Need For Synergy Between Sustainable Development, ESG And CSR Goals

The Sustainable Development Goals had been adopted in 2015 by the United Nation member states with the objective of achieving 169 targets spread across seventeen key areas by 2030. 

Agenda For Sustainable Development

Termed the 2030 Agenda for Sustainable Development, sixteen goals were sweeping in their scope and ambition - social goals, economic goals, environmental goals, a separate goal with a focus on peaceful societies and institutions to spur growth, and a stand-alone seventeenth goal on global partnership to provide support to developing countries.

There was a recognition that ‘ending poverty and other deprivations had to go hand in hand with strategies to improve health and education, reduce inequality and spur overall economic growth while tackling climate change and working to preserve our oceans and forests.

The Summit was a preparatory exercise for the ‘Summit of the Future’ to be held later this year which aims to’ build new life into the multilateral system so that it can deliver on the promises of the 2030 Agenda’. There was realisation that at the current pace, the 2030 targets would perhaps not be met.

The position in India too is a matter of concern. According to the UN SDG Index and Dashboards Report 2023, India is ranked 112 out of 166 countries with an overall index score of 63.5 per cent.

Progress, But Still A Long Way To Go

NITI Aayog which helms the efforts to achieve the SDG goals has instituted a framework that recognises the need for close coordination with the states. The theme is to take SDGs from Global to Local - a nod to the need for cooperative and competitive federalism.

As per the NITI Aayog’s  SDG India Index, the national score (all India) is 57 out of 100; the Centre for Science & Environment’s State of India’s Environment Report 2022 pegs the SDG score as 66. Progress has taken place, but we have still some distance to go. 

Given that the scope of Sustainable Development Goals cuts across Ministries, it is critical that there is alignment between the SDG goals and Ministries’ schemes. Providing a Budget for the various SDG-related goals and monitoring them becomes an even greater challenge.

Too Important To Be Left Only To Governments

SDGs are too important to be left only to governments. Consequently, there is a need to look at the other statutory provisions like Environmental, Social and Governance (ESG) and Corporate Social Responsibility (CSR), provisions of which overlap with the SDG goals.  

ESG comes under the regulatory oversight of the Securities Exchange Board of India (SEBI). The focus is on capturing non-financial performance - ethics, transparency, accountability, sustainability, and protecting the environment. SEBI also introduced a `regulatory framework for ESG Rating providers ( ERPs) in 2023. The Reserve Bank of India (RBI) too has prescribed a framework for acceptance of green deposits. Thus slowly but surely the Indian regulators have moved towards ensuring greater ESG accountability resulting in a spurt in ESG investments. Globally it is believed that the ESG assets are expected to exceed US$ 53 trillion. 

CSR started off as a voluntary concept - companies were encouraged to allocate specific amounts in their budget, to ‘bridge the gap between India and Bharat’.The Companies Act was amended in 2015 mandating companies with a profit above a certain threshold to spend at least 2 per cent of their average net profits over the previous three years on CSR activities. As per the National CSR portal data, total CSR expenditure has increased from Rs.20,217 crore in 2018-19 to Rs.26,278.71 crore in 2021-22. As per the portal, the major areas of CSR expenditure were in health & sanitation, rural development, contribution to the PM National Relief Fund, and encouraging sports.

Thus, there are three silos working towards largely the common goal of enhancing the quality of life. Unfortunately, there is little coordination between the three - SDG is driven by governments, the other two by the corporate sector. It is imperative that the efforts of the Central and State governments and of the corporate sector are aligned toward achieving SDG goals. This is possible if NITI Aayog takes the lead and identifies the various critical SDG goals where the corporate sector can participate through the ESG and CSR route.

A bouquet of such goals should be made available so that the corporates can chose where they wish to put their funds. Public-private partnerships should be encouraged.  There should be an audit of implementation through the statutory auditors of the corporates concerned. Then and only then can we inch our way forward towards achieving the SDG goals. We should not forget the dire warning of the UN Secretary General that ‘unless we act now, the 2030 Agenda could become an epitaph for a world that might have been.’