Abstract

The landscape for doing business has changed drastically. The new parameter to judge the criteria of corporate functioning is sustainability. Though CSR has established itself as a sustainability tool (enabling companies to make a social or environmental impact thus benefitting communities) it has however not been able to keep pace with the sustainability parameters. An important reason has been that CSR initiatives undertaken could not be quantified. CSR acted as a method to create a corporate image that the corporation is doing meaningful work for society. However, over the years, investors and also consumers have become more aware of the importance of sustainable investing as well as buying. Investors are preferring to invest in companies that can with factual data prove their contributions to society and their impact on the environment. This has compelled the corporations to take resort to more quantified methods which has ultimately led them to shift from CSR to ESG reporting. ESG stands for Economic, Social and Governance ESG is a set of standards for a company’s behaviour used by socially conscious investors to screen potential investments. It can be understood as a framework that enables stakeholders to analyse how an organization manages risks and opportunities related to environmental, social and governance criteria. ESG practises have resulted in better operational performances of the company. In spite of the benefits, there have been instances wherein ESG reporting has been used by companies to give misleading information about their product being environmentally sound. Such practices cause harm to consumers while misleading investors as to the impact of the company’s operations on society and the environment. ESG is the future of Corporate Reporting. It is required that the ESG governance standards must be improvised( which are at present complex and subjective. Attempts must also be made to frame universal ESG reporting guidelines.

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