CHENNAI: Industries whose focus has been on making profits have now been given an additional role in reducing the carbon footprint and being socially responsible by mandatorily following the Security Exchange Board of India’s (SEBI) standardised Environment Social Governance (ESG) framework this financial year.
The framework brought in by the SEBI last year was initially a voluntary one, but the Union Commerce Ministry has made it mandatory this financial year for the country’s top 1,000 listed companies who will be provided with a rating, which will help them in getting funds for their ventures, said Dr Rajeev Ranjan, director of Centre for Rural outreach and advisor to National Productivity Council.
To a query on whether the industries that fail to comply with SEBI’s EGS framework will be penalised, Dr Ranjan said there should be a compulsion. “If there is an element of penalty involved, people will comply with the rules,” he says.
The National Productivity Council, an autonomous organisation under the Department for Promotion of Industry and Internal Trade, will be conducting five workshops to sensitise the industries about the ESG framework and the first such workshop is being held in Chennai from Monday, said Dr Ranjan, who was former chief secretary of Tamil Nadu.
Ranjan says India has pledged more than 45% reduction in the ‘carbon intensity’ of its economy by 2030. The workshops are being conducted to help the industry understand how the compliance work and also the unique challenges industries face in complying with the framework.
Some of the industries are energy-intensive or water-intensive, leaving a large carbon footprint. The focus will be on these industries going in for better technology to reduce the carbon footprint. Such solutions could be unique for industries in every sector to improve their ratings, he says.
To a query on Indian companies may find it difficult to implement environmental, social and governance ratings proposed by SEBI, Dr Ranjan said the ESG standardisation framework is an evolving one. “The industries should realise that climate change is a reality and if they don’t comply, we all will face adverse climatic issues. Though there are challenges for the industries in complying with the guidelines the guidelines are evolving every now and then,” he said.
He said that during the workshop, NPC professionals will help the companies in filling up the forms pertaining to the ESG framework and work out a plan for improving it.