A revolutionary movement that addresses corporate governance, risk management, corporate social responsibility ('CSR'), sustainability, environmental conservation; promotes the well-being of all employees (including those in their value chains and elements such as diversity) and facilitates inclusive growth in an economy; Environmental, Social, and Governance (‘ESG’) is on course to become the mainstream during the course of this decade. Driven by united demand and an active stance from stakeholders such as employees, investors, customers, regulators and societal considerations; the philosophy that social, environmental and governance issues should be of equal concern as profits is expected to embed itself in corporate consciousness, in India and across the globe.

In a recent interview to Business Standard, our Managing Partner, Monish G Chatrath shared his views on the relevance & importance of ESG and challenges before the corporate sector in India, which have been published by Business Standard and can be viewed by clicking on [INTERVIEW].

We have provided excerpts from this interview in the ensuing section of this thought leadership for the ease of your reference.

In addition, in a fireside chat with professionals from our firm, Monish had outlined the concept of ESG and addressed specified questions, which may also feature in your thoughts. Excerpts from this discussion can be viewed by clicking on (ESG-FIRESIDE CHAT).

What is the status of its implementation?

ESG can be viewed as an advancement of CSR, the voluntary guidelines for which were published by the Government of India in 2009 and subsequently refined under the National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business in 2011. These eventually gained legislative standing in India with CSR becoming a mandatory requirement through the provisions of section 135 of the Companies Act 2013. The last decade has seen some radical changes in the manner in which CSR has been managed in India and also across the globe. India was one of first countries to enforce a law to enhance the level of CSR and the United Nations followed suit in 2017 by developing a CSR structure for companies to follow with their business objectives. CSR picked up steam after 2013 in India and while many may believe that ESG is still in its stage of infancy, it would seem to me that the same has been gaining considerable traction in India, in terms of appreciation of merits and adoption in principle, specially post the COVID pandemic. 

In your opinion, do you think ESG is here to stay?

In a world that is witnessing strong resurgence from a widespread epidemic and uncertainty, the corporate environment has changed considerably. Stakeholders are increasingly demanding accountability, transparency and responsibility, with risk management and corporate governance becoming two key buzz words. ESG provides a framework that enables stakeholders to assess the effectiveness of their risk management frameworks on parameters that go beyond the world of finance to environmental, social and governance factors. It also places emphasis on non-financial factors that are being used as metrics for guiding investment decisions, while displacing a sole focus on financial returns. It is in the interests and protection of all stakeholders of organizations that the concept of ESG gains widespread adoption.

What is the relevance/importance of ESG for companies?

Corporate sustainability is not a new movement. However, unlike the 1990s, this is currently not restricted to the reduction of the environmental impact. ESG holds merit on social grounds as the same seeks to enhance inclusive growth, which inextricably, is an integral component of any economy’s quest for development. While CSR brought under its ambit specific sections of the society that had been relatively neglected from the mainstream of development, ESG is more measurable, both in qualitative and quantitative terms; and has a broader process and impact, by integrating social, environmental and human development concerns in the entire value chain of corporate business. Sustainability in the current context should not only be measured by the societal impact of an organization, rather should encompass the holistic outlook of economic, environmental and governance priorities that an organization sets out in order to optimize the value creation for its business and all stakeholders.

What are the challenges that companies face during the implementation of ESG? Is there a proper framework yet, or can it be expected soon?

Limited awareness, inadequate resources to integrate ESG considerations into business practices, varying data and emerging regulations with guidelines are some challenges being faced by organizations today. In this context, it is fair to acknowledge the ongoing measures to set out disclosure requirements for ESG such as the National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business, the formulation of Business Responsibility Reports by the SEBI followed by a more comprehensive integrated mechanism for Business Responsibility and Sustainability Reporting (‘BRSR’). The BRSR seeks disclosures from listed entities on their performance against the nine principles of the National Guidelines on Responsible Business Conduct.

Will true comparability of ESG norms and practices be attainable in the short term, or will we see harmony emerge from discord. Time will tell. However, regulators, standard setters, practitioners and stakeholders will need to work closely together if realization of the true value is to be derived from the impact of ESG.

We trust that you found this thought leadership useful and would welcome your feedback.

MGC Global Risk Advisory and several member firms in Allinial Global across the globe have formed a multi-disciplinary team of environmental, social and corporate governance specialists who are well-versed with leading ESG practices. Should you wish to discuss your ESG strategy or require assistance in its implementation and/or your ESG reporting, please do not hesitate to reach out to us at contactus@mgcglobal.co.in.

Best regards

Markets Team

MGC Global Risk Advisory

About MGC Global Risk Advisory 

Recognized as one of the '10 most promising risk advisory services firms' in 2017, as the 'Company of the Year' in 2018 &, 2019' (both in the category of risk advisory services), one of the 'Top Exceptional Companies to Work For’ in 2020, amongst the ‘Top 25 Customer Centric Companies’ in 2020 and 'The Consultant of the year' in 2021 (in the category of risk advisory services); MGC Global is an independent member firm of the US$ 4.6 billion, Atlanta headquartered - Allinial Global.

MGC Global provides services in the areas of internal audits, enterprise wide risk management, control assessments (SOC, IFCR & SOX), process re-engineering, governance frameworks, IT risk advisory, GDPR, VAPT, ISO readiness, cyber security, CxO transformation and forensic services. Our Firm has the capabilities to service its clients through its offices in Bengaluru, Mumbai, NCR; and has service arrangements in all major cities in India.

About Allinial Global

Allinial Global (formerly PKF North America) is currently the world's second-largest member-based association (with collective revenues of approximately USD 4.6 billion) that has dedicated itself to the success of independent accounting and consulting firms since its founding in 1969. It currently has member firms in 99 countries, who have over 26,000 professional staff and over 4,000 partners operating from 688 offices across the globe.


Allinial Global provides its member firms with a broad array of resources and support that benefit both its member firms and their clients in the key impact areas of learning and development, human resources, international outreach, technical support, knowledge-sharing platforms through its specialized communities of practice, marketing resources, information technology and best practices in practice management.