ESG integration in companies will help create long-term value: EY India

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As the covid pandemic has reshaped global economies, exposing the fragility of today’s businesses, businesses recognize the threat posed by these risks and strive to protect the interests of stakeholders. According to EY India, integrating environmental, social and governance (ESG) aspects into the business will contribute to long-term value creation, thereby lowering risk factors from national and global factors.

He said Indian businesses are waking up strongly to prepare for the challenges of today and those that the future holds.

The results of a recent EY Global Investor Survey, covering the views of 300 institutional investors on ESG performance, show a clear trend towards an increasing integration of sustainability or non-financial factors into investment decisions, making ESG integration a tool that will pave the way for business sustainability. .

On the global front, as the World Economic Forum has reported, over the past decade the top five global risks have shifted from economic issues to environmental and social issues.

The top five risks of the decade that can have a major impact on society include: infectious diseases, failure of climate action, weapons of mass destruction, loss of biodiversity and the crisis of natural resources. The likelihood of extreme weather conditions, the failure of climate action. Human environmental damage, infectious disease and loss of biodiversity are becoming a reality and increasing day by day, EY India said.

Chaitanya Kalia, Partner and Leader, Climate Change and Sustainability Services (CCaSS), EY India said: “In an increasingly uncertain and volatile world that poses new challenges for businesses, ESG provides a framework for businesses to stay. resilient by holistically protecting people, planet and profits. ESG is the tool that categorizes aspects traditionally associated with sustainability and corporate responsibility, but which have a significant financial impact on the short and / or long term value of the organization. “

The Indian economy is going through a phase of uncertainty coupled with the amplification of several natural and social disturbances forcing Indian companies to rethink their business strategy. The covid-19 pandemic has helped reinforce the importance of the ESG framework as a key approach to long-term business resilience.

The report says companies plan to move beyond non-financial reporting and start reporting in an integrated profit and loss approach, which attempts to correlate or monetize the positive and negative impact of business operations and products across a range of capital, helping long-term value creation over time.

Last year India witnessed one of the costliest cyclones – Amphan – which caused a loss of around $ 14 billion, more than 35 times the budget of India’s Environment Ministry for fiscal year 22 (the budget of the Department of the Environment is $ 396.5 million). India recently suffered two more such cyclones on the east and west coasts, Cyclone Tauktae and Cyclone Yaas, with Cyclone Tauktae resulting in an estimated 104 death toll, which is higher than the death toll in India. ‘only one cyclone in the Arabian Sea in the past decade.

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