Environmental, Social and Governance (ESG) Philosophy: Best Practices of

Selected Indian Companies.

Dr. Ashok D. Gaur

Assistant Professor
S G M English Medium College of Commerce and Management - [SEMCOM]
Vallabh Vidyanagar - 388 120.
Mobile No. 94094 91392, Email: ask.gaur@gmail.com
&

Dr. Pareshkumar U. Mordhara

Assistant Professor
Bhikhabhai Jivabhai Vanijya Mahavidyalaya (BJVM)
Vallabh Vidyanagar - 388 120.
Mobile No.7777930301, Email: pmordhara@gmail.com

Abstract:
Environmental, Social and Governance (ESG) arenon -financial tool to analysis investment
opportunities. It is used in in the capital markets to evaluate corporate behavior and to identify
material risks and growth opportunities. It helps to know whether the company fulfilling its
corporate social responsibility towards sustainable development with reference to employees,
environment, society at large. It aims to maintaining balance between wealth maximization,
environment and social cost. ESG criteria can also help investors avoid investment losses when
companies engaged in risky or unethical practices are held accountable. Many Indian companies
such as Tech Mahindra, Infosys and Wipro etc. are a part of the Dow Jones Sustainability Index
(DJSI) which assesses the ESG performance of companies globally.
This paper will highlight best practices of selected Indian Companies.
Keywords: Environmental, Social and Governance (ESG), Dow Jones Sustainability Index, Non
-Financial Investment Analysis Tool

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Environmental, Social and Governance (ESG) Philosophy: Best Practices of
Selected Indian Companies.
Introduction
In the global scenario the objective of wealth maximization must not be achieved at the cost of
environmental and society. ESG includes three broad areas of interest - Environmental, Social,
and (Corporate) Governance. Sustainable investment is an investment approach that
considersenvironmental, social and governance (ESG) factors in portfolio selection and
management

Socially responsible investors must to show their concerns towards environment, society and
good governance as global citizenship. Environment criteria basically refer to how a particular
company deals with the environment during its cycle of production and distribution as well as
how eco-friendly is the final product. Social criteria are the one where the company’s relations
with consumers, employees, suppliers etc. is taken into account. And finally, Governance here
means the nature and attitude of the top management towards shareholder rights, audits and most
important stakeholders.

ESG metrics are not mandatory as a part of Financial Reporting Process. It’s up to investor to
decide whether to investment ESG practicing companies or not. It also depends on companies
whether to disclose ESG matrices in their annual report or not. Investors that care about the way
companies do business and how it affects our planet and society use ESG standards of a
company’s operations to screen potential investments.

Many renowned institutions, like SASB (Sustainability Accountability Standards (GRI) Board
and Global Reporting Initiative, Task Force on Climate-related Financial Disclosures (TCFD) are
working to frame guidelines and standardson ESG metrics.

ESG indicators
ESG indicators are divided into three categories which incorporates data relevant to all 17
Sustainable Development Goals. Environmental criteria consider how a company safeguards the
environment, including corporate policies addressing climate change, for example. Social criteria
examine how it manages relationships with employees, suppliers, customers, and the

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communities where it operates. Governance deals with a company’s leadership, executive pay,
audits, internal controls, and shareholder rights.
ESG indicators

Environment Social Governance

Emissions & pollution Education & skills Human rights

Employment Government effectiveness
Natural capital endowment & management

Energy use & security Demography Stability & rule of law

Environment/climate risk & resilience Poverty & inequality Economic environment

Food security Health & nutrition Gender

https://datatopics.worldbank.org/esg/framework.html
ESGDISCLOSURE REQUIREMENTS

SEBI introduced ESG reporting structure in the form of Business Responsibility and
Sustainability Report (BRSR) in the year 2021. The objective behind this was to of make it
mandatory for the top 1000 listed companies to report their sustainability performance in order to
maintain transparency with stakeholders.
According to BRSR top 1000 listed entities have to provide an overview of the entity’s material
ESG risks and opportunities, approach to mitigate or adapt to the risks along with financial
implications of the same.
Under BRSR, listed entities (top 1000) need to provide an overview of the entity’s material ESG
risks and opportunities, approach to mitigate or adapt to the risks along with financial
implications of the same. BRSR was introduced with the aim of making it mandatory for the top
1000 listed companies to report their sustainability performance in order to maintain transparency
with stakeholders. The pandemic along with the adoption of the Paris Agreement, and other
initiatives to combat climate change, have been the major contributors that accelerated the
relevance of ESG considerations to investors. BRSR is a questionnaire-based reporting that is
divided into 3 sections as follows:

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Section A: General Disclosures Section B: Management and Section C: Principle-Wise
Process Disclosures Performance Disclosures

This section contains details of the It contains questions relatedCompanies are required to report
listed entity; products/ services; to policy and managementupon KPIs in alignment with the
operations; employees; holding,
subsidiary and associate processes, governance,nine principles of the National
companies (including joint leadership and oversight. Guidelines on Responsible
ventures); Business Conduct (NGRBC). The
CSR; transparency and disclosure section classifies KPIs into two
compliances. subcategories that companies are
required to report upon: Essential
Indicators (Mandatory) and
Leadership Indicators (Voluntary).

ESG related reports provide stakeholders with comparable information of the top companies to
help them make informed investment choices. ESG criteria are used by socially conscious
investors to screen potential investments.
Listed below is an overview of the three criteria used to evaluate companies for ESG investing:

Environment. Social. Governance.

What kind of impact does the
company have on the
environment?
How does it protect/safeguard its social impact internally and
the environment?
This can include a company’s
carbon footprint, toxic chemicals
involved in its manufacturing
processes, its corporate policies
addressing climate change and
sustainability efforts that make Social criteria examine how a
up its supply chain.
How do the company’s board
and management drive positive
change? Governance includes
How does the company improveeverything from issues
surrounding a company’s
externally? Social factorsleadership, executive pay,
include everything from LGBTQdiversity in leadership, how well
equality, racial diversity in boththat leadership responds to and
the executive suite and staffinteracts with shareholders
overall, and inclusion programsaudits, internal controls, and
and hiring practices. shareholder rights.
company manages relationships
with employees, suppliers,
customers, and the communities
where it operates.

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With ESG investing becoming more mainstream, SEBI’s above disclosure requirements through
BRSR have been introduced to keep pace with such investment strategies, and growing concerns
about responsible corporate governance and climate change. (
https://www.obhanandassociates.com)
Companies that topped ESG rankings of SES

Company Rank Grade Industry

Infosys Ltd. 1 A+ IT
M&M 2 A Automobile
Tech Mahindra Ltd. 3 A IT
HDFC 4 A NBFC
Adani Ports 5 A Services
(https://www.business-standard.com)

According to a study conducted by corporate governance firm Stakeholders Empowerment

Services (SES). Mahindra & Mahindra (M&M), Tech Mahindra, HDFC and Adani Ports & SEZ
are the other firms in the top-five, with ESG scores between 80 and 90 (A rating).Overall, India’s
rank is 120 on the world Sustainable Development Goals (SDG) index with Finland topping the
tables and US and China ranked 32 and 57, respectively.
(ESG) Philosophy of Infosys

The Infosys ESG Vision 2030 encapsulates our ESG responsibilities andcommitments towards
the planet at large, the people and our stakeholders within the communities they inhabit. We
embraced ambitious goals andmeticulous plans for environmental preservation and serving the
interests ofour stakeholders.

ESG priorities to build a sustainable digital ecosystem the universe of our material concerns are
complex and multi-layered and it qualifies the value we seek to create through our business.
Within the domains of E, S and G, we are constantly defining the most crucial issues and
preparing to address them. In 2020, we reviewed the progress made over the past decade on our
ESG goals. We sharpened the lens for a more practical and comprehensive view. This helped
broaden our ESG focus and rank our priorities in order of their importance to our business and
our stakeholders, as observed through a data-driven and consultative exercise.

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ESG Indicatorsof Infosys
Environment

• The vision of the company is to serve the preservation of our planet by shaping and sharing
technology solutions and Leverage technology to support the transition to a low-carbon world
• In response to climate change the company aim to maintain carbon neutrality and reduce
carbon emissions every year
• Reducing greenhouse gas (GHG) emissions by 75%
• Engaging clients on climate actions through solutions

• Reduce our water footprint and enhance water availability in the communities where the
company operate and aim to maintain 100% wastewater recycling every year
• Reduce, reuse and recycle to minimize waste, including e-waste
• Ensuring zero waste to landfill

Social

• Serve the preservation of our planet by shaping and sharing technology solutions
• Serve the development of people by shaping a future with meaningful opportunities for all
Enabling digital talent at scale Energizing local communities Facilitate skilling to ensure
progress for all
• Extending digital skills to 10 mn+ people, including employees, clients’ workforce, students,
teachers and communities (2025)
• Partner with society to harness the power of technology solutions in their everyday
• Empowering 80 mn+ lives via tech for good programs in e-governance, healthcare and
education (2025)
• Foster diversity and nurture inclusion
• Creating a gender-diverse workforce at Infosys, with 45% women
• Enable opportunities for communities locally
• Delivering 33% of work by leveraging flexible/remote work options

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• Ensure fulfilling careers for our employees

• Facilitating best-in-class employee experience and being recognized among the best
employers in our key operating regions
Governance

• Serve the interests of all our stakeholders by leading through our core values
• Be a leader and get benchmarked for world-class corporate governance

• Bringing interests of all stakeholders to the fore through our empowered, diverse and inclusive
Board
• Building sustainable and responsible supply chain
• Ensuring robust compliance and integrity practices

• Engaging with stakeholders through various channels and earning trust through transparent
communication
• Ensure the safety of stakeholder data
• Adopting leading data privacy standards across all global operations
• Uphold the digital trust of our stakeholders

• Being recognized as industry leader in our information security practices (ESG) Philosophy

of Tech Mahindra
Tech Mahindra as a global IT services & consulting company, recognizes the impacts of its
business operations on the 3 key pillars of Sustainability viz People, Planet & Profit. It makes
continuous efforts to optimize efficiency across the environmental, social and governance
framework of the company. It is leading the way by putting sustainability at the heart of their
products, services, business models, and investments, helping to move the world onto a more
sustainable trajectory.
Tech Mahindra Becomes the Only Indian Organisation Recognized amongst the ‘2021 Global
100 Most Sustainable Corporations in the World’ by Corporate Knights It 72 globally for
delivering superior financial performance and leading the race to zero emissions economy.
It has been ranked as the Global IT Leader in the S&P Dow Jones Sustainability Indices (DJSI)
2021, one of the world’s most renowned indices for ESG. The company has been ranked 1st
among the top IT companies of the world in the “TSV IT services & Internet Software and
Services” segment. The leadership position in the DJSI world index shows it’s commitment

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towards sustainable practices and principles. It has not only focused on upon the environmental
aspects of ESG, but has also given due importance to the Social & Governance factors. It believes
that with ESG principles built into its core strategy can mitigate risks and drive profitable growth
while creating a positive societal impact.”
ESG Focus Areas Environmental factor:
• Climate Resilience : Achieve Carbon Neutrality by 2030
• Focusing on Renewable: 50% Renewable Energy by FY26 and 70% by FY30 (21.2% till
FY21)
• Solid Waste Management : Zero Waste to Landfill by FY26 for Owned locations (1 location
already in progress)
• Afforestation: Plant 50,000 trees every year (65,000+ trees planted till FY21)
• Water Security : Reduce Water Withdrawal intensity by 20% by FY26 (4.92 in FY21)

• Sustainable Supply Chain:Audit 200 Suppliers on Sustainability by FY26 (Audited 100+

suppliers till FY21)
Social factors:
• CSR projects (Disability): TMF Disability Projects: 50 by FY26 (35 in FY21)
• CSR projects (Employability): TMF Smart Centers: 120 by FY26 (76 in FY21) TMF Smart
Academies: 15 by FY26 (7 in FY21)
• Employee Recognition :45% associates to be recognized by FY26 (39% in FY21)
• Volunteering Hours: 180,000 per year (Green Marshals: 4,780 hours in FY21. CSR & ISR:
14,000+ hours in FY21)
• Women Empowerment:37% Women in organization & 12% in senior management by FY26
(Women overall 31.75% in FY21, Women in sr. mgmt. 8.08% in FY21)
• Human Rights Assessments:100% Owned locations by FY26 (1 location completed. 2
locations in progress)
• CSR Beneficiaries (Direct & Indirect):50,000 Direct & 5 Lakh Indirect by FY26 (30,820
Direct & 3.16 Lakh Indirect in FY21)
Governance factor:
Maintain High Corporate standards
• Effective Board: Diverse and Independent

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• Proactive Risk Management System
• Stringent compliance
• Transparent Disclosures
• Strong Customer Relationships
• Robust Cyber security
• Effectual Data privacy Integrated Reporting
Integrated Annual Report that is aligned to GRI standards, TCFD, CDSB and SASB
framework
Board of Directors:
• 3 women directors, exceeding the mandate of 1.
• Independent directors: 60%, exceeding the mandate of 33.3% (i.e.1/3rd) (
https://insights.techmahindra.com/investors/beyond-esg.pdf)

Conclusion

The ESG philosophy helpsto know company policy towards nature, policy toward
stakeholders and policy towards corporate disclosure and transparency. The need to
conserve the environment is utmost important in the present scenario due to hostile
effects of climate change in our everyday lives. In this situation, policy makers are
making mandatory for companies to disclose ESG requirements and sustainability.The
boards of companies are focusing on ESG practices to mitigate risks related to
exploitation of workers; poor corporate governance and climate change Moreover there is
mindset of investors are also gradually focusing on sustainable growth for their future
generations. In the long run failure of companies to comply with ESG standards might
lead to loss of their ability to attract capital.Indian companies performance is improving
in their ESG scores because of better disclosures and improved performance on various
parameters.
References

1. Abdul Rahman, R., &Alsayegh, M. F. (2021). Determinants of corporate

environment, social and governance (ESG) reporting among Asian firms. Journal of Risk
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2. Sultana, S., Zulkifli, N., &Zainal, D. (2018). Environmental, social and governance
(ESG) and investment decision in Bangladesh. Sustainability, 10(6), 1831.

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3. Korwatanasakul, U. (2020). Environmental, Social, and Governance Investment: Concepts,
Prospects, and the Policy Landscape. ENVIRONMENTAL, SOCIAL, AND
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