HomeEconomy NewsView: Why integrating ESG goals in business strategy is must

View: Why integrating ESG goals in business strategy is must

Earlier, issues around pollution, health and other factors were not seen as important initiatives by the government or any legislative regulations. But today, investors have put forward their focus not just on profits, payouts, but also on how the company is utilising their money for the greater good of society.

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By Sridhar Balakrishnan  July 27, 2021, 5:14:59 PM IST (Published)

View: Why integrating ESG goals in business strategy is must
Companies around the world are today integrating rules to implement ESG (Environment, Social and Governance) practices in their business strategy. According to the recent reports of United Nations-backed Principles of Responsible Investing (PRI), the number of signatories has increased from 63 to 3,038, which, in turn, has an increased the value of the assets under the management of the PRI signatories to $103 trillion.


Earlier, issues around pollution, health and other factors were not seen as important initiatives by the government or any legislative regulations. But today, investors have put forward their focus not just on profits, payouts, but also on how the company is utilising their money for the greater good of society.

Today, it is not about new technologies, innovation, or skills that define success, but it is about how one is using these pillars to work on the ESG issues towards achieving sustained success.

Let us take a peek into the fast-shifting priorities of businesses around the world.

The what and how

ESG is a big umbrella, and under which there are different ways of what one can do to get their act together and become a responsible corporate of the larger ecosystem. For example, renewable resources such as water, energy etc. are shared resources, thus should be used responsibly.

Pollution has always been a problem at an individual level, especially with factories being located in a residential neighbourhood. Disruption in business, caused by irresponsible behaviour will affect stakeholders, especially the investors. ESG as a platform provides opportunities to address these issues in a more organised and methodical manner.

In today’s disruptive world, companies have rejigged their priorities with ESG responsibilities being the forefront and including them in their long-term growth trajectory. What we are seeing as investor activism is actually an outcome of this. Today even religious bodies that invest in corporates are held responsible for their portfolio.

Whether from an ethical or economic standpoint, businesses, particularly the large ones are quickly coming to terms with these challenges.

In recent years, we have witnessed an increase in the number of Multi-National Companies (MNCs) hiring Chief Sustainability Officers to oversee the ESG priorities, which may be a reflection of this trend.

Recently, a report revealed the numbers of CSO hires have increased eightfold since 2015. Interestingly, it is around the same time when more than 190 countries came together to sign the Paris Accord to deal with the existential challenges posed by climate change.

Today, the cement industry has taken up accountabilities of ESG with great importance. As per Cement Sustainability Initiative(Now GCCA), a worldwide consortium of more than 100 concrete makers from 25-odd nations, the possible investment funds in CO2 outflow from the area by 2030 can be just about as much as 1 gigaton a year or around a third of the yearly CO2 discharge of a nation like India.

Investors are searching for quantifiable ESG results. Furthermore, that is unequivocally where the top administration group of a firm ought to zero in on to meet the expectations of its stakeholders.

—Sridhar Balakrishnan is MD & CEO, ACC Ltd. The views expressed in the article are those of the author.
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