CFOs can’t ignore ESG and Sustainability

• ESG criteria have become increasingly important in the investment and corporate world.
• Jobs related to the ESG sector have grown by over 223% in India between April 2019 and April 2023, according to Indeed.
• Here is what Dipanjan Basu, Co-founder & Partner at Fireside Ventures, ​Anuj Tewari, Co-founder and CFO Yulu, and Karandeep Singh, CFO of NODWIN Gaming have to say.

You need to learn about ESG

Environmental, Social, and Governance (ESG) criteria have become increasingly important in the investment and corporate world.

Investors as well as consumers are now more focused on sustainability and responsible business practices.

Here is another data. Jobs related to the ESG sector have grown by over 223% in India between April 2019 and April 2023, according to Indeed.

Employers are actively seeking individuals with expertise in sustainable practices, environmental science, conservation, corporate social responsibility, and related fields to fill these positions.

In this snippet from The Finance Story Bangalore event, Dipanjan Basu, Co-founder & Partner at Fireside Ventures, ​Anuj Tewari, Co-founder and CFO Yulu, and Karandeep Singh, CFO of NODWIN Gaming share their perspectives on why there is a growing need for Finance Professionals to look at ESG.

Growing interest from investors

ESG considerations are often driven by investors. He notes that when he secured funding from Blackstone, the firm was very particular about adhering to ESG norms.

Dipanjan explains his fund’s philosophy of the “value of good,” which encompasses ESG. His fund invests in consumer companies, often high carbon emitters, and breaks down ESG into two parts: planet and people.

Also read: ESG everywhere! Feeling overwhelmed by this hot topic? Why Finance Professionals should gear up now

Role of CFOs in ESG implementation

Anuj discusses the growing importance of ESG for CFOs, particularly in raising funds. He notes that impact investors are increasingly focused on measurable and certifiable ESG metrics.

Companies that adopt ESG practices tend to outperform the general index over the long term, making ESG integration a strategic priority for CFOs.

Anuj mentions, “ESG is increasingly becoming a part of your daily responsibilities as a CFO. There are many opportunities available, and one of your key roles is to raise funds.”

SEBI’s ESG framework 

The Business Responsibility and Sustainability Reporting (BRSR) framework was introduced in 2021 by the Securities and Exchange Board of India (SEBI).

BRSR is a framework to mandate certain listed companies to disclose their ESG (Environmental, Social, and Governance) related information.

It is currently mandatory for top 1000 listed companies by market capitalization.

ESG mandates are still in its nascent stage in India

However, India is still evolving in terms of internalizing ESG standards. The lack of established accounting standards and reporting frameworks poses challenges, but the space is gradually developing.

Karandeep states, “I believe India has not yet fully developed a comprehensive approach to ESG. The space is evolving, but there are significant challenges, including the lack of standardized accounting practices and reporting frameworks for ESG.”

Also read: Global Head at KPMG says Sustainable Finance & Impact Investing Presents a Once-in-a-Lifetime Career Opportunity

Indian businesses prioritize ESG

Dipanjan mentions that it might be unfair to impose sustainability costs on growing Indian companies especially when compared to Europe and the US.

The latter countries have contributed significantly to environmental degradation through industries like leather.

Regardless, many Indian companies are demonstrating a greater sense of responsibility in this area. This shift is not driven by investors but by a genuine commitment to sustainable practices.

Wrapping up

While Environmental, Social, and Governance (ESG) practices are still nascent in India, there is a growing momentum towards integrating sustainable and responsible business practices across various sectors.

Given this evolving landscape, there would be a requirement for finance professionals in various areas including, ESG matters, ESG analysis and consulting, sustainability reporting, and impact investment.

So buckle up folks!