The consideration of ESG – Environmental- your impact on the world with commitment to future generations; Social- your contributions to the communities reflecting how returns are shared and Governance- how you conduct yourself – factors have become critical to the success of any business. Companies should serve not only their shareholders but also deliver value to their customers, invest in employees, deal fairly with suppliers and support the communities in which they operate. Investors, customers, employees, shareholders, lenders, rating agencies and regulators are demanding companies to consider how their business impacts the world, their contribution to society and how they conduct themselves. Businesses not taking ESG seriously will begin to lose customers, employees and financing; eventually they will become unviable.
Watch: Top Paper Companies 2023
According to The Economist, 2022, more than one-third of global investment worth USD 35 trillion is monitored through ESG lenses. Regulatory developments for ESG are taking place all over the world. KPMG ESG report states that in March 2022, the US SEC released its consultation report asking for mandatory disclosure of Scope 1 (internal greenhouse gas emissions of a firm) and Scope 2 (emissions related to energy supply), and possibly Scope 3 (external/supply chain emissions) depending upon materiality. France, Germany, Australia, China, and South Africa have developed legislation for mandatory ESG disclosure. The International Sustainability Standards Board (ISSB) is also developing an ESG reporting standard that will be mandatory for UK companies by 2025 or earlier. The British Academy has redefined the purpose of corporations, moving away from the traditional concept of shareholder primacy, and underscored the multi-stakeholder perspective using a long-term view.
Market leaders are taking a strategic response to ESG, changing their products and services, processes, operations and supply chains. The first step to embed ESG into a business must be taken by the Board, taking on the responsibility and accountability to drive the growth or expansion transition towards becoming an environmentally sustainable and socially responsible business. A well formulated ESG strategy should focus on sustainable procurement practices involved in raw materials, sustainability in processes beyond core manufacturing processes, preserving natural ecosystems by undertaking conservation and supportive practices, community involvement for upliftment, better living standards, safety, and security of society.
Stakeholders are pushing for increased transparency and it’s working. New mandatory reporting standards are fast approaching and, where it’s not mandatory, lenders and investors are still withdrawing funding from, and voting against, businesses not considering ESG. Corporate Governance envisages attainment of highest levels of transparency, accountability and integrity in the functioning of the company with a view to create value that can be sustained continuously for the benefit of its stakeholders.
ESG is no longer a choice; it is an imperative.
The Indian paper industry is inherently sustainable. Paper industry recycles the societal waste, mills adopt social farm forestry which generates employment at large scale for farmers in the remotest of the areas and the trees grown in the process help in carbon dioxide sequestration. Industry is strongly committed towards water & energy conservation, wastewater treatment, reducing carbon footprint, and promoting FSC® certified products. As per IPMA, in the last five to seven years, an amount of over INR 25,000 crore has been invested in new efficient capacities and induction of clean and green technologies. Government’s ban on single-use plastics industry ‘estimated to be INR 10,000 crore’, has opened doors for the paper industry to contribute towards the environment.
Paper Mart has done a special feature on ESG – specific to the paper industry, highlighting the ESG initiatives of top players of the paper industry.
