1 00:00:00,120 --> 00:00:05,690 < Intro > 2 00:00:05,690 --> 00:00:07,210 – Welcome back to Count Me In. 3 00:00:07,210 --> 00:00:09,240 I'm your host, Adam Larson, 4 00:00:09,240 --> 00:00:10,520 and today we're diving deep 5 00:00:10,520 --> 00:00:13,950 into a topic that's reshaping the corporate landscape in India, 6 00:00:13,950 --> 00:00:17,400 ESG, or Environmental, Social, Governance, factors 7 00:00:17,400 --> 00:00:19,440 and their growing influence. 8 00:00:19,440 --> 00:00:21,430 We have two esteemed guests joining us. 9 00:00:21,430 --> 00:00:24,520 First, Sunil Deshmukh, who is IMA's chair-elect 10 00:00:24,520 --> 00:00:26,240 and an expert with over 30 years 11 00:00:26,240 --> 00:00:29,240 of global experience in business management. 12 00:00:29,240 --> 00:00:33,800 Also, we have Sandhya Sriram, the group's CFO for Narayana Health, 13 00:00:33,800 --> 00:00:37,800 and she is among India's top 100 women in finance. 14 00:00:37,800 --> 00:00:41,570 In this episode, we're not only looking at the current regulations 15 00:00:41,570 --> 00:00:44,000 and the evolution of reporting requirements. 16 00:00:44,000 --> 00:00:47,120 But also how Indian markets are responding to the pressing need 17 00:00:47,120 --> 00:00:50,320 for ESG integration in risk management 18 00:00:50,320 --> 00:00:52,240 and long-term sustainability. 19 00:00:52,240 --> 00:00:55,800 Sunil will highlight the rewards tied to sustainable finance, 20 00:00:55,800 --> 00:00:59,000 has enhanced global reputation and reduced capital costs. 21 00:00:59,000 --> 00:01:01,880 While Sandhya will shed light on the practical challenges 22 00:01:01,880 --> 00:01:05,449 and opportunities like achieving transparency in ESG disclosure, 23 00:01:05,449 --> 00:01:08,000 and leveraging sustainable solutions through startups. 24 00:01:08,400 --> 00:01:09,840 Get ready to impact the complexities 25 00:01:09,840 --> 00:01:12,320 and innovations within the world of ESG, 26 00:01:12,320 --> 00:01:14,830 with insights from the CFO's desk. 27 00:01:14,830 --> 00:01:18,470 As the G20 turns its eyes to India for sustainable finance directives, 28 00:01:18,470 --> 00:01:20,800 we, too, focus on how Indian companies 29 00:01:20,800 --> 00:01:24,600 can translate these directives into competitive advantages. 30 00:01:24,600 --> 00:01:25,840 Let's get started. 31 00:01:25,840 --> 00:01:31,800 < Music > 32 00:01:31,800 --> 00:01:34,020 Sandhya and Sunil, I'm so excited 33 00:01:34,020 --> 00:01:37,240 to have you both on the podcast, today, as we talk about ESG, 34 00:01:37,240 --> 00:01:40,080 and especially ESG in the Indian market. 35 00:01:40,080 --> 00:01:42,600 And to just jump right into the conversation, 36 00:01:42,600 --> 00:01:46,460 how would you describe the importance of ESG integration, 37 00:01:46,460 --> 00:01:47,720 within financial strategies 38 00:01:47,720 --> 00:01:50,760 for companies operating in the Indian market? 39 00:01:51,880 --> 00:01:53,240 – Thank you very much, Adam. 40 00:01:53,240 --> 00:01:55,440 A great question, very relevant question 41 00:01:55,440 --> 00:01:57,800 to the Indian market conditions. 42 00:01:57,800 --> 00:02:00,080 Before we get into the formal discussion, 43 00:02:00,080 --> 00:02:03,240 I would say that the concept of triple bottom line 44 00:02:03,240 --> 00:02:06,290 was already existing in the world before ESG, 45 00:02:06,290 --> 00:02:10,080 which was coined by John Elkinton in 1994. 46 00:02:10,080 --> 00:02:15,200 Where we used to talk about 3P's, Profit, People, and Planet. 47 00:02:15,200 --> 00:02:20,280 I would say that ESG is a formal expansion of that concept, 48 00:02:20,280 --> 00:02:22,400 which has come into the existence. 49 00:02:22,850 --> 00:02:25,690 Now, ESG is in existence in India, 50 00:02:25,690 --> 00:02:28,940 I would say right from 2011. 51 00:02:28,940 --> 00:02:33,520 Indian Companies Act Department or, Ministry of Corporate Affairs, 52 00:02:33,520 --> 00:02:37,280 as well as the Securities and Exchange Board of India, 53 00:02:37,280 --> 00:02:39,400 have been coming out with different regulations, 54 00:02:39,400 --> 00:02:43,720 different advisories, guidelines, and some reporting requirements 55 00:02:43,720 --> 00:02:47,840 by Securities and Exchange Board of India, on this topic. 56 00:02:47,840 --> 00:02:49,320 Now, you asked me the question 57 00:02:49,320 --> 00:02:53,840 about the importance of ESG in financial strategies. 58 00:02:53,840 --> 00:02:56,989 I would say that in today's world, 59 00:02:56,989 --> 00:03:00,780 almost all companies in their financial strategies 60 00:03:00,780 --> 00:03:03,560 start with a concept of risk management first. 61 00:03:04,000 --> 00:03:06,269 And when we talk about the risk management, 62 00:03:06,269 --> 00:03:10,480 one of the most important strategy that comes is the sustainability. 63 00:03:10,480 --> 00:03:12,800 Whether your business is going to be sustained 64 00:03:12,800 --> 00:03:15,240 for a longer period of time or not. 65 00:03:15,240 --> 00:03:18,680 And there comes the ESG, which is of course sustainability 66 00:03:18,680 --> 00:03:22,040 pertaining to environment, risk relating to the environment, 67 00:03:22,040 --> 00:03:24,600 risk relating to the social, which is typically the people. 68 00:03:24,800 --> 00:03:28,760 And, of course, the governance, which is more of a compliance risk 69 00:03:28,760 --> 00:03:31,360 based on the requirements of the stock market 70 00:03:31,360 --> 00:03:33,320 or government regulations, and all those things. 71 00:03:33,320 --> 00:03:35,440 So I would say that most of the companies 72 00:03:35,440 --> 00:03:41,120 start with integrating the ESG in their risk management strkategy, 73 00:03:41,120 --> 00:03:42,800 and from there they take it. 74 00:03:42,800 --> 00:03:46,160 And, in today's world, ESG has become very important 75 00:03:46,160 --> 00:03:48,540 not only from a financial strategy point ofview 76 00:03:48,540 --> 00:03:50,599 or a business strategy point of view, 77 00:03:50,599 --> 00:03:53,459 but also accessibility to the capital. 78 00:03:53,459 --> 00:03:57,240 If you want to access the capital at the world level or global market, 79 00:03:57,240 --> 00:03:59,240 and if you want to have a cheap capital 80 00:03:59,240 --> 00:04:02,620 or affordable capital as compared to the market prices, 81 00:04:02,620 --> 00:04:07,600 I think sustainability and ESG is going to play a very important... 82 00:04:07,600 --> 00:04:11,349 ESG strategy integrated into a financial strategy, 83 00:04:11,349 --> 00:04:15,230 will help the companies have a competitive advantage 84 00:04:15,230 --> 00:04:17,000 as compared to their competitors. 85 00:04:17,000 --> 00:04:21,040 It will also help the companies to have a long-term sustainability strategy. 86 00:04:21,040 --> 00:04:23,800 And we also talk in finance domain, 87 00:04:23,800 --> 00:04:25,449 that every single business is supposed 88 00:04:25,449 --> 00:04:29,830 to have a going concern concept or is a perpetual continuation. 89 00:04:29,830 --> 00:04:33,800 So from that point of view, ESG will help companies to look into, 90 00:04:33,800 --> 00:04:36,790 naturally, how long the business strategy 91 00:04:36,790 --> 00:04:39,000 is going to sustain and stabilize. 92 00:04:39,000 --> 00:04:43,360 So long-term aspect of ESG is also going to help the companies 93 00:04:43,360 --> 00:04:45,280 in their financial strategy. 94 00:04:45,280 --> 00:04:48,920 Other small things, or other very important but small things, 95 00:04:48,920 --> 00:04:53,360 which are helping companies due to ESG is talent retention. 96 00:04:53,360 --> 00:04:57,600 The today's generation Z employees, they don't want to work for companies 97 00:04:57,639 --> 00:05:01,320 which are not following the people strategies or governance strategies. 98 00:05:01,320 --> 00:05:04,780 So talent acquisition and talent retention is one area. 99 00:05:04,780 --> 00:05:08,120 I would say supply chain resilience. 100 00:05:08,120 --> 00:05:11,880 In today's world, the Indian companies use global supply chain. 101 00:05:11,880 --> 00:05:13,440 We import a lot of raw material. 102 00:05:13,440 --> 00:05:16,360 So if we have a sustainability strategy, 103 00:05:16,360 --> 00:05:20,400 in the global supply chain, that's also going to help the companies. 104 00:05:20,400 --> 00:05:22,539 And, obviously, the last but not the least 105 00:05:22,539 --> 00:05:25,449 is the stakeholder engagement. 106 00:05:25,449 --> 00:05:26,810 And when I say stakeholder engagement, 107 00:05:26,810 --> 00:05:30,100 it could be your customers, it could be your suppliers, 108 00:05:30,100 --> 00:05:35,160 it could be your employees, it could be government, a municipal corporation, 109 00:05:35,160 --> 00:05:37,920 and, of course, shareholders, investors of the company. 110 00:05:37,920 --> 00:05:40,840 All these stakeholders are looking at ESG 111 00:05:40,840 --> 00:05:44,000 as a strategy from a long-term continuity, 112 00:05:44,000 --> 00:05:47,720 as well as comprehensive success formula for the company. 113 00:05:47,960 --> 00:05:50,449 – Now, I think that's an amazing overview 114 00:05:50,449 --> 00:05:54,550 of where to look at things from a 10,000-foot point of view, 115 00:05:54,550 --> 00:05:57,720 to see how everything's working within the organization. 116 00:05:57,720 --> 00:05:59,960 Now, Sandhya, as a CFO, 117 00:05:59,960 --> 00:06:04,520 how do you perceive your role changing and developing, especially, 118 00:06:04,529 --> 00:06:06,320 as you try to implement these strategies 119 00:06:06,320 --> 00:06:08,720 and some of the things that Sunil talked about? 120 00:06:09,600 --> 00:06:13,680 – Absolutely, in fact, I want to build on to what Sunil said. 121 00:06:13,680 --> 00:06:16,960 Traditionally, they say CFO, ESG, 122 00:06:16,960 --> 00:06:21,320 which means that maybe it allows you to raise funds more efficiently 123 00:06:21,320 --> 00:06:24,759 or maybe able to attract a larger investor pool. 124 00:06:24,759 --> 00:06:30,640 But, really, if you take a step back and think investors are asking, 125 00:06:30,640 --> 00:06:35,120 but we don't need investors to ask. 126 00:06:35,120 --> 00:06:38,240 There is a lot of value in championing 127 00:06:38,240 --> 00:06:41,760 the business objective through the lens of ESG. 128 00:06:41,760 --> 00:06:44,400 And here I want to take a little practical example 129 00:06:44,400 --> 00:06:47,110 of my own organization, Narayana Health. 130 00:06:47,110 --> 00:06:50,240 I lead the ESG committee, for the group, 131 00:06:50,240 --> 00:06:53,720 and I want to take an example of one of our sustainability goals, 132 00:06:53,720 --> 00:06:55,480 which is paper reduction. 133 00:06:55,480 --> 00:06:59,400 Now, it's a simple environment goal, one may think. 134 00:06:59,400 --> 00:07:04,240 So in 2020 we were consuming eleven pages. 135 00:07:04,240 --> 00:07:07,040 Now we are consuming five pages per patient, 136 00:07:07,040 --> 00:07:10,720 and we want to have it in the next two to three years. 137 00:07:10,720 --> 00:07:15,640 But, really, a paper is not an environment goal only. 138 00:07:15,640 --> 00:07:19,300 Of course, it's good for the environment, if you use less paper. 139 00:07:19,300 --> 00:07:24,640 But it is forcing us, as an organization, to think digitally. 140 00:07:24,640 --> 00:07:28,000 It is enabling better patient workflows. 141 00:07:28,000 --> 00:07:31,680 It is improving the quality of electronic health record 142 00:07:31,680 --> 00:07:33,520 because nobody can actually write something 143 00:07:33,520 --> 00:07:35,600 for the patient on a piece of paper 144 00:07:35,600 --> 00:07:38,160 because we are not allowing them to use that paper. 145 00:07:38,160 --> 00:07:41,440 So, then, someone goes on record and writes it. 146 00:07:41,440 --> 00:07:43,480 When that's written, then, it is improving 147 00:07:43,480 --> 00:07:46,680 the quality of data mining in the organization, 148 00:07:46,680 --> 00:07:51,160 and it's obviously improving the digital mindset in the team. 149 00:07:51,160 --> 00:07:54,120 We are starting to think more digital on processes. 150 00:07:54,560 --> 00:07:57,400 So when one may say, "It's an environment goal; 151 00:07:57,400 --> 00:07:59,379 I want to consume less paper." 152 00:07:59,379 --> 00:08:01,690 But it's an organization goal. 153 00:08:01,690 --> 00:08:04,840 If we want to be a digital organization tomorrow. 154 00:08:04,840 --> 00:08:10,200 We have to train our people at grassroots, to think digitally, 155 00:08:10,200 --> 00:08:14,600 and paper optimization is leading us in that direction. 156 00:08:14,600 --> 00:08:18,960 So I feel that it is very important for finance heads, 157 00:08:18,960 --> 00:08:23,280 who is typically called a co-pilot to the business, 158 00:08:23,280 --> 00:08:27,800 to understand the aspects of sustainability that play 159 00:08:27,800 --> 00:08:30,180 an integral part to business outcomes. 160 00:08:30,180 --> 00:08:33,600 And we have to channelize the organizational energy 161 00:08:33,600 --> 00:08:36,040 and resources in that direction. 162 00:08:36,040 --> 00:08:38,960 So we are able to achieve development 163 00:08:38,960 --> 00:08:44,280 and growth in the organization, and not just our ESG objective. 164 00:08:44,500 --> 00:08:50,000 So this is what I feel the roles CFOs can play in an organization, 165 00:08:50,000 --> 00:08:53,840 to be able to champion ESG. 166 00:08:54,040 --> 00:08:56,120 – Mh-hmm, yes, it takes time. 167 00:08:56,120 --> 00:08:59,589 You can't just throw all these regulations at the team 168 00:08:59,589 --> 00:09:00,800 and say, "Okay, start this now." 169 00:09:00,800 --> 00:09:01,960 You have to slowly build it 170 00:09:01,960 --> 00:09:05,810 to build that organizational culture to help build that. 171 00:09:05,810 --> 00:09:08,360 Say, "Hey, this is something we're going to do as an organization." 172 00:09:08,360 --> 00:09:10,600 So it's not something that just happens overnight. 173 00:09:10,600 --> 00:09:14,200 And I can imagine that, as you were mentioning that 174 00:09:14,200 --> 00:09:15,600 it's not something that you should wait 175 00:09:15,600 --> 00:09:17,990 for the investors to say, "Hey, this is what we have to do." 176 00:09:17,990 --> 00:09:19,440 Or wait for the consumers. 177 00:09:19,440 --> 00:09:22,400 But there are some elements, especially, 178 00:09:22,400 --> 00:09:25,640 when the regulatory environment in your country is changing. 179 00:09:25,640 --> 00:09:28,840 And maybe we can discuss a little bit about some of the effectiveness 180 00:09:28,840 --> 00:09:33,120 and the existive regulatory environment within India, 181 00:09:33,120 --> 00:09:35,300 in fostering the sustainable finance. 182 00:09:35,300 --> 00:09:36,880 And are there any enhancements 183 00:09:36,880 --> 00:09:39,080 you can suggest to help improve upon that? 184 00:09:39,320 --> 00:09:40,360 – Yes, thanks, Adam. 185 00:09:40,360 --> 00:09:46,040 It's an interesting question because effectiveness is a very loaded word. 186 00:09:46,040 --> 00:09:49,220 What is effective to someone may not be effective to someone else. 187 00:09:50,120 --> 00:09:54,480 Now, as far as India is concerned, the regulatory environment in India 188 00:09:54,480 --> 00:09:57,640 has made significant strides in fostering 189 00:09:57,640 --> 00:10:00,480 the sustainable finance, in recent years. 190 00:10:01,280 --> 00:10:02,920 And, of course, there is room for improvement, 191 00:10:02,920 --> 00:10:05,800 nothing is perfect unless you keep on improving. 192 00:10:05,800 --> 00:10:07,960 Now, in India's regulatory environment, 193 00:10:07,960 --> 00:10:11,490 I would tell a little bit more about the existing scenario. 194 00:10:11,490 --> 00:10:14,320 So we have our Securities and Exchange Board of India, 195 00:10:14,320 --> 00:10:15,890 which we call the SEBI. 196 00:10:15,890 --> 00:10:18,280 So SEBI has prescribed some ESG 197 00:10:18,280 --> 00:10:21,920 disclosure requirements for the listed companies. 198 00:10:21,920 --> 00:10:27,240 And these requirements have been evolving over a period of time. 199 00:10:27,240 --> 00:10:30,640 I will not go back all the way to the year 2011, 200 00:10:30,640 --> 00:10:34,000 when in India we started talking about sustainability 201 00:10:34,000 --> 00:10:37,960 through a concept called National Voluntary Guidelines, NVGs. 202 00:10:37,960 --> 00:10:40,160 That's where we started in 2011. 203 00:10:40,160 --> 00:10:43,810 But I would say, particularly, in the last two to three years, 204 00:10:43,810 --> 00:10:47,120 from the year 2020, we created a concept 205 00:10:47,120 --> 00:10:52,800 called Business Responsibility and Sustainability Reporting, BRSR, 206 00:10:52,800 --> 00:10:54,010 and that was prescribed 207 00:10:54,010 --> 00:10:56,360 by The Securities and Exchange Board of India, 208 00:10:56,360 --> 00:11:00,670 and it was applicable to top thousand listed entities in India. 209 00:11:00,670 --> 00:11:04,480 And later on in the year 2023, this current financial year, 210 00:11:04,480 --> 00:11:09,280 what has happened is they came out with a concept called BRSR Core. 211 00:11:09,280 --> 00:11:13,360 It means Business Responsibility and Sustainability Reporting system 212 00:11:13,360 --> 00:11:14,920 for the core companies. 213 00:11:14,920 --> 00:11:17,930 And they have identified some specific types of companies, 214 00:11:17,930 --> 00:11:20,520 listed companies, and they have given a roadmap 215 00:11:20,520 --> 00:11:23,360 over a period of time, in the next four to five years. 216 00:11:23,360 --> 00:11:31,480 In '23, '24, financial year 2023 and '24, top 150 companies are expected 217 00:11:31,480 --> 00:11:34,520 to give this core reporting on BRSR. 218 00:11:34,520 --> 00:11:40,320 In 2024, '25 top 250 company, after that top 500 company, 219 00:11:40,320 --> 00:11:41,930 after that top thousand companies. 220 00:11:41,930 --> 00:11:43,800 So Securities Exchange Board of India 221 00:11:43,800 --> 00:11:48,480 is expecting that within next four to five years, almost all listed companies 222 00:11:48,480 --> 00:11:52,720 will be covered under the ESG reporting, on a core basis. 223 00:11:52,720 --> 00:11:56,720 And there are criteria, there are nine basic principles of ESG reporting. 224 00:11:56,720 --> 00:12:00,079 There are formats, and I will not get into all those nitty-gritties 225 00:12:00,079 --> 00:12:03,930 because it's very comprehensive way of talking on that. 226 00:12:03,930 --> 00:12:06,399 But where the improvement is possible 227 00:12:06,399 --> 00:12:10,640 or where there are possibilities of enhancing this effective network, 228 00:12:10,640 --> 00:12:14,720 I would say one is we need to have a uniform ESG standards 229 00:12:14,720 --> 00:12:16,290 in line with global standards. 230 00:12:16,290 --> 00:12:19,760 In today's world, if you see ESG requirement of reporting 231 00:12:19,760 --> 00:12:23,320 it varies in America, it varies in Europe, and it varies in India. 232 00:12:23,320 --> 00:12:25,560 So how do you bring a comprehensive, 233 00:12:25,560 --> 00:12:28,680 consolidated, and uniformity across this reporting? 234 00:12:28,680 --> 00:12:30,850 That's very important because most of the companies 235 00:12:30,850 --> 00:12:33,360 are global companies, international companies. 236 00:12:33,360 --> 00:12:36,040 Their parent headquarters in U.S. does a different reporting. 237 00:12:36,040 --> 00:12:38,440 A subsidiary in India does a different reporting. 238 00:12:38,440 --> 00:12:42,130 So bringing them on a common platform is very important. 239 00:12:42,130 --> 00:12:48,280 I would also say that government can think of providing some tax incentives 240 00:12:48,280 --> 00:12:51,280 for ESG compliance, to become effective. 241 00:12:51,280 --> 00:12:53,600 Because our effectiveness will also come 242 00:12:53,600 --> 00:12:55,920 when companies see that there is some financial incentives, 243 00:12:55,920 --> 00:13:00,080 some benefits, like tax holiday, or like tax incentives, 244 00:13:00,080 --> 00:13:02,240 or reduced rate of tax for the companies. 245 00:13:02,240 --> 00:13:06,000 I think that would help for companies to foster more on ESG. 246 00:13:06,000 --> 00:13:09,480 Also impact investing regulations can be brought into India 247 00:13:09,480 --> 00:13:14,600 in a little bit more detailed way, and incentives given to the green projects. 248 00:13:14,600 --> 00:13:17,360 We are already having green bonds into India now. 249 00:13:17,360 --> 00:13:19,480 But any project which is being invested 250 00:13:19,480 --> 00:13:24,560 through a green investing or they are able to ensure that 251 00:13:24,560 --> 00:13:27,080 environmental impact on the society 252 00:13:27,080 --> 00:13:29,200 or on the community is being protected. 253 00:13:29,200 --> 00:13:32,160 So government can think of giving such incentives 254 00:13:32,160 --> 00:13:34,400 and benefits to new green projects 255 00:13:34,400 --> 00:13:37,690 through green bonds, or tax benefits, or tax holidays. 256 00:13:37,690 --> 00:13:40,520 And, of course, ensuring that stakeholder 257 00:13:40,520 --> 00:13:43,680 involvement is enhanced, at all levels. 258 00:13:43,680 --> 00:13:47,240 Not only at the shareholder level, or not only at the governmental level, 259 00:13:47,240 --> 00:13:50,840 but even customer level, supplier level. 260 00:13:50,840 --> 00:13:54,200 I would even say the employees who are working in the company. 261 00:13:54,200 --> 00:13:55,410 How can we ensure that? 262 00:13:55,410 --> 00:13:59,860 So there can be some possibilities of enhancement into these areas. 263 00:13:59,860 --> 00:14:04,720 I think that's the right approach or that's the ideal approach to go forward. 264 00:14:05,600 --> 00:14:13,040 – Just to add to what Sunil said, I think, in the G20, which India hosted recently, 265 00:14:13,040 --> 00:14:16,560 there was a segment on sustainable finance, 266 00:14:16,560 --> 00:14:20,000 and there was a roadmap that was set out 267 00:14:20,000 --> 00:14:23,200 and I was going through that in a different context, 268 00:14:23,200 --> 00:14:26,120 and I could see the depth of thinking 269 00:14:26,120 --> 00:14:29,200 that has gone into putting that roadmap together. 270 00:14:29,200 --> 00:14:34,400 Of course, with all the nations, and India also playing an important role 271 00:14:34,400 --> 00:14:38,640 and really the spirit of how this is coming together. 272 00:14:38,640 --> 00:14:41,940 Many of the enablers that Sunil is bringing 273 00:14:41,940 --> 00:14:43,760 maybe they'll come in different forms. 274 00:14:43,760 --> 00:14:46,610 But I feel it's only a matter of time, 275 00:14:46,610 --> 00:14:49,400 that there will be more enablers that will come to play. 276 00:14:49,960 --> 00:14:55,760 – That's a great point, Sandhya, you just hit the nail, absolutely. 277 00:14:55,760 --> 00:15:01,400 The India G20 presidency has put a lot of importance on sustainability. 278 00:15:01,400 --> 00:15:04,480 And we have already given commitment to the world, at large, 279 00:15:04,480 --> 00:15:08,560 that what we as India would like to do on green gas emission, 280 00:15:08,560 --> 00:15:10,920 carbon footprint, and every single commitment 281 00:15:10,920 --> 00:15:14,400 is properly drafted and roadmap is put forward 282 00:15:14,400 --> 00:15:17,160 to the United Nations, as well as the G20. 283 00:15:17,160 --> 00:15:19,040 Thanks for bringing that, Sandhya, great point. 284 00:15:19,040 --> 00:15:20,880 – Mh-hmm, and that'll be the day 285 00:15:20,880 --> 00:15:23,720 where all the regulations worldwide match up perfectly. 286 00:15:23,720 --> 00:15:26,080 I mean, that's a dream we can all have 287 00:15:26,080 --> 00:15:28,470 when politicians can actually agree on something. 288 00:15:28,470 --> 00:15:33,720 So I think we can all look forward to that, maybe, in the future. 289 00:15:33,720 --> 00:15:39,440 Now I know that enabling these regulations that are coming is not easy. 290 00:15:39,440 --> 00:15:41,160 And, so, maybe we can discuss a little bit 291 00:15:41,160 --> 00:15:42,920 about some of the challenges and barriers 292 00:15:42,920 --> 00:15:45,080 that are being encountered, as they try to integrate 293 00:15:45,080 --> 00:15:48,400 these sustainable finance principles into operations. 294 00:15:49,000 --> 00:15:54,019 – Yes, actually, I want to take a step back in the strategy itself. 295 00:15:54,019 --> 00:15:56,720 The biggest challenge today for many companies 296 00:15:56,720 --> 00:16:03,040 is that they're not integrating ESG into their core strategic vision. 297 00:16:03,040 --> 00:16:08,320 It's like a compliance exercise, or an obligation, or a requirement. 298 00:16:08,320 --> 00:16:12,080 It is because a lot of effort is required 299 00:16:12,080 --> 00:16:17,000 to fundamentally integrate ESG into the core vision of an organization. 300 00:16:17,000 --> 00:16:21,160 So, again, I want to come closer home, NH, again. 301 00:16:21,160 --> 00:16:23,660 So when BRSR became mandatory, 302 00:16:23,660 --> 00:16:26,720 what Sunil mentioned, last year, for us, 303 00:16:26,720 --> 00:16:31,560 we said, "Ok, let's not just do this as an exercise to update the BRSR. 304 00:16:31,560 --> 00:16:35,509 Let's take a step back and see what ESG means for us." 305 00:16:35,509 --> 00:16:40,000 So we worked on building that sustainability vision for our company. 306 00:16:40,000 --> 00:16:43,800 So we did stakeholder interviews, materiality assessment. 307 00:16:43,800 --> 00:16:47,010 We came up with outside-in on what we need to do, 308 00:16:47,010 --> 00:16:50,480 but somehow it was just not falling together. 309 00:16:50,480 --> 00:16:52,800 Then we got together as leadership, 310 00:16:52,800 --> 00:16:57,760 did a brainstorming on what inspires everyone to work for the organization, 311 00:16:57,760 --> 00:17:00,080 and what they feel proud about. 312 00:17:00,080 --> 00:17:02,040 And every member of leadership expressed 313 00:17:02,040 --> 00:17:04,840 in their own words, tremendous pride. 314 00:17:04,840 --> 00:17:07,920 We have strong values, leading governance practices, 315 00:17:07,920 --> 00:17:10,200 we do work on renewable energy. 316 00:17:10,200 --> 00:17:14,840 But the core of what it was for us was our "Health for All" mission, 317 00:17:14,870 --> 00:17:18,680 which is a socially-leaning approach to healthcare. 318 00:17:18,680 --> 00:17:21,840 But, then, for us it was a bit easy. 319 00:17:21,840 --> 00:17:23,280 We got a little lucky that way 320 00:17:23,280 --> 00:17:26,160 because we were deeply embedded in that social cost, 321 00:17:26,160 --> 00:17:29,320 even though we were a for-profit listed entity. 322 00:17:29,320 --> 00:17:33,600 But it had taken us 20 years of building this entity 323 00:17:33,600 --> 00:17:36,880 and now we discovered it in our ESG mission. 324 00:17:37,280 --> 00:17:40,669 For many organizations going that deeper 325 00:17:40,669 --> 00:17:43,120 and looking into what they stand for. 326 00:17:43,120 --> 00:17:44,860 How they impact their stakeholders. 327 00:17:44,860 --> 00:17:49,120 How they impact their investors, their consumers, their society, 328 00:17:49,120 --> 00:17:53,760 the regulatory bodies, and how can this impact 329 00:17:53,760 --> 00:17:58,120 be positively amplified into their ESG charter. 330 00:17:58,120 --> 00:18:00,680 I think that's the challenge 331 00:18:00,680 --> 00:18:06,470 that people are trying to get to battling with, get that right. 332 00:18:06,470 --> 00:18:11,160 And maybe some of the pioneers, like the Unilever Sustainability Plan 333 00:18:11,169 --> 00:18:15,240 I thought that was way ahead of its time, and really well thought through, 334 00:18:15,240 --> 00:18:17,840 across the walk of different aspects 335 00:18:17,840 --> 00:18:21,400 of how the business impacts its stakeholders. 336 00:18:21,400 --> 00:18:26,320 Recently, Apple came with a very beautiful video, very creatively done, 337 00:18:26,320 --> 00:18:28,640 about how they are looking at sustainability, 338 00:18:28,640 --> 00:18:30,960 and why it's so important to them. 339 00:18:30,960 --> 00:18:35,280 Now, that requires an organization to go deep inside, 340 00:18:35,280 --> 00:18:38,720 find that soul, and that exists in every organization, 341 00:18:38,720 --> 00:18:40,700 it's not that it doesn't exist. 342 00:18:40,700 --> 00:18:46,760 But we need to find that, and that has to help us build the ESG on top of it. 343 00:18:46,760 --> 00:18:49,000 I think that's when India Inc., 344 00:18:49,000 --> 00:18:53,640 can embark on a truly meaningful ESG journey. 345 00:18:54,040 --> 00:18:55,920 – I think that's a beautiful way of describing it. 346 00:18:55,920 --> 00:18:58,960 Of how you can lay that foundation 347 00:18:58,960 --> 00:19:01,640 and it can lead your organization forward. 348 00:19:01,640 --> 00:19:05,410 And it's not an easy task, especially, 349 00:19:05,410 --> 00:19:07,920 when you're trying to adopt sustainable finance, 350 00:19:07,920 --> 00:19:11,160 and investors may have different feelings about it. 351 00:19:11,160 --> 00:19:14,430 And how do you help your investors' sentiment 352 00:19:14,430 --> 00:19:18,560 shift toward the sustainable finance, especially if there's different definitions, 353 00:19:18,560 --> 00:19:20,360 people feel different ways about it. 354 00:19:20,360 --> 00:19:22,160 But it's becoming more socially acceptable and people 355 00:19:22,160 --> 00:19:24,000 are understanding the importance of it. 356 00:19:24,280 --> 00:19:25,200 – Yes, thanks, Adam. 357 00:19:25,200 --> 00:19:28,400 As far as sustainable finance is concerned, 358 00:19:28,400 --> 00:19:32,600 I personally think that adopting the sustainable finance practices, 359 00:19:32,600 --> 00:19:35,600 particularly, for Indian companies, at a global level. 360 00:19:35,600 --> 00:19:39,240 There is a huge, or I would say numerous opportunities 361 00:19:39,240 --> 00:19:42,000 of a competitive advantage for indian companies. 362 00:19:42,000 --> 00:19:45,640 As India is one of the fastest-growing economy in the world. 363 00:19:45,640 --> 00:19:47,040 And when economy grows, 364 00:19:47,040 --> 00:19:51,400 you need access to the capital, quick access to the capital. 365 00:19:51,400 --> 00:19:57,600 And this sustainable finance will help India, or Indian companies, or India Inc., 366 00:19:57,600 --> 00:20:01,560 to get access to the global capital, as quickly as possible. 367 00:20:01,560 --> 00:20:06,660 But not only accessibility, I will also say lower the cost of capital. 368 00:20:06,660 --> 00:20:10,240 The cost of capital is the cost at which you borrow the money in the market, 369 00:20:10,240 --> 00:20:11,240 in the financial market. 370 00:20:11,240 --> 00:20:14,960 And, of course, as you may know the cost of capital, 371 00:20:14,960 --> 00:20:18,000 or borrowing the cost of capital in global level, 372 00:20:18,000 --> 00:20:19,520 and in India, there's a huge difference. 373 00:20:19,520 --> 00:20:21,400 There is no parity at that. 374 00:20:21,400 --> 00:20:23,851 So sustainable finance will help Indian companies 375 00:20:23,851 --> 00:20:28,920 to borrow the money at lower cost of capital, that's a huge advantage. 376 00:20:28,920 --> 00:20:31,720 Other advantages I look at is it will help companies 377 00:20:31,720 --> 00:20:34,560 to improve their credit rating. 378 00:20:34,560 --> 00:20:37,560 Nowadays, to borrow the money, you need to get a credit rating. 379 00:20:37,560 --> 00:20:40,040 And one of the criteria applied in credit rating 380 00:20:40,040 --> 00:20:44,309 is about your ESG strategy, your sustainable finance strategies. 381 00:20:44,309 --> 00:20:49,130 So if companies follow sustainable finance initiatives or strategy, 382 00:20:49,130 --> 00:20:51,919 they are likely to get a better credit rating. 383 00:20:51,919 --> 00:20:55,760 Of course, in turn, it means that, again, you will get a lower cost of capital, 384 00:20:55,760 --> 00:20:58,080 and a higher accessibility to funds. 385 00:20:58,080 --> 00:21:02,080 I also see that it will enhance companies' reputation, 386 00:21:02,080 --> 00:21:03,920 in the global market. 387 00:21:03,920 --> 00:21:08,409 And reputation today is one of the very important aspect, we all know. 388 00:21:08,409 --> 00:21:11,700 Not only from ESG point of view, but from any other point of view. 389 00:21:11,700 --> 00:21:15,600 So sustainable finance can enhance companies' reputation. 390 00:21:15,600 --> 00:21:17,360 You get access to the global market. 391 00:21:17,360 --> 00:21:20,520 Some of the markets today, we are not able to reach out to 392 00:21:20,520 --> 00:21:22,920 because we are not following ESG practices. 393 00:21:22,920 --> 00:21:26,510 For example, European Union has got very stringent requirements 394 00:21:26,510 --> 00:21:28,280 as far as supply chain is required. 395 00:21:28,280 --> 00:21:30,800 So we will have access to those markets, 396 00:21:30,800 --> 00:21:31,840 once we follow the sustainable 397 00:21:31,840 --> 00:21:35,200 finance facilities, sustainable finance initiatives. 398 00:21:35,200 --> 00:21:38,680 Risk mitigation will happen much better than it used to happen. 399 00:21:38,680 --> 00:21:41,600 We will have more competitive differentiation. 400 00:21:41,600 --> 00:21:45,929 Indian companies will be competitive enough to global companies, 401 00:21:45,929 --> 00:21:47,480 by following the sustainable strategies. 402 00:21:47,480 --> 00:21:50,680 And many global players prescribe that 403 00:21:50,680 --> 00:21:53,850 when they buy the material or when they supply the material. 404 00:21:53,850 --> 00:21:57,400 The supply chain and entire value chain should be ESG compliant. 405 00:21:57,409 --> 00:22:00,440 So there also we will get opportunities. 406 00:22:00,440 --> 00:22:03,220 I also see that there are a lot of partnership opportunities. 407 00:22:03,220 --> 00:22:05,520 Of collaboration and various companies, 408 00:22:05,520 --> 00:22:10,280 various, I would say finance houses, they will come and partner with you 409 00:22:10,280 --> 00:22:13,960 if you are following the ESG sustainable finance strategy. 410 00:22:13,960 --> 00:22:19,240 But one of the very important thing I see in today's world is that innovation 411 00:22:19,240 --> 00:22:22,679 and India is world startup capital, in today's world. 412 00:22:22,679 --> 00:22:26,720 We are creating more unicorns than anyone else is creating in the world. 413 00:22:26,720 --> 00:22:32,600 And my panelist, Sandhya, lives in the city where the highest number 414 00:22:32,600 --> 00:22:35,400 of unicorns are being created. 415 00:22:35,400 --> 00:22:38,160 So from that point of view, for the startup economy, 416 00:22:38,160 --> 00:22:40,800 the sustainable finance is going to help us a lot. 417 00:22:40,800 --> 00:22:43,240 And I made a comment last week, 418 00:22:43,240 --> 00:22:46,440 when I was talking at one of the CFO conference 419 00:22:46,440 --> 00:22:48,680 that there was a quote by Peter Drucker 420 00:22:48,680 --> 00:22:52,150 called "Culture eats strategy for breakfast." 421 00:22:52,150 --> 00:22:55,000 So culture is more important than strategy. 422 00:22:55,000 --> 00:22:59,520 But, in view of this, I would say that culture eats innovation for breakfast. 423 00:22:59,520 --> 00:23:02,080 What I'm trying to say is that a culture of innovation 424 00:23:02,080 --> 00:23:04,360 is very important in an organization. 425 00:23:04,360 --> 00:23:07,480 And if you have a culture of innovation, 426 00:23:07,480 --> 00:23:10,640 definitely, you are going into get into the sustainability 427 00:23:10,640 --> 00:23:13,320 because environment, social, and governance. 428 00:23:13,640 --> 00:23:16,680 – I like that "Culture eats innovation for breakfast" 429 00:23:16,680 --> 00:23:20,240 and how important all those things to build up there. 430 00:23:20,240 --> 00:23:21,680 And, so, when you're thinking about things 431 00:23:21,680 --> 00:23:25,570 like disclosure in an ESG, with regulations. 432 00:23:25,570 --> 00:23:29,440 How can companies ensure transparency and build that trust, 433 00:23:29,440 --> 00:23:33,400 that Sandhya you were talking about, and how can we improve upon that? 434 00:23:33,419 --> 00:23:36,169 To make sure that we're being transparent and being open, 435 00:23:36,169 --> 00:23:38,680 but also being successful as an organization. 436 00:23:38,680 --> 00:23:44,680 – So an ESG scorecard that was released by Crisil, in 2022 437 00:23:44,680 --> 00:23:47,120 showed the performance of companies 438 00:23:47,120 --> 00:23:49,560 on the environment parameter was weaker, 439 00:23:49,560 --> 00:23:51,400 compared to social and governance. 440 00:23:51,400 --> 00:23:57,640 In India, one in five companies reported their Scope 1, Scope 2 GHG emissions. 441 00:23:57,650 --> 00:24:01,100 The disclosure of Scope 3 emissions was even worse. 442 00:24:01,100 --> 00:24:05,120 63 out of 586 companies published this data. 443 00:24:05,640 --> 00:24:08,760 Now, if you take a step back, the biggest challenge 444 00:24:08,760 --> 00:24:12,400 which Indian industries are facing is on the supply chain side, 445 00:24:12,400 --> 00:24:14,489 Sunil mentioned about supply chain. 446 00:24:14,489 --> 00:24:18,620 But many supply chain providers are MSMEs unlisted, 447 00:24:18,620 --> 00:24:23,240 do not have the ability to track and report a large number of matrices. 448 00:24:23,240 --> 00:24:24,800 Deloitte had done a survey 449 00:24:24,800 --> 00:24:30,000 that revealed that only 27% of Indian organizations, 450 00:24:30,000 --> 00:24:32,800 feel that they are adequately equipped 451 00:24:32,800 --> 00:24:36,160 to meet their ESG strategy and compliance requirements. 452 00:24:36,160 --> 00:24:38,600 Only 15% believe that their suppliers 453 00:24:38,600 --> 00:24:42,240 are prepared to comply with ESG mandates. 454 00:24:42,240 --> 00:24:45,000 Now, to all of this, there is that additional challenge 455 00:24:45,000 --> 00:24:48,120 of what quote within quotes "Greenwashing". 456 00:24:48,800 --> 00:24:51,480 There is a very interesting article 457 00:24:51,480 --> 00:24:55,680 by valuation guru Ashwath Damodaran, in one of his blogs. 458 00:24:55,680 --> 00:24:59,000 Where he writes a post about a large listed company. 459 00:24:59,000 --> 00:25:04,000 He says, "They've learned to play the ESG game well." 460 00:25:04,000 --> 00:25:09,320 And added to that, "The BRSR, is a bit of a prescriptive document, 461 00:25:09,320 --> 00:25:11,120 the way it has been designed." 462 00:25:11,440 --> 00:25:14,400 So it does not allow enough leverage 463 00:25:14,400 --> 00:25:17,710 to appreciate the nuances of different businesses 464 00:25:17,710 --> 00:25:21,760 and more importantly, their goals and what is core to them. 465 00:25:22,280 --> 00:25:24,160 Now, if you take a step back in the West, 466 00:25:24,160 --> 00:25:29,120 ESG has a very strong E leaning, followed by G, and then S. 467 00:25:29,480 --> 00:25:32,640 But for India, the order is a little jumbled up. 468 00:25:32,640 --> 00:25:36,840 Many Indian companies are doing a lot on the social space, 469 00:25:36,840 --> 00:25:39,480 followed by environment, followed by governance. 470 00:25:39,480 --> 00:25:45,640 So we need to contextualize our ESG measurement to the country's needs. 471 00:25:45,640 --> 00:25:47,760 And somewhere our weightage, 472 00:25:47,760 --> 00:25:53,070 and line of what we want to go after have to play that balance. 473 00:25:53,070 --> 00:25:57,160 But, finally, you can say a lot of things like this, 474 00:25:57,160 --> 00:26:01,640 but it really comes down to purpose and intent. 475 00:26:01,640 --> 00:26:07,320 If the purpose is not aligned and ESG is something on the sidelines, 476 00:26:07,320 --> 00:26:09,880 or if the intent is not there. 477 00:26:09,880 --> 00:26:13,480 I don't think any disclosure requirement 478 00:26:13,480 --> 00:26:17,640 will be enough to get the right perspective. 479 00:26:17,640 --> 00:26:21,429 So it has to start from within for organizations 480 00:26:21,429 --> 00:26:25,600 and how they can, like we spoke about earlier, bring their co-purpose. 481 00:26:25,600 --> 00:26:31,840 Then disclosure, compliance, can fall in place, maybe 60%, maybe 80%, 482 00:26:31,840 --> 00:26:35,440 but it will start moving in that direction. 483 00:26:36,060 --> 00:26:37,620 – It will start moving in that direction, 484 00:26:37,620 --> 00:26:40,420 but it's going to take time to build that. 485 00:26:40,420 --> 00:26:45,280 And like Sunil was mentioning, these unicorns that are popping up. 486 00:26:45,280 --> 00:26:47,360 They need to start it at the ground level 487 00:26:47,360 --> 00:26:49,120 as they're building their organization, 488 00:26:49,120 --> 00:26:51,560 and older organizations that have been around for a while, 489 00:26:51,560 --> 00:26:55,240 they have to change their whole culture, 490 00:26:55,240 --> 00:26:58,450 so that they can develop as an organization. 491 00:26:58,450 --> 00:27:01,600 And how can you develop these, 492 00:27:01,600 --> 00:27:04,640 how can you incorporate these strategies into your organization, 493 00:27:04,640 --> 00:27:07,200 to make sure that you can build these strong foundation? 494 00:27:07,200 --> 00:27:10,120 Because, otherwise, it's going to be very difficult 495 00:27:10,120 --> 00:27:12,960 to make these changes that we've been discussing. 496 00:27:13,480 --> 00:27:17,520 – We spoke about when ESGs are tied to the core of the organization 497 00:27:17,520 --> 00:27:19,610 benefits can be achieved. 498 00:27:19,610 --> 00:27:22,240 The biggest place where you are able to see this, 499 00:27:22,240 --> 00:27:25,520 in India, today, is in the banking sector. 500 00:27:25,520 --> 00:27:28,640 A large number of banks have been able 501 00:27:28,640 --> 00:27:32,240 to channelize investments into rural households. 502 00:27:32,240 --> 00:27:35,000 One of the largest banks in India, 503 00:27:35,000 --> 00:27:40,800 they've financed 7.6 million rural households, it's a win win. 504 00:27:40,800 --> 00:27:46,040 The amount of credit growth that has happened for the bank, for India, 505 00:27:46,040 --> 00:27:49,760 and the financial inclusion goal of the country, 506 00:27:49,760 --> 00:27:52,640 you're able to tick all the boxes. 507 00:27:52,640 --> 00:27:56,720 So some of these models are able to create value. 508 00:27:56,720 --> 00:28:01,120 So where businesses are able to create value with a sustainability goal. 509 00:28:01,120 --> 00:28:03,419 Maybe I want to take our example one more. 510 00:28:03,419 --> 00:28:06,280 We run one of the largest hospital-based, 511 00:28:06,280 --> 00:28:11,640 post-graduation programs for doctor training, it's called DNB. 512 00:28:11,640 --> 00:28:15,160 We also run a very large nursing paramedical training program. 513 00:28:15,160 --> 00:28:17,200 In a country where there's an acute shortage 514 00:28:17,200 --> 00:28:19,320 of doctors, nurses, paramedics, 515 00:28:19,350 --> 00:28:20,800 This investment we are making 516 00:28:20,800 --> 00:28:24,200 in creating a talent pool for the future is a win-win. 517 00:28:24,200 --> 00:28:27,640 We believe it will secure our own talent pipeline for the future, 518 00:28:27,640 --> 00:28:31,400 and at the same time, we'll be able to create talent for the country. 519 00:28:31,400 --> 00:28:34,680 Most business cases in renewable energy 520 00:28:34,680 --> 00:28:36,960 have a two to three years' payback. 521 00:28:36,960 --> 00:28:40,659 There is a lot of investment that's being channelized in the space. 522 00:28:40,659 --> 00:28:44,450 For our own company, there is one of our largest units, 523 00:28:44,450 --> 00:28:46,520 it's 77% renewable energy. 524 00:28:46,520 --> 00:28:52,680 But I'm a very happy CFO because my power bill is halved. 525 00:28:52,680 --> 00:28:56,960 So there is so much of benefit that one can achieve. 526 00:28:56,960 --> 00:29:00,480 So when we say sometimes that government has to give benefits 527 00:29:00,480 --> 00:29:06,840 to enable ESG, et cetera, it's possible within the organization's contour 528 00:29:06,840 --> 00:29:10,200 to be able to create models that are able to create value 529 00:29:10,200 --> 00:29:13,380 for the organization, and are also sustainable. 530 00:29:13,380 --> 00:29:16,500 Now, to see from a startup point of view, 531 00:29:16,500 --> 00:29:20,840 Sunil was talking about the startup capital is Bangalore 532 00:29:20,840 --> 00:29:23,840 but India itself is the startup capital of the world. 533 00:29:23,840 --> 00:29:25,390 There are several startups 534 00:29:25,390 --> 00:29:29,840 which have built successful business models on sustainable solutions. 535 00:29:29,840 --> 00:29:32,140 I mean, the count, the number is endless. 536 00:29:32,140 --> 00:29:35,520 The areas are phenomenal, renewable energy, of course. 537 00:29:35,520 --> 00:29:38,280 But say areas such as biofuel from waste, 538 00:29:38,280 --> 00:29:44,400 biomass, emission control devices, battery recycling, air purification. 539 00:29:44,400 --> 00:29:47,920 Rooftop solar for home, it's such a big thing now. 540 00:29:47,920 --> 00:29:49,920 And we always think that India is a hot country, 541 00:29:49,920 --> 00:29:52,960 tropical country, there's so much heat. 542 00:29:52,960 --> 00:29:59,440 But it's really created a new wave of companies with rooftop solar, 543 00:29:59,440 --> 00:30:02,360 vertical gardens for homes and offices, it looks beautiful. 544 00:30:02,360 --> 00:30:06,340 People are now, instead of doing interiors with fancy wood, 545 00:30:06,340 --> 00:30:10,480 and color, and lighting, are doing interiors with vertical gardens, 546 00:30:10,480 --> 00:30:11,680 which is again, a win-win. 547 00:30:11,680 --> 00:30:16,110 It looks so beautiful and at the same time it's so sustainable. 548 00:30:16,110 --> 00:30:19,080 Many technology solutions have picked up from this. 549 00:30:19,080 --> 00:30:22,640 For example, there are IoT solutions for energy monitoring, 550 00:30:22,640 --> 00:30:26,600 for various types of sustainability practices, 551 00:30:26,600 --> 00:30:29,280 improving sustainability practices. 552 00:30:29,280 --> 00:30:32,690 So it's really a long list of opportunities, 553 00:30:32,690 --> 00:30:38,040 that the space of sustainability has created to monetize in a win-win way. 554 00:30:38,520 --> 00:30:42,560 So businesses also see tremendous value in engaging with these startups. 555 00:30:42,590 --> 00:30:46,860 So I would like to conclude that this explosion 556 00:30:46,860 --> 00:30:53,400 that has got created in the Indian context, and how we are able to bring 557 00:30:53,400 --> 00:30:55,920 all of this together in our organization. 558 00:30:55,920 --> 00:31:02,200 Is now becoming more a challenge of innovation, like Sunil was mentioning, 559 00:31:02,200 --> 00:31:05,400 than a challenge of compliance. 560 00:31:05,520 --> 00:31:08,280 – And just to add to what Sandhya has just said, 561 00:31:08,280 --> 00:31:10,040 is one of the interesting phenomenon 562 00:31:10,040 --> 00:31:12,280 I have seen of late, in the last two to three years, 563 00:31:12,280 --> 00:31:16,280 is that there are a lot of small and medium-sized companies 564 00:31:16,280 --> 00:31:20,320 who are voluntarily accepting the ESG standards. 565 00:31:20,320 --> 00:31:23,090 They're not mandatorily required to do that. 566 00:31:23,090 --> 00:31:26,000 There is no compliance requirement for them. 567 00:31:26,000 --> 00:31:29,130 But as a good startup or as futuristic startup, 568 00:31:29,130 --> 00:31:31,440 they are talking from day one that 569 00:31:31,440 --> 00:31:34,760 "We want to ensure environmental, social, 570 00:31:34,760 --> 00:31:37,380 and governance aspects, from day one, 571 00:31:37,380 --> 00:31:39,840 when we are a small company, we are a growing company." 572 00:31:39,840 --> 00:31:42,040 And no one is forcing them. 573 00:31:42,559 --> 00:31:47,280 So I really like that aspect because, normally, what we see, 574 00:31:47,280 --> 00:31:52,389 what this BRSR report, and all these SASB, and all this compliance, 575 00:31:52,389 --> 00:31:55,600 it is sort of forced upon the corporations. 576 00:31:55,600 --> 00:31:59,320 Either by the investors, or by the Security Exchange Board of India, 577 00:31:59,320 --> 00:32:01,340 or by some government authority. 578 00:32:01,340 --> 00:32:04,000 Whereas I'm seeing a different phenomenon here. 579 00:32:04,000 --> 00:32:06,539 On their own, the small and medium businesses 580 00:32:06,539 --> 00:32:13,040 are creating that culture of ESG, and which is really fantastic to see that. 581 00:32:13,040 --> 00:32:14,799 – That is really fantastic to see. 582 00:32:14,799 --> 00:32:18,640 And maybe as we wrap up, this has been a wonderful conversation. 583 00:32:18,640 --> 00:32:22,160 I feel like we've covered so much and given so much great advice. 584 00:32:22,190 --> 00:32:23,990 If we're looking toward the future, 585 00:32:23,990 --> 00:32:27,539 how do we see the evolution of sustainable finance in India, 586 00:32:27,539 --> 00:32:28,480 or even the world? 587 00:32:28,480 --> 00:32:31,549 As we're looking at it from an overarching view. 588 00:32:31,549 --> 00:32:33,600 How can companies stay ahead of that curve? 589 00:32:33,600 --> 00:32:34,960 I think we've given some great advice. 590 00:32:34,960 --> 00:32:38,920 But maybe we can summarize some of that as we wrap up the conversation. 591 00:32:39,320 --> 00:32:44,120 – So I think the ESG is going to evolve very quickly, very rapidly, 592 00:32:44,120 --> 00:32:46,240 not only in India but worldwide. 593 00:32:46,240 --> 00:32:52,750 And one of the statements made by United Nations, last week, 594 00:32:52,750 --> 00:32:56,610 was that "We have transitioned now from global warming 595 00:32:56,610 --> 00:32:59,680 and we are now into global boiling." 596 00:32:59,680 --> 00:33:02,590 This was the statement made. 597 00:33:03,080 --> 00:33:07,600 Now, that is a very, I would say a very powerful statement. 598 00:33:07,600 --> 00:33:12,080 People need to understand that if we do not take care of our environment, 599 00:33:12,080 --> 00:33:13,920 what's likely to happen to us. 600 00:33:13,920 --> 00:33:17,680 Evolution, on one hand, is through forced measures, 601 00:33:17,680 --> 00:33:19,500 compliance measures, typically, 602 00:33:19,500 --> 00:33:24,200 which will happen on requirement strategies, compliance reports, 603 00:33:24,200 --> 00:33:27,080 and how to evolve with the new reports and all those things. 604 00:33:27,080 --> 00:33:31,000 But one of the area, or some of the few areas 605 00:33:31,000 --> 00:33:35,260 I would like to see, which may happen based on my experience, 606 00:33:35,260 --> 00:33:40,070 is board-level oversight will be required now into ESG. 607 00:33:40,070 --> 00:33:42,800 The global boards or the boards of the companies, 608 00:33:42,800 --> 00:33:46,000 they have to get involved into ESG now. 609 00:33:46,000 --> 00:33:49,000 And when I say involved, I'm not talking about the micromanagement, 610 00:33:49,000 --> 00:33:51,600 but ESG as a strategy on the board. 611 00:33:51,600 --> 00:33:54,080 When the board is sitting, they need to start discussing 612 00:33:54,080 --> 00:33:56,600 and overseeing what's happening on the ESG. 613 00:33:56,600 --> 00:33:58,520 That's a new way of evolving. 614 00:33:58,520 --> 00:34:02,600 We need to start engaging more and more all the stakeholders, 615 00:34:02,600 --> 00:34:04,300 with whom we are doing the business. 616 00:34:04,300 --> 00:34:07,639 We also have to keep on doing the ESG risk assessment 617 00:34:07,639 --> 00:34:10,800 on a continuous basis because we may have new risks. 618 00:34:10,800 --> 00:34:15,000 Covid-19 was a classic example; we don't know what else is likely to come. 619 00:34:15,000 --> 00:34:20,680 So on a continuous basis, keep doing the ESG risk assessment, 620 00:34:20,680 --> 00:34:23,760 supply chains, innovation is required to happen. 621 00:34:23,760 --> 00:34:27,030 Talent; retaining talent, acquiring talent, 622 00:34:27,030 --> 00:34:30,400 who respects the ESG, that's also required. 623 00:34:30,400 --> 00:34:34,180 And, obviously, we need to start looking into green financing, 624 00:34:34,180 --> 00:34:36,329 green bonds, and all those type of things. 625 00:34:36,329 --> 00:34:40,360 So I think these are some of the areas, which will evolve over a period of time. 626 00:34:40,360 --> 00:34:43,560 And, of course, technology will play a huge role in this. 627 00:34:44,120 --> 00:34:47,679 – Thank you, Sunil, maybe, I want to take a slightly sectoral view. 628 00:34:47,679 --> 00:34:50,450 Some of the sectors that are really making an impact, 629 00:34:50,450 --> 00:34:51,940 starting, of course, is energy. 630 00:34:51,940 --> 00:34:56,720 The companies in the energy sector are focusing the most on reducing GHGs, 631 00:34:56,720 --> 00:34:58,920 and investing in renewable energy. 632 00:34:58,920 --> 00:35:02,880 For example, Tata Power, today, has 38% clean and green energy. 633 00:35:02,880 --> 00:35:05,869 They are aiming to be 80% by 2030. 634 00:35:05,869 --> 00:35:08,320 The advantage of Tata Power going green 635 00:35:08,320 --> 00:35:11,680 is that the Tata Group is such a massive group of companies, 636 00:35:11,680 --> 00:35:13,780 and they are in every sector. 637 00:35:13,780 --> 00:35:16,520 That means that all those sectors will go green 638 00:35:16,520 --> 00:35:21,130 because most of them consume captive power from Tata Power, 639 00:35:21,130 --> 00:35:23,560 and that really makes a very big difference. 640 00:35:23,560 --> 00:35:26,840 Similarly, the next big sector is the manufacturing. 641 00:35:26,840 --> 00:35:28,800 There are a lot of companies which are working 642 00:35:28,800 --> 00:35:32,480 on reducing pollution using sustainable material. 643 00:35:32,480 --> 00:35:34,980 Reprocessing plastic because manufacturing 644 00:35:34,980 --> 00:35:41,120 generates the most amount of plastic and pushes in, especially, fast moving. 645 00:35:41,120 --> 00:35:43,800 There's a lot of plastic that's getting pushed into the environment, 646 00:35:43,800 --> 00:35:47,240 and government has built a good set of regulations 647 00:35:47,240 --> 00:35:49,120 around plastic reprocessing. 648 00:35:49,120 --> 00:35:52,440 But there's a lot of thinking and research and innovation dollars, 649 00:35:52,440 --> 00:35:56,920 that are going into finding more sustainable ways 650 00:35:56,920 --> 00:35:59,910 of delivering materials to their consumers. 651 00:35:59,910 --> 00:36:02,320 Agriculture, again, there are companies 652 00:36:02,320 --> 00:36:04,490 that are focusing on reducing water use, 653 00:36:04,490 --> 00:36:08,760 which is very important for a water-scarce country like India. 654 00:36:08,760 --> 00:36:13,760 Sustainable farming practices, even improving farmer livelihood 655 00:36:13,760 --> 00:36:18,080 is an important aspect for a country like India. 656 00:36:18,080 --> 00:36:19,950 So one initiative I want to call out 657 00:36:19,950 --> 00:36:23,819 is the transformational work that Reliance Foundation does. 658 00:36:23,819 --> 00:36:26,180 They run a rural transformation program, 659 00:36:26,180 --> 00:36:29,320 which reaches to some 20 states, union territories. 660 00:36:29,320 --> 00:36:35,600 It has some 14.6 million people they've covered as of, I think, August '22. 661 00:36:35,600 --> 00:36:38,910 Now, in this they have one part of that service 662 00:36:38,910 --> 00:36:41,880 is a Reliance Foundation Information Service. 663 00:36:41,880 --> 00:36:47,760 They bring technology solutions and help address information gaps 664 00:36:47,760 --> 00:36:52,400 and asymmetry for farmers, like agricultural farmers, 665 00:36:52,400 --> 00:36:54,520 marine farmers, livestock farmers. 666 00:36:54,520 --> 00:36:58,970 It provides them virtual advisory, and there are inputs on weather, 667 00:36:58,970 --> 00:37:03,000 better farming practices, diseases, livestock management. 668 00:37:03,000 --> 00:37:09,320 Now, this is like a beautiful example of how information itself can empower 669 00:37:09,320 --> 00:37:15,400 a sustainable world forward, and in a sector which is so disintegrated, 670 00:37:15,400 --> 00:37:19,160 and disempowered, and not very affluent as well. 671 00:37:19,160 --> 00:37:23,560 So last one more sector I really want to talk about is construction. 672 00:37:23,560 --> 00:37:26,400 Of course, there are hundreds of sectors which are there, 673 00:37:26,400 --> 00:37:28,720 but I want to talk about construction. 674 00:37:28,720 --> 00:37:32,000 Again, there is a huge amount of sustainable material 675 00:37:32,000 --> 00:37:34,960 thinking that's going into construction industry. 676 00:37:34,960 --> 00:37:37,760 People are looking at reducing energy, water use. 677 00:37:37,760 --> 00:37:41,160 Worker safety, it's a very important aspect 678 00:37:41,160 --> 00:37:44,600 because there are statutory regulatory requirements. 679 00:37:44,600 --> 00:37:49,840 But from an ESG charter, people are going above and beyond on safety. 680 00:37:49,840 --> 00:37:52,160 A friend of mine, she runs a startup 681 00:37:52,160 --> 00:37:55,800 which focuses urban tech, developing scalable startups 682 00:37:55,800 --> 00:37:59,040 about livability, climate, resilience, inclusion. 683 00:37:59,040 --> 00:38:02,680 What she tells me is that the amount of interest 684 00:38:02,680 --> 00:38:08,520 that she gets from various, one is investors, but from stakeholders, 685 00:38:08,520 --> 00:38:14,840 on being associated with people who are in these sustainable construction 686 00:38:14,840 --> 00:38:19,640 has grown manifold by several orders of magnitude. 687 00:38:19,640 --> 00:38:27,520 So a lot of sectors are being inspired to take on more sustainable ways. 688 00:38:27,520 --> 00:38:31,920 The other flip side of it is if we are running 689 00:38:31,920 --> 00:38:36,680 say at the rate of 100 kilometers, the speed that is required to reach, 690 00:38:36,680 --> 00:38:41,390 we want to is 200 or 300 km. 691 00:38:41,390 --> 00:38:44,550 So while we can be proud and we can celebrate 692 00:38:44,550 --> 00:38:47,040 that we have come from zero to 100, 693 00:38:47,040 --> 00:38:50,920 we still have to get to 300 to be able to leave 694 00:38:50,920 --> 00:38:54,260 a better future for our future generations. 695 00:38:54,260 --> 00:38:58,200 – Yes, just to add one small, she raised some very valid points. 696 00:38:58,200 --> 00:39:01,280 And one of the area of ESG which Indian government 697 00:39:01,280 --> 00:39:04,280 has taken as an initiative is agricultural. 698 00:39:04,280 --> 00:39:05,760 And in the agricultural side, 699 00:39:05,760 --> 00:39:11,430 India has taken an initiative called India's Millet Revolution. 700 00:39:11,430 --> 00:39:13,550 Millet is a type of food you may know. 701 00:39:13,550 --> 00:39:16,760 And, so, India's Millet Revolution is a movement that seeks 702 00:39:16,760 --> 00:39:22,240 to increase awareness of the health and environmental benefits of millets, 703 00:39:22,240 --> 00:39:25,880 promote the traditional agricultural practices in India, 704 00:39:25,880 --> 00:39:27,680 and it will also support the small scale. 705 00:39:27,680 --> 00:39:30,520 This is one of the big steps Indian government has taken, 706 00:39:30,520 --> 00:39:32,640 again, towards the environmental side. 707 00:39:33,080 --> 00:39:35,000 – I just want to thank both of you so much, 708 00:39:35,000 --> 00:39:37,840 for coming on the podcast, for sharing your insights. 709 00:39:37,840 --> 00:39:40,800 I've learned a lot, and I hope our audience has learned a lot, as well. 710 00:39:40,800 --> 00:39:43,400 And, obviously, this is a continuing conversation 711 00:39:43,400 --> 00:39:46,390 that we'll have to keep having because it's ever evolving. 712 00:39:46,390 --> 00:39:48,880 So I just thank you so much for coming on, today. 713 00:39:48,880 --> 00:39:50,200 – Thank you, Adam. 714 00:39:50,200 --> 00:39:51,760 – Thank you for inviting us here. 715 00:39:52,080 --> 00:39:53,880 < Outro > 716 00:39:53,880 --> 00:39:56,760 – This has been Count Me In, IMA's podcast, 717 00:39:56,760 --> 00:39:59,600 providing you with the latest perspectives of thought leaders, 718 00:39:59,600 --> 00:40:01,600 from the accounting and finance profession. 719 00:40:01,600 --> 00:40:04,160 If you like what you heard, and you'd like to be counted in 720 00:40:04,160 --> 00:40:06,680 for more relevant accounting and finance education, 721 00:40:06,680 --> 00:40:13,600 visit IMA's website at www.imanet.org.