Mumbai, November 11, 2021: Boston Consulting Group (BCG), in collaboration with NASSCOM, today launched its report titled, “The Next Big Leap’ Towards ESG Maturity in Tech Sector.” The report findings highlight that over the past decade, ESG—Environmental, Social and Governance—factors have become an increasingly important paradigm across the corporate world. Conversations on ESG have come to the forefront, owing to elements like the COP26 United Nations Climate Change Conference, that witnessed commitments not only from governments, but also from the private sector. The Tech industry, a frontrunner on ESG, is well-positioned to play a significant role in shaping the path forward; not only for itself but also for its clients by actively supporting their journey towards ESG goals.
BCG’s Media Study of 4,000+ media articles on ESG from this sector over the last four years shows that the volume of ESG-related articles has nearly doubled. This is particularly evident for the Tech industry, where ESG has become a top priority today with scrutiny by clients, investors, and employees. According to the report, India too is witnessing an increasing focus on ESG. Assets under management (AUM) for ESG-themed funds rose to USD 650 Million in FY21 from USD 275 Million in FY20, a 2.5X increase. Issuance of sustainability-linked bonds in the first four months of 2021 are already more than double of issuances in all of 2020.
“Conversations around ESG are at its peak, as climate change continues to dominate the published word, along with social topics like employee well-being and mental health,” said Vikash Jain, Managing Director & Senior Partner, BCG. “As attention turned to the recently held COP26 and the ‘Race to Zero’ campaign in November, discussions around zero emissions fructified further, with participation from over 3000 firms across the globe; a number that continues to double each year accounting for more than 20% of the Fortune 500 companies.”
“India’s bold commitments at COP26 need swift execution. Tech companies have a tremendous role to play, with the sector influencing 55M employees globally. Also, tech innovation will be key, from scaling-up existing solutions to developing disruptive ones,” said Sreyssha George, Managing Director & Partner, BCG.
Sharing her thoughts, Debjani Ghosh, President, NASSCOM, said, “The tech industry has always been a pioneer of sustainability and doing business in a conducive way which is future proof. It is critical to incorporate ESG considerations across the value chain to build a resilient business model and contribute to global ESG goals. The future necessitates a fundamental shift in thinking about sustainability and transitioning into a low-carbon business model using tech innovation. The industry must put technology to good use by using insights from data to enhance operations, increase efficiency, and minimise environmental impact.”
The focus for the NASSCOM and BCG report, is to sensitize the technology sector on the material ESG topics for the industry. The report lays out the nine material topics across the three priorities - environmental, social, and governance, that technology companies can use to formulate their respective ESG strategies. It also draws a comprehensive and mature ESG strategy that can guide companies’ non-financial vision and ambitions to unlock future value.
While the signs are positive, a lot of ground remains to be covered before the industry gets close to the global sustainability ambitions. The report finds that while the significance of ESG is being discussed extensively within the technology sector, a clear roadmap is yet to emerge. ESG is also a broad topic and not every ESG factor will be material to all businesses and sectors. Hence it is essential for both companies and investors to be able to identify and manage factors that are significant for their industry. The report introduces a five-point maturity framework that can enable CXOs to analyse their current position and provide actionable steps to dynamically evolve in this fast-evolving topic.
David Young, Managing Director & Senior Partner, BCG said, “By embracing sustainability and ESG, TECH has the opportunity to both improve the sustainability performance of their businesses making them better companies and better for planet and society while also helping their customers achieve more sustainable business models”
“The Indian tech companies have a pivotal role to play in not just setting an example of leading the ESG journey for themselves but also use their core tech DNA to help their clients across verticals on their ESG journey” explains Ayon Banerjee, Managing Director & Senior Partner, BCG. “As threatening as the climate threat is to our planet, it’s also a huge opportunity for the Indian IT industry to truly play a differentiating role here.”
About NASSCOM
The National Association of Software and Services Companies (NASSCOM®) is the premier trade body and chamber of commerce of the Tech industry in India and comprises over 3000-member companies. Our membership spans across the entire spectrum of the industry from startups to multinationals and from products to services, Global Capability Centres to Engineering firms. Guided by India's vision to become a leading digital economy globally, NASSCOM focuses on accelerating the pace of transformation of the industry to emerge as the preferred enablers for global digital transformation. Our strategic imperatives are to reskill and upskill India's IT workforce to ensure that talent is future-ready in terms of new-age skills, strengthen the innovation quotient across industry verticals, create new market opportunities - both international and domestic, drive policy advocacy to advance innovation and ease of doing business, and build the industry narrative with focus on Talent, Trust and Innovation. And, in everything we do, we will continue to champion the need for diversity and equal opportunity.
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