One of the biggest challenges that companies are facing today is finding their ESG data. We expect that after the first year of struggle around data management, companies will upgrade their existing enterprise applications to capture ESG-relevant data better.

1. Banks have started looking at ESG more closely when making financing or lending decisions. And will work towards creating internal frameworks for green bonds.
2. The reporting on ESG will not be limited to the 1000 companies that have been mandated by SEBI. We see public companies beyond the top 1000 listed companies and multiple private companies will be reporting on their sustainability performance. The format for this reporting might not necessarily be BRSR but could be global reporting standards like GRI.
3. Companies will better manage their diversity talent pipelines for their Boards and Top management positions. We will start seeing companies make appointments aligning with their diversity goals.
4. More companies will apply for ESG global and national ratings like MSCI, DJSI, CRISIL etc. after the first year of collecting and reporting their ESG data.

Services:

1. The services sector like IT, consulting, BFSI etc. is looking at ESG from a differentiation lens. They will use their superior ESG performance and ESG ratings to attract global customers.
2. Companies will provide extensive ESG trainings to their employees to align them with their sustainability goals and initiatives
3. Commercial real estate players are already under pressure from their tenets for ESG data and energy efficiency that these tenets can use to report on their ESG reports.
4. Companies that have a hybrid working culture with employees working out of coworking spaces or from home will face difficulties in capturing their Scope 2 and 3 data.

Manufacturing:

1. Companies will rethink their product and processes to incorporate sustainability. This will lead to more innovation.
2. Most companies have already made headways into assessing their Scope 1 & 2 emissions. But, Scope 3 emissions are still a black box due to low awareness levels of their supply chain partners. Companies will start to re-think their supply chain management strategies to set processes in place to start being able to capture this data.
3. Manufacturing sector is looking at ESG from a cost-saving lens and many of them have already shifted from coal to agro based alternatives or renewable energy sources due to higher cost and emissions.
4. Export oriented businesses are already loaded with numerous ESG assessments and certifications expectations from their customers. This pressure will increase as some global brands are choosing to fire the suppliers that do not comply with their ESG requirements.
5. Businesses are struggling with their net-zero targets due to a lack of India-specific data on climate risks. The government entities like MoEFCC will start capturing national data so that companies can have access to more accurate energy and climate-related information.

In conclusion, ESG is becoming increasingly important for companies across various sectors. Companies are realizing the value of incorporating sustainability practices and reporting on their ESG performance. The adoption of ESG reporting is expected to extend beyond the mandated top 1000 listed companies in India, and more companies will be applying for global and national ESG ratings.

To achieve sustainability goals, companies are providing extensive ESG training to their employees and making changes to their products and processes. However, challenges still exist, particularly in capturing data related to Scope 2 and 3 emissions, but the government is working towards addressing this issue by providing national data on climate risks. Overall, companies that prioritize sustainability are likely to benefit in the long run by attracting customers, investors, and talent.