Sustainability is an emerging concept in India gaining considerable momentum in recent years. As society’s awareness on importance of sustainability has increased, company boards, executives, and management are investing more time and resources on issues such as carbon (greenhouse gas emissions), energy efficient and clean technology, water use and biodiversity. Global push towards sustainability practices has created a need to account for, and report on Sustainability development.
Such a report would help the organization to internalize and improve its commitment to sustainable development in a way that it can be demonstrated to both internal and external stakeholders. Internationally organizations have seen some movement in organizations consolidating both Financial and Sustainability information into one integrated report. This would help in providing a single report to stakeholders on the organizations impacts on environment and community in which it operates, and impact of environment and community on the organization’s business.
Integrated reporting would be a holistic approach towards aggregating data on both financial and non financial parameters that create stakeholder value. Such a report would include how an organization’s strategy, governance, performance and prospects lead to the creation of value over short, medium and long term. It would be a comprehensive representation of an organization’s performance in terms of both financial and non financial data that fits into business operations and helps embed long-term sustainability into an organization’s decision making.
In India, typically, reporting beyond mandatory requirements is low. For financial reporting, organizations follow a systematic approach owing to its regulatory nature; however, non financial reporting lags due to lack of regulatory requirements despite international frameworks like Global Reporting Initiative, Carbon Disclosure Projects and UNGC Communication on Progress. Statistics show that very few Indian companies report on their impact of various environmental and social factors. There are around 50 Indian companies reporting on sustainability using international frameworks, compared to BRICSA countries where 109 companies in Russia, 163 in SA, 206 in China and 399 in Brazil (data source: database.globalreporting.org) report on sustainability parameters. Research also indicates that the reporting, especially in India, is limited to only large corporations. The small and medium enterprises face peculiar challenges on this front on account of lack of access to additional capital to invest in clean technologies/energy efficient measures, lack of appropriate skills, management frameworks and governance structures.
Although sustainability reporting is low currently in India as of now, significant progress can be expected in coming years, on both number of reporters and quality of information reported. The push factor comes from the most recent Annual Business Reporting Responsibility (ABRR) by the SEBI and the Company Bill, which if passed, will mandate reporting on CSR spend.
While organizations these a clear business benefits of reporting, there are many challenges when it comes to accurate measurement. Organizations find the existing frameworks complex and aggregating data on emissions, from multiple locations across India becomes a tedious task. Appropriate tools for measurement and collation of data thus become critical. So while I believe that reporting is undoubtedly the starting point for measuring and managing carbon emissions, actually aggregating data, its accuracy and running mitigation programs are really the pain points to be addressed. Another hurdle in running sustainability practices within an organization is constraints on budgets to apply greener technologies or green solutions and lack of information on green service providers or their existence at a pan India level.
At the organizational level the Board of Directors and top management buy in to the sustainability vision is extremely vital since today it cannot be addressed in isolation. Integrating Sustainability principles within the core business operations is critical for business sustenance. So while in theory we see that sustainability and business responsibility must be driven directly by the CEO, considering various business pressures and commitments faced by the leader, the support of a strong sustainability leader or Chief Sustainability Officer (CSO) is significant for developing, implementing and communicating the sustainability strategy to internal and external stakeholders. In many cases there may not be a role like that within the organization and is left to Environment managers who struggle between compliances and sustainability reporting. I believe this clearly is an opportunity for deep involvement and engagement with senior management, thus, eliminating any scope for silos.
Another big challenge is to decipher “sustainability” and communicate its value to internal and external stakeholders. Organizations need to develop strong communication medium and translate esoteric subjects of sustainability into pragmatic business impact, ensuring that the Sustainability initiatives stay relevant to other departments.
To add to this list of challenges is the lack of technically competent skills base, social and environmental development practitioners and auditors and environmental economists who would have detailed knowledge and understanding of the business they are working in and would facilitate the uphill task of Integrated Reporting.
As the Chief Sustainability Officer of a bank, I feel that the banking sector in specific has dual responsibility when it comes to sustainability reporting. It plays a central role in an economy by influencing economic outcomes as they intermediate financial flows, some of which have significant environmental and social impact. Thus its ability to influence the transition towards a more sustainable and stable economy is unparalleled making sustainability reporting even more crucial. Along with being a responsible investor, Banks also need to look at reducing their own impact on the environment through internal operations, since they normally have large office spaces, devour large amounts of paper, have significant transport/business travel and consume energy for daily business operations. Therefore looking at its own operations and weaving sustainability principles within the core operations is extremely important- What gets measured, gets managed.”
Thus it is the responsibility of every organization to measure report and mitigate their footprint. Along with the financial sector, other sectors too have a role to play and become sustainability catalysts, as it can have far-reaching positive impacts. This could be achieved by demonstrating the business case for sustainability, as it is imperative for businesses to link sustainability with stakeholder value creation. Thus embedding sustainability within every aspect of any organization is really a board room to copy room strategy.
I believe that with constant efforts towards “Influence positively all stakeholders, Innovating for BoP markets and Investing in green technology, businesses would be able to achieve robust business growth, a strong brand recognition, employee pride & rising investor confidence and trust.
Namita Vikas is president and chief sustainability officer of YES Bank.