Sustainable investing is no longer considered a niche corner of the investment portfolio of an organization. Nowadays ESG issues are intricately linked to corporate performance, investment performance. Research indicates that organizations with better ESG scores tend to generate better earnings over a five- to seven-year period than those with lower ESG scores. This means that in order to be successful, organizations need to create value for all their stakeholders – employees, customers, suppliers and society in general, including the environment – and not just for themselves.
ESG is an abbreviation for Environmental, Social and Governance, and defines the three central pillars that help measure the sustainability of an investment. It comes from the ‘Triple Bottom Line’, also known as People, Planet and Profits. Environmental metrics examine how an organization contributes to and performs on environmental challenges for example, waste, pollution, greenhouse gas emissions, deforestation, and climate change. Social metrics look at how a business treats people, for example, human capital management, diversity and equal opportunities, work conditions, health & safety etc. Governance metrics examine how an organization is governed in terms of executive remuneration, tax practices and strategy, corruption and bribery, and board.
With the growing demand for clean energy, environmental, social, and corporate governance (ESG) in the energy sector have become all the more important in the industry. Today, organizations are continuously looking for new ways to promote ESG initiatives, as a growing number of customers and investors are demanding that organizations must take ESG issues more seriously. For example, the SEBI chief recently announced that they are looking at enhancing some of its ESG rules and codes to be in tune with global investing & regulatory practices.
Businesses in the energy sector must ensure they’re aligned with the new energy landscape in order to transition to a low carbon economy .This would essentially mean a shift to renewable energy solutions like solar power solutions. ESG is no longer just a tick in the box exercise, but a cornerstone for maintaining and attracting the support of stakeholders. With the Indian government’s strong focus on the green shift, the environmental part of ESG is extremely likely to be a closely watched space in terms of compliance requirements for times to come.
Strong ESG strategies can provide
1. Top-line growth
Organizations with strong ESG practices attract more investments which translate into increased revenue and sales. Such practices are known to drive consumer preferences as well.
2. Operating cost reduction
Organizations can offset their rising operational expenses by adding long term efficiencies. For example, by switching to green energy solutions they can cut down on their power bills significantly.
3. Regulatory and legal benefits
Organizations can earn strategic freedom and earn many subsidies and government support if they follow strong ESG practices.
4. Attract superior talent
If you have strong ESG policies as an organization, you become a socially credible brand which is a lucrative proposition for potential employees.
Altilium can be the one-stop solution for the companies having the intent to go green, reduce their carbon footprint while wanting to reduce their power cost of operations. Being the integrated power player in the industry, Altilium believes in proposing customisable, well-researched, insightful, implementable energy cost optimisation solutions rather than “one-size fits all” advisory.
With overall team experience of 45 years in the Indian power sector, our array of services includes bespoke Electricity Regulatory Advisory, Energy Portfolio Management, Renewable Energy offtake & trade, open access services, Renewable Energy Projects management, to name a few. Being one of the leading CERC (Central Electricity Regulatory Commission) approved power trading companies in India, Altilium is managing a trade volume of over 15 MUs (million units) of Renewable Energy every month for its clients PAN India, as on date.
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04 Dec 2021
For organizations, Environmental, Social and Governance (ESG) issues must be driven by both purpose and practical considerations. Renewable energy for business is a promising investment. SEBI Chief’s recent announcement regarding enhancing some of its ESG rules and codes to be in tune with global investing & regulatory practices is a strong step in this direction.