Corporates Performance on Troika of ESG

Abstract

E, S and G are an integral elements of business world, especially a key concern for the corporate sector across the globe. Corporate houses are required to evince the approaches espoused for implementation of elements of ESG. Referring to the article, titled, “ESG Performance drives Corporate Performance” (Maria Montenegro) the reasons that engender to explore ESG performance are- 87% of the investors are of the opinion that corporate reports on sustainability matters contains greenwashing, and 82% states that their clients ask for ESG factors to be taken into consideration. 64% of consumers select, switch, avert, or gave up consumption of such brands which does not focus on societal issues, and drastic change in buying behaviour. It is estimated that by 2029, 72% of the global human capital will be comprised of Millennials who will lay more emphasis on ESG matters in comparison to their predecessors. The agility among the regulators on ESG matters across the globe have increased prodigiously. The soaring significance of a corporate’s ESG performance, driven by investors, consumers, human capital, and regulators has engendered putting ESG agenda on the top by top management of the companies. Numerous ESG regulations are governing the companies to ensure that various elements covered under ESG are complied with. The developed markets such as European Union (EU), U.K and U.S.A have espoused noteworthy initiates towards ESG. The European Union (EU) has laid stress upon E, S and G with a double materiality approach, that is companies will be required to take into consideration not only the impact of external factors (e.g., climate change) on their financial value, but also the impact their operations have on the planet and society. Previously EU made it mandatory for 11,700 Public Interest Entities that is listed companies, banks and insurers to make ESG disclosures through the Non-Financial Reporting Directive (NFRD). Then the onset of Corporate Social Responsibility Directive (CSRD) on January 5, 2023 provided impetus to ESG, as it laid emphasis on modernization and strengthening of the rules pertaining to the social and environmental information that corporate houses have to report.