Future-proofing the business: How Indian firms are leveraging ESG for growth
India is at an interesting inflection point considering it is the world's fourth-largest economy with the most number of young people. This unprecedented combination, both highly climate-exposed and the site of one of the world's most vibrant consumer markets, gives its national
sustainability
quest unmatched strategic significance and conceptual intensity.
India's focus on environmental, social and governance (ESG) has evolved significantly over the years, from being aspirational to institutionalising it. In 2021, the
Securities and Exchange Board of India
(SEBI) mandated extensive
ESG
disclosures for the top 1,000 listed companies through its Business Responsibility and Sustainability Report (BRSR) framework. This significant regulation fundamentally changed the approach, transitioning from merely promoting transparency to formally integrating sustainability into corporate accountability.
The country's banking sector, as well, is seeing a deep rethink. The
Reserve Bank of India
's release of Green Deposit Guidelines represents an unmistakable push toward climate-responsible lending strategies. Banks are now increasingly being charged with integrating exacting environmental risk analysis into their overall sustainability move forward in coordinated development very core credit decision-making protocols—a subtle yet powerful restructuring of capital deployment methods.
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At a policy level, the Ministry of Corporate Affairs issued the National Guidelines on Responsible Business Conduct (NGRBC) in 2018, providing a comprehensive framework for businesses to adopt responsible and sustainable practices aligned with ESG principles and the
United Nations Sustainable Development Goals
(SDGs). This strategic alignment gives unity to what were formerly separate endeavors, ensuring that social responsibility and overall sustainability move forward in coordinated development.
This comprehensive regulatory makeover is already prominently transforming company conduct. Statistics show that by mid-2024, more than 1,170 Indian businesses had filed their BRSRs—a record of swift compliance in just twelve months. In addition, about 20 Indian businesses have been recognized in the globally recognized Dow Jones Sustainability Index, highlighting that achieving international sustainability standards is not just within sight but is even rapidly becoming the default expectation in Indian business circles.
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Big businesses are no longer side lining sustainability as a third-order function. The deliberate hiring of Chief Sustainability Officers, the explicit connection of executive remuneration to the success of ESG objectives, and the spontaneous inclusion of circular economy paradigms into fundamental strategic considerations are unmistakable signs that this era marks a deep divergence from the outdated conventions of 'business as usual.'
As the shadow of climate risk comes to dominate and societal scrutiny hones in on its target, businesses with truly credible ESG plans are self-consciously positioning themselves to dominate markets that increasingly become excruciatingly discerning. Consumers, investors, and collaborative stakeholders alike expect higher levels of transparency, provable accountability, and quantifiable impact, and they actively reward those organizations that reliably meet those demands.
Internationally, products and services based on real sustainable principles are systematically outperforming their traditional equivalents, building stronger consumer loyalty and immensely enhancing brand value. In a world with an oversupply of choices, the environmental and social integrity of a company is becoming a determining differentiator, especially among digitally-native and more ethically-conscious consumer bases. Capital flows are unmistakably following suit. ESG funds are growing exponentially, with assets under management worldwide expected to more than double to over an eye-watering $50 trillion by 2025, Bloomberg Intelligence estimates.
Importantly, businesses that profoundly integrate ESG thinking into their operational DNA are better able to navigate disruptive forces, whether arising from climate-related supply chain disruption, reputational risk, or sudden regulatory changes. Sustainability, as such, is not simply about altruism; it is really about building businesses that can not only survive but thrive in a world characterized by inherent and increasing volatility.
A landmark 2022 McKinsey & Company report showed that firms with high ESG scores enjoy a reduced cost of capital and are more likely to have high performance in terms of long-term value creation. In parallel, a Morningstar review showed that worldwide ESG fund inflows exceeded $67 billion in 2023. On the essential supply chain side, Carbon Disclosure Project revealed that climatic disruptions in suppliers alone cost businesses worldwide a collective $120 billion in 2022, a stark reflection of why meaningful ESG integration is now an absolute necessity for business continuity.
Today's workforce, especially Gen Z and millennials, prioritizes values like sustainability. A 2023 LinkedIn study found 64% wouldn't work for an employer misaligned with their values. For businesses, ESG is now key to attracting and retaining top talent. India reflects this global trend. Domestic ESG mutual funds exceeding Rs 10,000 crore AUM signal growing investor confidence. Indian companies are leveraging ESG beyond compliance to access global capital, enter new markets, and build reputation.
Beyond reports, companies need action. This means asking critical questions: What ESG risks truly matter? What's material, what's noise? Leading companies align with global standards (GRI, SASB, TCFD, IFRS) to build focused, measurable, and accountable strategies. It's about future-proofing the business. Stakeholders demand evidence, not just narratives. India's progress is commendable, with established frameworks and increasing disclosures driving serious boardroom discussions. Companies worldwide are re-engineering operations and understand that growth at the cost of the planet is not ethical.
The author is Vice Chairman, DS Group.
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