New Delhi: India needs US $ 20 billion worth of investments each year to achieve its climate targets and fund its green transition, says FICCI-Trilegal released a white paper ‘ESG – Into the Mainstream’ released during FICCI ESG Summit 2022 on Saturday .

“It needs a large budget allocation, international finance from bilateral and multilateral sources and green private investments,” says the report, which was released by Rajesh Verma, Secretary, Ministry of Corporate Affairs, Government of India. 

The report comes at a timely juncture as ESG - environmental, social and governance – considerations are increasingly influencing the way in which businesses measure success. The expectations of key business stakeholders such as investors, regulators, customers, and employees are also bringing these parameters in sharp focus.

The narrative around ESG has changed significantly over the last couple of years, from being seen as compliance imperative to taking the centre stage at boardroom discussions and driving investment and business strategy decisions. The report among other things explores India’s readiness to access and deliver climate finance and other related aspects such as uniform carbon tax policy and green taxonomy for enhancing investor confidence.

Focussing on redefining corporate citizenship – the road to sustainability, the report details how corporates can contribute to the sustainability agenda, non-financial metrics and management of ESG risks. As regulators actively incorporate ESG and sustainability factors into the legal framework, the ways in which companies operate will change.  

Given that assessment of the ESG metrics is based on softer uncrystallized principles, the report underscores the need for revisiting the requirement for accreditation of ERPs along with proposals for eligibility criteria such as net worth requirements, infrastructure and man-power requirements.

A light-touch principle-based regulation coupled with increasing shareholder activism and investor awareness will help set the broader framework within which ERPs operate, and act as a check on the activities of ERPs, which will in turn set the roadmap for corporate governance for the coming decades. The report also spotlights reforms in the power sector for encouraging ESG-led investment in India’s climate transition. /BI/