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A Webinar Report on The Green Agenda: ESG and Net Zero Imperatives for Boardrooms

A Webinar Report on The Green Agenda: ESG and Net Zero Imperatives for Boardrooms Nov 02, 2024

The Institute of Directors (IOD), India, organised the Second Global Webinar of the Boardroom Webinar Series 2024-25. The theme was "The Green Agenda: ESG and Net Zero Imperatives for Boardrooms", and was held on October 17, 2024. It was attended by around 150 participants, comprising Independent Directors, Regulators, aspiring and serving Board members, directors, policy-makers, educationalists, and private as well as public sector institutions.

The 'Opening Address' was delivered by:

Prof. Colin Coulson-Thomas
Director General UK & Europe Operations
Institute of Directors, India in London

Prof. Thomas emphasized the urgent need for action within the environmental context, warning that the cost of inaction is likely to escalate more rapidly than the cost of transitioning to sustainable practices. He highlighted that, 'cooperation', 'collaboration', and 'collective responses' are essential to address environmental challenges effectively. Boards must become adept at assessing what is best for their local situations, as directors frequently face dilemmas that involve tough choices and difficult tradeoffs. The pressing question remains: should they strive to do more than the bare minimum, or simply comply with existing regulations? He advocated for more boards to focus on responsible outcomes that inspire entrepreneurship and innovation, fostering a culture of sustainability that can drive long-term benefits for both businesses and the communities they serve.

The 'Guest of Honour Address' was delivered by:

Mr. V. S. Sundaresan
Executive Director
Securities and Exchange Board of India

Mr. Sundaresan spoke on the theme "BRSR Reporting: A Guide to the Boardroom Community". He discussed the global evolution of ESG initiatives and the challenges businesses face in balancing ESG compliance with ease of doing business. He noted that these two objectives often clash, placing companies at crossroads. He also raised concerns about the rise of "greenwashing," where companies appear to comply with ESG norms optically but fall short in genuine adherence. He emphasized the need for interoperability in reporting, particularly for Indian corporates operating internationally, ensuring that disclosures made abroad align with local standards. Additionally, he highlighted that reports should be scrutinized beyond face value to ensure accuracy and truthfulness in ESG practices.

of doing business. He noted that these two objectives often clash, placing companies at crossroads. He also raised concerns about the rise of "greenwashing," where companies appear to comply with ESG norms optically but fall short in genuine adherence. He emphasized the need for interoperability in reporting, particularly for Indian corporates operating internationally, ensuring that disclosures made abroad align with local standards. Additionally, he highlighted that reports should be scrutinized beyond face value to ensure accuracy and truthfulness in ESG practices.

The 'Keynote Address' was delivered by:

Mr. Pradeep Ramakrishnan
Executive Director
International Financial Services Centres Authority (IFSCA)

Mr. Ramakrishnan spoke on the theme, "ESG Reporting Standards & Guidelines for Listed Companies". He said that sustainability is no longer optional; it is now essential for doing business. He highlighted the evolution of corporate governance, where governance (the "G" in ESG) was initially prioritized, but environmental and social aspects are now equally important. He added that in India, the Business Responsibility and Sustainability Report (BRSR) framework is the principle method of 'ESG reporting, although the country is yet to establish an official taxonomy. He discussed the government's Nationally Determined Contributions (NDCs) and also mentioned the concept of "greenium," where investors are willing to accept lower returns on investments that support green projects, driven by a sense of altruism.

Panel Session: ESG & The Future Ahead

The Session was chaired by:

Mr. Giridhar Sanjeevi
Former Executive VP & CFO
The Indian Hotels Company Limited (IHCL)

The distinguished speakers of the Panel were:

1. Mr. Pradeep Ramakrishnan
Executive Director
International Financial Services Centres Authority (IFSCA)

2. Mr. Pyarali Jamal
Transformation, ESG & Sustainable Finance Specialist
Member - ICAEW Sustainability Committee, London, UK

Mr. Sanjeevi emphasized that while some companies are content with merely meeting regulatory compliance, the increasing demands from regulators require businesses to go beyond this and embed ESG into their core strategy. He discussed a few companies that successfully pivoted their business models, such as moving to wind energy. However he acknowledged the challenges and trade-offs involved. He said that these pivots are not easy, and boards remain accountable to shareholders, who expect returns. He cited cases like Exxon and Shell, where boards faced significant pressure from activist investors and even personal liability for failing to prioritize ESG. He stressed the importance of the board's oversight on ESG matters, particularly the need to focus on the materiality matrix to ensure it reflects the key issues facing the organization, with climate change and environmental concerns taking center stage.

Mr. Ramakrishnan emphasized the importance of regulators guiding companies, particularly when it comes to non-compliance or greenwashing. While penalties exist, he believes the real action will come from investors, as reputational risk is now a company's greatest threat, surpassing even financial or cyber risks. He highlighted the shift in 1992 with SEBI's move from merit-based to disclosure-based regulation, underscoring the need for credible disclosures. He also noted the increasing prominence of the "E" (environmental) aspect in ESG and stressed that ESG reporting is an ongoing process that continuously evolves with global developments.

Mr. Jamal discussed the evolving landscape of sustainable finance regulations, particularly in Europe, where investors are subject to the Sustainable Finance Disclosures Regulation (SFDR). He noted that the EU taxonomy is also regularly revised, and green bonds and regulations like EU's Carbon Border Adjustment Mechanism (CBAM) will impact companies, including Indian suppliers, due to carbon footprint and product intensity requirements. In UK, companies are already adhering to various taxonomies and are similarly affected. He added that for Indian firms operating in the US, the SEC (U.S. Securities and Exchange Commission) has scaled back disclosure requirements, particularly regarding Scope 3 emissions. Despite this, suppliers may still face ESG-related inquiries from clients, even if they are not directly required to report.

SCOPE 3 EMISSIONS:
Scope 3 emissions are indirect greenhouse gas (GHG) emissions that occur outside of an organization's direct control and are a result of activities in its value chain. They are also known as value chain emissions, and are both upstream and downstream.

The panel session was followed by an interactive Q&A session with the participants.

POLL

Following this, a poll consisting of two questions was conducted to gather participants' views on key issues. It received an overwhelmingly active response, demonstrating the participants' keen interest and willingness to contribute. This engagement enriched the discussions with diverse perspectives and valuable insights.

This indicates that most audience members were fairly familiar with the concept of ESG and its principles. Executives may benefit from the ESG Masterclass organized by IOD to deepen their understanding.

This indicates that most directors and business believe that 'ethical responsibility' is the primary reason for boards to adopt ESG and Net Zero policies, followed by 'regulatory compliance.' Notably, 'pressure from investors and stakeholders' is not seen as a major driver for boardrooms to pursue sustainable strategies.

Special Talk: The Imperative Role of 'S' in ESG - Driving a Culturally Conscious Board for Sustainable Growth

This was followed by a 'Special Talk', delivered by:

Dr. Jennifer Jukanovich
Managing Partner - Ambactus Global Solutions
Co-Author, The Culturally Conscious Board

Dr. Jukanovich spoke on the theme "The Imperative Role of 'S' in ESG: Driving a Culturally Conscious Board for Sustainable Growth." She emphasized that boards face increasing pressure to not only focus on the bottom-line but also to prioritize people and culture. Citing the National Association of Corporate Directors' (NACD) Blue Ribbon Commission, she highlighted the importance of using culture as a tool to drive board excellence in today's complex environment. Drawing from her experience on various boards, Dr. Jukanovich explained that a culturally conscious board—one that considers all stakeholders and the broader society—is essential for sustainable success. She noted that an unhealthy board culture negatively impacts both stakeholders and the communities served. Understanding cultural differences and addressing blind spots are crucial for board members, who must recognize their companies' roles in a larger global context while remaining aware of their own limitations.

This was followed by the 'Vote of Thanks' proposed by:

Mr. Pradeep Chaturvedi
Vice President - Institute of Directors

Mr. Chaturvedi thanked all the participants for their commitment and engagement in the discussions. On behalf of IOD, he extended his gratitude to all the speakers and panelists for sparing their valuable time.

IOD is grateful to the partners of the Boardroom Webinar Series 2024-25:

Our Strategic Partner: Nasdaq

Our Institutional Partners:

1. Bitscore Cybertech LLP
2. BoardPac
3. Gujarat Fluorochemicals Limited

Our Knowledge Partners:

1. Halex Consulting
2. Taxmann

This report is compiled by:

Ms. Laghima Sharma
Assistant Executive Editor

REFLECTIONS
FROM THE
WEBINAR

Here are 6 key takeaways from the webinar on “The Green Agenda: ESG and Net Zero Imperatives for Boardrooms:

1. Urgent action needed: The cost of inaction on environmental challenges is increasing faster than the cost of transitioning to sustainable practices. Immediate action is necessary for long-term benefits.

2. Beyond compliance: Companies should integrate ESG principles into their core strategy rather than just meeting regulatory requirements.

3. Reputational risks: Reputational risk, stemming from non-compliance or greenwashing, is now the greatest threat to companies, surpassing financial and cyber risks. Credible disclosures are critical.

4. Materiality focus: Oversight on ESG matters should prioritize a materiality matrix that reflects key issues, especially concerning climate change and environmental concerns.

5. Need for continued education: Active engagement in discussions highlights the importance of ongoing education on ESG principles for executives and board members. Ongoing education, such as ESG Masterclasses offered by IOD, can enhance practical knowledge.

6. Evolving regulatory landscape: The landscape for sustainable finance regulations is rapidly changing, impacting global business operations, including Indian suppliers.

These takeaways emphasize the critical role of boards in addressing ESG challenges, fostering sustainable practices, and embracing cultural consciousness for longterm success.

Author


Institute of Directors India

Institute of Directors India

Bringing a Silent Revolution through the Boardroom

Institute of Directors (IOD) is an apex national association of Corporate Directors under the India's 'Societies Registration Act XXI of 1860'​. Currently it is associated with over 30,000 senior executives from Govt, PSU and Private organizations of India and abroad.

Owned by: Institute of Directors, India

Disclaimer: The opinions expressed in the articles/ stories are the personal opinions of the author. IOD/ Editor is not responsible for the accuracy, completeness, suitability, or validity of any information in those articles. The information, facts or opinions expressed in the articles/ speeches do not reflect the views of IOD/ Editor and IOD/ Editor does not assume any responsibility or liability for the same.

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    Institute of Directors (IOD) is an apex national association of Corporate Directors under the India's 'Societies Registration Act XXI of 1860'​. Currently it is associated with over 30,000 senior executives from Govt, PSU and Private organizations of India and abroad.

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