For entities operating beyond the borders, it’s imperative to understand evolving corporate law in international business avenues. In the corporate business landscape in India, there’s a visible shift from CSR (Corporate Social Responsibilities) to ESG (Environmental, Social, and Governance) in recent years. This shift in paradigm redefines the way businesses operate in the country, besides reshaping regulatory frameworks and standards of accountability.
In this edition, let’s have a comprehensive look into the relationship between corporate law and the sustainability revolution in the country. Foreign companies investing in India presently find themselves at a crossroads as the focus shifts to ESG globally. To make room for new norms, corporate law in India is undergoing a profound transformation. This explains why companies need to fulfil their reporting obligations amidst the growing influence of shareholder activism.
Why is ESG a Cornerstone of Corporate Responsibility?
ESG has proven to be a key progression in corporate sustainability. These standards serve as a parameter to evaluate the commitment of a company to stakeholder engagement, protecting the environment, and effective governance. ESG standards ensure compliance with ethical business practices and enable investors to evaluate companies before investing in them.
Foreign companies operating in India need to understand that establishing and maintaining a comprehensive ESG framework involves certain initial costs. However, this returns a substantial benefit in the long run. Experts recommend against neglecting ESG factors since they can prove detrimental to the finances, reputation, and legal standing of firms expanding to India.
The Shift from CSR to ESG for Better Corporate Accountability
ESG practices in India define a departure from the traditional shareholder-centric approach that CSR initiatives carry. Unlike CSR, ESG comes up with a more holistic focus on all stakeholders. This marks a significant shift in corporate strategies.
Let’s understand this transition based on three key aspects.
1. Evidence-based Accountability
2. Integrated Approach to Management
3. Strategic Importance
Best Practices for Corporate Compliance with ESG Regulations
Establishing ESG Committees
Evaluating ESG Risks
Engaging Stakeholders
Compliance Requirements and Best Practices
1. Mandatory CSR Spending
2. ESG Reporting
3. Adhering to Global Frameworks
It’s time to Pioneer Sustainable Corporate Practices
International brands striving to integrate themselves into the thriving corporate environment in India should adhere to the best ESG practices, respecting the standard regulations in the respective industries. This approach not only streamlines their path to contribute to a more sustainable future but also positions themselves for long-term success and gains the trust of stakeholders.
The IMC Group continues to be one of the most trusted global ESG Consulting firms. The professionals have been collaborating with foreign corporate firms expanding to India over the years, offering comprehensive assistance to ensure ESG compliance.
