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How ESG creates value for an organisation?

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Over the last few years there has been a substantial rise in responsible investment by businesses. Earlier, companies either focused on social or environmental aspects that fell under the purview of CSR. Today however, they have become more conscious to ensuring aspects like human rights, anti-corruption, sustainable manufacturing and fair labour receive equal focus in their operations as well as across their value chains. Additionally, businesses have realised that the ‘either or’ approach is no longer viable. Action towards ESG (environmental, social and governance) as a whole has to be driven through a synergistic approach across a business’ value chain as well as in communities. This approach is thus gradually becoming a key facet in an organization’s value creation model. To address a  diverse set of ESG related issues companies must track the right KPIs, incentivise management using those metrics, and must communicate performance improvements to different stakeholders.

Strong ESG performance can create multiple competitive advantages for enterprises including a more stable investor base, lower CapEx and better access to financing, improved employee engagement and customer loyalty.

Here are 5 ways in which ESG could create value for businesses:

Achieve top-line growth

Businesses with a strong ESG proposition are able to attract customers with more sustainable offerings as these practices drive consumer preferences. The majority of consumers are willing to pay more for green products with same performance standards as ‘non-green’ ones.

Reduced costs

Businesses that execute ESG practices effectively are able to combat rising operational expenses through efficiencies, which can affect profits in the long term. It has been found that the companies that have strategized their sustainability practices are able to perform better than other companies across all the sectors.

Easing regulatory interventions

Strong and proactive ESG initiatives can help businesses reduce the risk of adverse government actions and they can expect better support from government agencies.

Improved employee productivity

Strong ESG initiatives by companies can help them retain talent and enhance employee motivation. The stronger an employee’s perception of impact on the beneficiaries of their work, the greater is the employee’s motivation to act in a “prosocial” way.

Enhance investment returns

Businesses can expect increased returns on their investments when they allocate capital to more promising and sustainable opportunities. ESG initiatives can also help companies avert investments that may not pay off due to longer-term environmental issues. Even institutional investors are showing an increased interest in putting their money in companies with values. Over the last few years, there have been several ESG related funds being offered by brokerage firms and mutual fund companies who invest in companies that prioritize ESG aspects and report on their year-on-year performance.

STL’s ESG initiatives – Creating Shared Value

STL, through various programmes, is not only forwarding the concept of ESG but is also creating value for society at large. STL’s ESG practices connect directly with 15 of the 17 Sustainable Development Goals (SDGs) adopted by the United Nations in 2015. The main objectives include;

  • Striving towards a healthier, cleaner and greener world through sustainable production, innovation, preservation of natural resources and responsible consumption;
  • While also creating a more inclusive future through poverty alleviation, reduced inequalities between communities and genders, access to quality education, clean water, sanitation and healthcare;
  • As well as building resilient and sustainable communities through investment in infrastructure, digital access and by leveraging partnerships for the goals.

STL is committed to responsible operations and has adopted comprehensive environmental policies and monitoring systems that address recycling and reusing water at its manufacturing units. It has invested in rainwater harvesting with facilities across its manufacturing units in Silvassa and Aurangabad. Apart from this, STL has set up ETPs (effluent treatment plants) and STPs (sewage treatment plants) to curtail use of fresh water in its plants – the results evident in the use of recycled and reused water in FY20 to the tune of 1,24,791 m3.

Through its ‘Zero Waste to Landfill’ programme STL has contributed to India’s Swaach Bharat Mission by diverting more than 64,000 MT of waste away from landfills over the last two years. This endeavour not only helps reduce harmful methane emissions, but also promotes more circular use of resources by identifying alternative industrial or organic streams where they can be repurposed. Last year, 21,000 MT of waste were reused out of the total 30,000 MT diverted. Being certified ‘Zero Waste to Landfill’ by Intertek (US) in FY20 has made STL the world’s first integrated optic fibre and cable manufacturer to achieve this for its manufacturing plants in India.

STL’s robust in-plant carbon emission reduction activities have helped reduce over 5500 tCO2e. Further through collaboration with local partners, STL has developed S.U.R.E (Sustainable, User-friendly, Reliable and Efficient) packaging for its products. Such collaboration has helped STL transition to eco-friendly packaging as well as promote economic development in surrounding communities. Through knowledge sharing and helping mentor them on more organised and streamlined processes, STL has helped make such smaller enterprises future ready. With a stringent quality control policy that focuses on its green quotient, STL uses and produces products that are durable as well as environment-friendly.

Each one of these activities are further reinforced through holistic social impact programs. Project Green Belt and Gram Samruddhi undertaken at Aurangabad have been successful in doing over 13,000 plantations between 2014 to 2019. Similarly, through an eco-restoration project being undertaken in Vetale, a small village 65Km North East of PuneSTL aims to reforest ~40 acres of barren land into lush forest that are home to varieties of indigenous flora and fauna. Again along with the World Bank WRG2030 Group STL has planned a holistic water management program in drought prone Aurangabad for communities that aims to create equitable access to this precious resource through conservation, ground water replenishment and treated waste water management use for agriculture and massive afforestation.

To ensure basic human rights like education and healthcare are accessible to needy communities, STL has leveraged technology to provide over 796,000 children and teachers with quality learning interventions across rural, semi-urban areas in Maharashtra, Silvassa and Rajasthan. Through its Medical Mobile Unit, STL has ensured over 220,000 tribals in Silvassa can access quality healthcare at their doorsteps.

The Jeewan Jyoti Women Empowerment programme in Maharashtra initiated by STL in 2014, has till date empowered more than 2,200 women and thus over 11,000 lives across 120 villages in Bhor, Velhe and Haveli talukas. Here, to ensure women across age-groups are empowered the programme offers them certified vocational training courses, support on setting up their business enterprises, self-help groups, micro-financing and micro livelihood programmes that help them lead transformation in their communities.

During the COVID-19 pandemic, STL provided aid to 20 locations across the country in the form of PPE kits, N95 masks, ventilators, and other essential items, impacting over 1,00,000 lives. It has also leveraged digital platforms to spread the message of hygiene and rules to follow to stay safe as well as to ensure progress through its social impact programmes is not stalled, but continued even amidst the lockdown.

On the governance front, STL not only has robust policies and processes that ensure Human Rights and Fair Labour practises are adhered to.  Importance is given to monitoring, reporting and transparency along with grievance redressal mechanisms.  An effective Whistle Blower Policy is followed to contain misconduct, corruption or unlawful acts like extortion or bribery. The Code of Conduct followed at STL lays prime importance to transparency, with an active grievance cell to address any kind of corruption. Additionally, child labour is strictly forbidden, as also forced labour. An uncompromising no-tolerance policy is adopted towards sexual harassment with the implementation of the grievance mechanism in compliance with the Prevention of Sexual Harassment (POSH) Act. And each of these aspects are also driven throughout our supply chain.

STL follows the Global Reporting Initiative (GRI) standard for reporting on its Social Impact and Sustainability programs. Every aspect is corroborated by an independent third party assurance company.  As a signatory to the UN Global Compact, STL also communicates its progress on the UNGC principles annually.

ESG for a better future ESG factors are integral to assessing the quality of a company and covers a wide range of issues that traditionally were not part of financial analysis and hence not given due importance. However, as part of a global economy, businesses and are confronted with environmental issues and social factors and need to comply and abide by various regulations. Therefore, proactively managing these elements in synergy with each other should be a pivotal part of sustaining a business’ value proposition in today’s competitive world.

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