ESGRC: Powering business transformation to align to net-zero

India’s announcement of its net-zero emission target is a transformational step towards climate change. It will undoubtedly trigger a cascade in India’s corporate sector as businesses play their part in bringing this dream to reality. Most large businesses in India have already set net-zero targets of their own and more companies are committing to reduce greenhouse gas emissions. While it is encouraging to see that government and businesses are thinking green, they will still need to draw out a clear pathway to reducing emissions. 

To align to net-zero, this pathway would need to enable change across the entire business value chain. It will need to align with the organization’s vision and business strategy. Businesses will need to look at all aspects of the value chain through a sustainability lens. The net-zero pathway must include products, services, infrastructure, supply chain, customers, investors, and all stakeholders. This is because everything right from sourcing, manufacturing, packaging, distribution, to consumer use and disposal, impacts sustainability.

Aligning business goals to net-zero is a complex process. To make this work, companies would need an ESG (Environmental, Social and Governance) framework that is integrated into their business strategies and processes. A data-driven approach must be used to set targets for reducing carbon emissions and improving energy efficiency. And that is why company boards across the world are working on metrics to tie business goals to ESG goals. 

A framework to simplify and streamline processes

One of the best ways to start aligning an ESG performance-linked strategy to net zero is to connect the business’ structured and unstructured data across multiple facets of the organization. The challenge, however, is that fragmented technology environments are making it difficult for businesses to develop effective ESG monitoring and reporting systems. Platforms and solutions currently available in the market are either heavily focused on the ‘governance’ aspect of ESG or only on either ‘social’ and ‘environmental’. They lack effective integration into an organization’s broader Governance and Risk, Compliance (GRC) architecture. Other challenges may include the Board of Directors' inability to understand real-time ESG risks and requirements, collating large amounts of data relevant to ESG metrics, and the huge efforts needed to publish ESG disclosures.

To enable effective alignment to net-zero, companies need a simplified and streamlined approach that encompasses both the ESG and GRC architecture. An integrated ESGRC framework that covers not only environmental, social, and governance but also risk and compliance may be able to do just that.

ESGRC provides Company Boards an eagle’s eye view into processes

An integrated ESGRC framework can provide companies with a holistic platform to track emerging and changing regulations, along with a host of complex regulatory standards. Some of these include:

 The company Board of Directors can use the platform to gain comprehensive and real-time visibility into various ESGRC management processes and metrics through graphical dashboards and configurable reports.

To sum it all up, an ESGRC platform can be a powerful enabler for companies to align to net-zero emissions. They can use it to manage disclosure requirements, conduct self-assessments, identify issues, and maintain action plans. They can also use the framework to link standards to organizational entities, develop key metrics, automate the collection and aggregation of data. Reporting can be via real-time analytics and dashboards. Companies can use the software’s centralized risk repository to manage ESG-related risks and perform various assessments across business units and suppliers. Any identified ESG-related issues can be tracked and remediations can be implemented in an automated manner, with the AI-powered engines classifying and recommending remedial actions. 

The article is authored by Aravind Varadharajan, SVP & MD, APAC, MetricStream