Evolution of the ESG Disclosure and Reporting in India

Traditionally, investment decisions pertaining to a company were made on the basis of financial parameters. But with the global pandemic, increase in the instances of frauds and scams, continual climate change, and depletion of natural resources, the investors have changed their criteria for screening a business. Environmental, Social, and Governance (ESG) are one of the criteria now used by the investors for screening businesses for the purpose of investment as the ESG could have an impact on the long-term performance of a company. Since the investors have become more aware of their responsibility towards the society and the environment, this has increased the pressure on the companies to focus more on the ESG in their business practices. An increasing number of investors opt for a business enterprise that is environment-oriented and has high corporate governance standards. The ESG standards are fixed of standards for a business enterprise's operations that socially aware investors use to screen capacity investments. The recent changes and awareness among the investors with respect to ESG have also increased the investor interest and demand for ESG Reporting, ESG Ratings, and products related to ESG. The ES Reporting discloses the data that covers a company’s operations in the following areas: 1. Environmental 2. Social; and 3. Governance The ESG Reporting helps the investors in making an informed decision and in eliminating companies that pose a higher risk due to social or governmental practices or their environmental performance.