FICCI, along with Trilegal, published a white paper, ESG – Into the Mainstream, during the FICCI ESG Summit 2022, says that achieving India’s climate goals and financing green change requires an investment of $20 billion per year. This requires large budgets, international funding from bilateral and multilateral sources, and private green investments, added the paper.
Chapter 1, Unlocking Green Finance, of the report explores India’s willingness to access and provide climate finance and other related aspects such as a uniform carbon tax policy and green ratings to build confidence investors. It explores potential funding sources and innovative structures and catalyses further investment as needed to encourage willing investors to provide “first loss capital” for risk-free projects.
The report published by Rajesh Verma, Secretary, Ministry of Corporate Affairs, Government of India, comes at a time when ESG (environmental, social and governance) is increasingly influencing how companies measure success. The expectations of key business stakeholders such as investors, regulators, customers and employees also focus on these parameters.
The narrative around ESG has changed significantly over the last couple of years, from being seen as compliance imperative to taking the centre stage at boardroom discussions and driving investment and business strategy decisions.
Focussing on Redefining Corporate Citizenship – the Road to Sustainability, the report details how corporates can contribute to the sustainability agenda, non-financial metrics and management of ESG risks. As regulators actively incorporate ESG and sustainability factors into the legal framework, the ways in which companies operate will change. The report also explores the themes of ESG Crisis Readiness and Regulation of ESG Ratings Providers in India through global comparisons and makes recommendations on the ESG framework that pre-empts ESG crises as well as handles one responsibly when it arises.
Given that assessment of the ESG metrics is based on softer uncrystallised principles, the report underscores the need for revisiting the requirement for accreditation of ERPs along with proposals for eligibility criteria such as net worth requirements, infrastructure and man-power requirements. A light-touch principle-based regulation coupled with increasing shareholder activism and investor awareness will help set the broader framework within which ERPs operate, and act as a check on the activities of ERPs, which will in turn set the roadmap for corporate governance for the coming decades.
The report also highlights reforms in the power sector to encourage ESG-focused investments in India’s climate change.