Tata, Reliance, and HDFC make the case for increased ESG adoption

The trio has announced a plethora of initiatives to adopt green energy resources and achieve carbon neutrality

June 28, 2021

Tata Steel endeavours to introduce sustainability in every aspect of the supply chain as per the UNSDGs.

Reliance and HDFC have set targets to achieve net carbon neutrality by 2035 and 2032 respectively.

ESG has emerged as a key evaluator for foreign investors and millennial office goers in recent years.

Cash-flow increase, improved productivity, regulatory benefits, and asset optimisation are some benefits.

Media sources report that some of India’s leading companies are actively prioritising the adoption of Environmental, Social and Governance (ESG) protocols in their daily operations. Some of the companies that are looking to increase their ESG compliance include Tata Steel, Reliance Industries and HDFC Bank Ltd. HDFC’s strategy now includes the use of ESG principles to guide fund disbursal to parties and also to achieve carbon neutrality by 2032. Reliance Industries has shared a similar vision albeit with 2035 as the target year. The vision includes an action plan to adopt cleaner energy resources including green hydrogen for everyday operations. Tata Steel has re-framed operational targets in accordance with the United Nations’ Sustainable Development Goals, and shared its plan to make sustainability an important component of the supply chain.  Nifty100 data from 2012-2018 reveals that the Information Technology, cement products, automobile, consumer goods, and industrial manufacturing sectors are the top five adopters of ESG in India. 

The recent years have seen the positioning of company Environmental, Social and Governance (ESG) protocols as a strategic deal-maker for investors abroad. Furthermore, the millennial-dominated workforce upholds sustainability and climate consciousness as important components of their worldview. The mandatory disclosure provisions embedded in ESG play a strong role in ensuring good governance practices and achieving carbon neutrality among other key sustainability priorities. Management Consulting entity Mckinsey outlines five key benefits to adopting ESG protocols and they are as follows : (i) Top-line growth, (ii) regulatory intervention, (iii) cost reduction, (iv) investment and asset optimization, (v) improvement in community productivity. 

On a global scale, India has been recognised as the third-largest emitter of carbon, compelling policymakers, and entities in multiple domains to pay attention to their individual carbon footprints. The reduction in plastic usage and implementation of mechanisms to reuse water in office buildings are key strategies adopted by many private enterprises to infuse sustainability. Experts opine that much more effort will be required in making ESG participation easier for small and mid-sized companies in the private sector as they might not necessarily have the required budgets for the same. With greater measures taken by private sector companies, ESG can be expected to significantly facilitate the growth of the Indian economy at large.