From Compliance to Competitiveness: The Green Economy’s Effect on Corporate India and ESG Reporting

Green Economy and ESG Accounting: Growing Sustainability

A green economy, or sustainable economy, is a model that fosters growth while protecting natural resources and ecosystems for future generations. ESG (Environmental, Social, and Governance) reporting details how companies disclose sustainability practices.

Understanding the Green Economy

A green economy advances sustainability by balancing environmental protection, social well-being, and economic growth. Unlike traditional models that overlook ecological costs, the green economy model prioritizes lower carbon emissions, reduced waste, resource conservation, and renewable energy.

For instance:

India has seen growth in solar power generation, enabled by projects such as the Rewa Solar Plant in Madhya Pradesh, which has reduced carbon emissions and created thousands of jobs in the installation, maintenance, and manufacturing of solar equipment.

Tata Motors and Ather Energy are expanding electric-vehicle adoption, reducing reliance on fossil fuels, and creating new markets and skills.

The Role of ESG Accounting:

ESG reporting allows companies to evaluate sustainability using measurable data. It covers environmental, social, and governance issues, enabling stakeholders to make informed decisions.

• Environmental indicators also include energy and water utilisation, waste generation, existing pollution, and carbon emissions.

• Social measures, which include employee welfare, workplace diversity, community development, and human rights.

Governance indicators include board diversity, ethical leadership, transparency, and compliance.

ESG Reporting for a Green Economy:

ESG reporting translates sustainability goals into practice. It enables companies to report on progress in sustainable development and identify required improvements.

For example:

A textile company may report on issues related to water conservation, such as the efficiency of dyeing processes, or on the proportion of cotton sourced from organic farms.

A manufacturing firm may seek to transition from coal-based energy to solar and report the exact degree of carbon-emission reduction.

This transparency boosts investor trust, attracts responsible consumers, and drives innovation among companies.

ESG Issues in Green Economy Projects:

• Better Decision-Making

ESG data highlights risks early. For instance, a water-intensive company may anticipate scarcity and adopt recycling technology.

• Higher Investor Confidence

Investors today prefer sustainable companies. At Tata Power, we focus on renewable energy and have attracted increased interest from ESG-focused funds.

• Regulatory Compliance

India’s corporate social responsibility and sustainability reporting (BRSR) rules require ESG accounting for listed companies.

• Competitive Advantage

Companies that prioritise sustainability attract more eco-conscious customers and report greater success. For example, HUL’s water-saving and plastic-reduction programs have improved its market standing.

• Long-Term Resilience

By addressing environmental and social risks, companies build resilience against crises such as climate disruptions or supply chain interruptions.

Challenges

ESG offers value but faces challenges, including inconsistent standards, poor data quality, and challenges in measuring social impact.

However, these issues may be overcome by:

• Adopting international frameworks like GRI or SASB.

• Through the use of AI-based sustainability tracking tools.

• Training staff on the integration of ESG into day-to-day business.

Companies should not view ESG accounting as a checkbox exercise. Instead, they must integrate it into business strategy and organisational culture.

Conclusion:

The green economy promotes growth while prioritising people and the planet. For corporate India, this transition moves from compliance to competitive edge, creating lasting value for the environment, society, and economy.

Authored by: Ritika Malani, FLC