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Adherence to ESG compliance and its impact on value chains

As several organisations worldwide continue to work towards implementing environmental, social and governance (ESG) measures within their businesses, adherence to compliance measures is a critical area that requires continuous attention. In the fourth episode of PwC’s ‘ESG: A bridge to action’, in association with Moneycontrol, leaders discuss the importance of ESG compliance and its impact on value chains.

Manish Sharma, Infrastructure and Logistics Leader, PwC India, and Kunal Bahl, CEO, Snapdeal, were the guests who shed light on ESG compliance in the episode. In an exclusive message before the beginning of the episode, Sanjaya Nayar, CEO, KKR, said that investors are focusing more acutely on ESG and hiring ESG consultants, and though corporate governance standards have improved in recent times, transitioning to green manufacturing practices is a long-drawn and expensive process that organisations should come to terms in the next 10–15 years to adhere to the highest ESG standards.

Manish Sharma was asked about how organisations are complying with ESG standards and transforming the supply chain to make it more sustainable. He said that incorporating ESG across supply chains would make them more sustainable. Organisations should also look to redesign their entire production cycle to make their products ESG compliant as stakeholders now monitor companies more closely. Companies are looking to make this transition smoother by analysing the risk assessment across the entire value chain. From identifying the major products and services that require an overhaul to comparing best practices across a wide range of industries, organisations are taking some major steps to ensure that they are adhering to global ESG norms. PwC’s ESG services could help organisations in their transition towards becoming more sustainable.

Kunal Nayar spoke about how technology has enabled Snapdeal to help small- and medium-sized businesses to cater to a pan-India market. The organisation is working towards digitalising the retail sector and helping MSMEs become future ready by assisting them with accelerated access of payments and management of working capital. It has also partnered with local artisans from various states for procuring sustainable products. From digitally empowering local and regional players to promoting the use of electric vehicles, the organisation is embedding ESG in its journey.

When asked about whether there is a right way to approach business partners when embedding ESG standards in supply chains, Manish Sharma said that a ‘one-size-fits-all’ approach is neither possible nor recommended considering the involvement of multiple stakeholders. The commitment of the leadership towards an organisation’s sustainability journey is a key determinant. He stressed on the importance of defining an organisation’s ESG expectations with regard to its supply chain. Implementing a supplier code of conduct, monitoring and auditing, and designing and incorporating certain select ESG key performance indicators (KPIs) for supply chain partners can help organisations in measuring and reporting their supplier assessments and further incentivising the transition to ESG. It is very important to understand its threshold of sustainability and procurement process.

Start-ups can have a large-scale impact on the society, said Kunal Bahl, and an organisation like Snapdeal has the ability to set the bar higher as far as the G of ESG is concerned. From conducting quarterly audits to forming dedicated ESG and CSR committees, the organisation is focusing on governance.

Companies are being held accountable for the ESG compliance of their entire value chain and therefore, the onus is on large companies to adhere to and incorporate ESG metrics across their entire value chain for a smoother ESG transformation in India.   

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