Just 27% of Indian organisations feel adequately equipped to meet their ESG strategy and compliance requirements and only 15% believe their suppliers are well-equipped to do so, according to Deloitte India’s ESG preparedness survey.
Deloitte India surveyed 150 organisations on their readiness for ESG requirements with respondents including CEOs, CFOs, as well as Chief Sustainability Officers (CSOs) and heads of Corporate Social Responsibility (CSR).
When it came to suppliers, respondents said that only 15% of organisations were well prepared, with 33% being moderately prepared and 18% not prepared at all.
Commenting on the low number of suppliers considered to be equipped to meet ESG compliance requirements, the report said: “The focus on suppliers is critical since most upstream Scope 3 emissions will require supply chains to be decarbonised and certified per sustainability requirements.
“One of the biggest challenges organisations in India will face is dealing with Scope 3 emissions originating from supply chain partners.”
The report said many of these suppliers would be SMEs and expressed doubts that these small businesses would have the capacity to account for Scope 3 emissions.
“There is currently no regulatory, investor, or stakeholder pressure on small enterprises to be ESG compliant,” the report added.
“In the foreseeable future, it is expected that their supply-chain partners will exert pressure on them to enhance their ESG profile.”
The survey found that while businesses were highly committed to ESG goals, a “significant gap in preparedness and action” existed for Indian businesses.
One of the biggest challenges for respondents was the complexity of ESG requirements.
Only 49% of organisations said they were well aware of ESG reporting mechanisms and regulations in India. Three-quarters (75%) of respondents said there was a need to simplify ESG compliance or improve ESG reporting procedure.
Meanwhile, 65% of those surveyed said evolving ESG regulations were a major hurdle in building ESG preparedness, with the existence of multiple ESG frameworks indicated by 62% organisations as a challenge.
Almost nine in 10 (88%) of respondents considered sustainability regulations to directly impact their businesses, while 75% said it had become an important boardroom agenda and 90% believed ESG reporting would enhance their brand reputation.
When it came to achieving net-zero targets 78% of respondents said supply chain emissions management was an obstacle, with 63% saying the same of costs associated with adopting net-zero technologies.
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