Bangalore Organizations have become increasingly aware that environmental, social and governance (ESG) norms have become a value driver, making sustainability the key. The pandemic acted as a catalyst for more ESG adoption as COVID-19 forced firms to face new types of social and governance challenges, changing their overall approach.
The challenges of ESG adoption were brought to the fore in a panel discussion titled ‘Minimum Risk, Maximize Return, Mobilize Sustainable Development’ at Mint’s ‘ESG’s Next Frontier – India’s Real Estate Leading the Way to a Sustainable Future’ event, organized by went. Nucleus Office Park.
Pranav Sharma, Partner, Triangle; Mehul Pandya, Interim CEO, Care Edge; N. Sridhar, CEO, Greenbase Industrial & Logistics Park and Chief Investment and Strategy Officer at Hiranandani Communities; Alok Vijayvargiya, AVP, Sustainability and CSR, Tata Realty and Infrastructure Limited; and Siddharth Malik, Business Head, Energy Transition, Azure Power, spoke on a comprehensive ESG approach to strategy, survival and success in the age of climate change.
The talks saw an in-depth discussion on how corporates and real estate firms are trying to adopt a more holistic approach to ESG adoption, which will pave the way for long-term sustainability.
Sridhar said that every action has a direct impact on the environment and urged for the need to create a framework around ESG and define ESG metrics, as well as focus on the use of technology and innovation. “We try to build a huge infrastructure ahead of time along with renewable energy implementation, waste management. We are also implementing certification for individual buildings, and not only that – there are efforts to track the carbon emissions footprint in our buildings.”
TRIL’s Vijayvargiya pointed to the need to dismantle silos and integrate ESG as part of the business proposition. “It is also necessary to create a framework that is understandable in common language by all the key stakeholders. We believe in support framework (H for health, E for environment, L for livelihood, and P for public welfare). This framework should be supported by the governance,” Vijayvargiya said.
Malik of Azure Power shared that 37% of the total energy consumption is from the construction sector alone. He pointed out a positive – that only 18 GW of dedicated renewable energy capacity has been earmarked for the commercial and industrial sectors. Nevertheless, much remains to be done in terms of driving energy transmission. “Sustainability is becoming an important decision-making cornerstone; it has gone beyond economics and become a core value proposition as part of the moral compass.”
Speaking about the potential risks, Pandya highlighted that any organization operating in an industry that is sensitive with respect to environmental aspects is subjected to a certain kind of threshold. Since the industry has many inherent risks, it cannot go beyond a certain level, even if the financials are very strong. “The sheer volatility of those aspects is manifested in some way or another in terms of overall functioning. When it comes to social standards, there could potentially be disruption of any kind, but the good news is that the ESG Parameters are becoming more implicit in reading the results in a more explicit way.”
Trilegal’s Sharma explained how a happy two-way consensus approach exists between developer and investor. There have been many policy statements at the national level, but when it comes to actual legislation, the conversation is maturing. “SEBI has constituted a committee on ESG ratings to objectively measure and assess liabilities. One of the requirements of investors has been high quality standardized data, so that they know who to give the capital to. Laws are still evolving; We are still following global certification norms, but discussions are intensifying. The developer community is also trying to differentiate itself.”
The stories featured in the bottom half of this page are coverage of a Mint event.