ratings. He took members through the whole gamut of navigating the various compliances and frameworks in ESG reporting. He said that it was a continuously evolving ESG reporting ecosystem and gave an overview of the common ESG reporting agencies. He then dwelt on the framework and guidance for sustainability disclosures, industry focussed reporting requirements, business responsibility and sustainability reporting and gave examples of how this is being managed in the USA and India. He explained why ESG disclosures should be independently assured and what it means for business and stakeholders. He mentioned the commonly used assurance frameworks such as the International Standard on Assurance Engagements (ISAE) 3000, the ISAE 3410 which was released by the International Auditing and Assurance Board and the Standard on Sustainability Assurance Engagements (SSAE 3000) from the Institute of Chartered Accountants of India. Within the non-financial information, the two levels were limited assurance and reasonable assurance. He mentioned that there are over 800 professionals in PwC engaged in ESG reporting work. The meeting came to an end with a Q&A segment. Mr. Rajan Aiyer summed up the session and made closing remarks.
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