4 Ways in which the G20 Declaration will accelerate ESG

The Delhi Declaration begins with the theme - We are One Earth, One Family, and we share One Future. True to its intent, the text focuses on the fact that today’s world is already facing immense challenges and that growth, poverty and climate change need to be tackled with urgency and at scale. To accelerate progress on SDGs by 2030 the document recognises the role of digital transformation, AI, data advances, and the need to address digital divides. All these will have a profound impact on business and ESG.

The big takeaway from the declaration is a clear commitment by the members to achieve net-zero emissions by around 2050. To achieve this policy makers and governments will insist on companies committing to NetZero targets and disclosing their emissions. Targets will get determined by the sectors companies operate in, investor and government scrutiny will strengthen and penalties for pollution, non-compliance and adverse impacts will get higher. 

The declaration emphasises the importance of biodiversity, focus on oceans and climate finance. Companies will face tremendous scrutiny while raising funds and will be expected to disclose actions and commitments in these areas.

Business responsibility can’t emerge by compliance alone. We need to enable it by action, words and through the products and services we sell. A better standard of living and greater disposable incomes, egged on by marketing will lead to associated increases in consumption and increase the pressure on land, energy, water, higher carbon emissions and increased waste.

The summit endorsed the G20 High-Level Principles on Lifestyles for Sustainable Development, to make the battle against climate crisis a mass movement by ensuring sustainable lifestyles. For Indian brands, this is an opportunity to begin switching gears on their business strategy in favour of the long term and integrating sustainability and social impact into their brand promise. Sustainable impact will fundamentally define how consumers and brands see themselves and impact brand valuations.

The G20 brought artificial intelligence into the conversation at G20. The declaration also G20 has accepted the idea of digital public infrastructure as a "set of shared digital systems, built and leveraged by both the public and private sectors, based on secure and resilient infrastructure" that can "enable delivery of services at societal-scale".

The responsibility frameworks of today look at post facto interventions to define social and environmental responsibility. As digital and climate change accelerate, we will be looking at real time responses to everything – waste, water, pollution, compliances, natural disasters and large scale social projects. Digital public infrastructure will strengthen this. ESG data will be readily available, accessible and verifiable.

The energy transition - shift from coal and fossil fuels to renewable energy, means large scale reskilling of people. It also means the emergence of a new set of skills. In these times, knowledge can be a great advantage, but people who don’t have this knowledge or new skills can be left behind. Further, the digitally disadvantaged, either because of lack of internet, a disability, language issues or literacy may face huge, disproportionate challenges.

The G20 declaration talks about a comprehensive toolkit with adaptable frameworks for designing and introducing digital upskilling and reskilling programs. It also commits to working towards ensuring well-managed, regular and skills-based migration pathways. The skills ecosystem will get a boost with this initiative. Social initiatives for companies are likely to veer towards large scale skills initiatives.

The focus must not only be on reducing harmful operations but on innovations and design that can fundamentally alter the way things function together. This implies a cross-functional approach that requires integrated planning across business departments, such as product/service designing, manufacturing, distribution, finance and marketing. The businesses of the future should move from resource efficiency to resource neutrality.

The G20 has made it clear that ensuring growth while addressing the climate crisis and spreading digital public infrastructure (DPI), are top priorities. Its time that companies took collective and individual action too.

It’s a time of change, but more so a time to act. It’s time to take actions that not just help in alleviating the visible problems but the ones that go to the very core—the fundamental imbalances that have contributed to where we are today. The one significant learning from the era of industrialisation has been that social equity and the balance of nature are both equally important. The corporation of 2030 therefore will need a new responsibility framework to work for the global good and take on board the modern context that is digital, sustainable and inclusive.

A version of this article was published on 18 September 2023 by Business Standard Online.