The evolution of ESG laws and regulations is still at a nascent stage in India!
Karma Global Rebuilds Compliances for Businesses with Robust Integration as Cost of Non-Compliances Could Be More Than Cost of Compliances!!!!!
Karma Global is one of the top 5 labour law consulting firms in the country, has recently hit upon yet another significant milestone in the journey of tying up with SUNDEEP PURI ASSOCIATES AND ADVOCATE, where both these Firms have formally joined hands together to collaborate and create a bigger alliance by scaling up its business on Pan India basis and Internationally to give greater reach of its services together, to its hundreds of clients all over.
The pandemic has changed the very way we do business, disrupting everything from global supply chains to financial markets which subsequently paved the way for change, new adaptations, and rebuilding of business models with compliance being at the heart of this change.
In this context, the Enterprises too need a change in mindset for those who want to remain on the right side of the law. “If the government can change, Corporate and Corporations need to be faster than the regulatory authorities in changing their mindset in this automation game.
Only a few years back, we had compliance people to check and update on compliance conforming to the prevailing laws but now the nature of work is changing and we have platforms that put all the dates, and laws in the form of a checklist for us, which comes as a lifesaver,”
At present, not all but most of the companies have woken up to the reality of this changing compliance landscape with the announcement of the new labour codes, and with it, there is a growing trend towards digitization to improve compliance and ensure that organizations are saved from the stiff penalties imposed on defaulters. “Every other day you have a different regulation change happening across numerous States, recent example with Chhattisgarh going in for old pensions while other States are opting for new pensions.
We have many vendors who are going towards digitalization to track these compliance and regulation changes,” and Karma Global is proud to have adopted the new AI technology and automation much before others could even think about it. With the changing notifications from the government, and the requirement of reporting real-time data to authorities on a monthly/quarterly/half-yearly, and annual basis, it is the technology that has set new standards and disrupted traditional methods and practices.
An increasing number of companies today are using a mix of internal and externally developed technology tools to keep pace with the fast-changing compliance landscape and are standing with Karma Global for its state-of-the-art “WeProcess” and “WeChecked” tools that offer advanced features, chatbots, machine learning, single uploading of all documents, and final evaluation together with remediation of noncompliance.
“The compliance scenario in India has gone so far that everything is interconnected. One failure somewhere is going to reflect in many records. We see the government rolling things out step by step to make sure that they have a more robust compliance mechanism and a compliance-driven economy.
So in this regard, besides the business profile of Karma Global relating to labour laws, it will now focus whole time also on legal and paralegal issues and matters with the collaboration of Sundeep Puri & Associates who are already into legal matters such as disputes, litigation, and court cases.
The evolution of ESG laws and regulations is still at a nascent stage in India!
Background:
Businesses should be measured not just on traditional economic metrics (shareholder return), but also by their –
- Environmental impact,
- Commitment to social issues and the
- The soundness of their corporate governance and protection of shareholder rights.
Companies have a distinct responsibility as corporate citizens and the ESG considerations in a company’s risk profile are needed to accurately assess the enterprise.
Let us exactly understand the meaning of ESG:
- ESG is an acronym for Environmental, Social, and Governance.
- ESG takes the holistic view that sustainability extends beyond just environmental issues.
- ESG can be best explained as a framework that helps the stakeholders understand how an organization is managing risks and opportunities related to environmental, social, and governance criteria.
- In a simple manner, the main objective of ESG norms is basically to ensure that businesses are conducted in a more responsible manner.
How ESG differs from Corporate Social Responsibility (CSR)
- India has a robust CSR policy codified in the Companies Act 2013, mandating that corporations engage in initiatives that contribute to the welfare of society by spending at least 2% of their net profit over the preceding 3 years on CSR activities.
- ESG regulations differ in process and impact. For example, The U.K. Modern Slavery Act requires companies to publish the efforts they have taken to identify the risks of child labour in their supply chain, etc.
The current focus of India:
It places more emphasis on protecting the environment or working conditions than on implementing the controls and disclosure that are essential components of modern ESG legislation.
Attempts to bring ESG legislation in India:
India has a number of laws and bodies regarding ESG issues, including
- The Environment Protection Act of 1986,
- Quasi-judicial organizations such as the National Green Tribunal,
- A range of labour codes and laws governing corporate governance practices.
- While these provide important environmental and social safeguards, new initiatives establish guidelines for monitoring, quantification, and disclosure, akin to ESG.
- For example, SEBI revised the annual Business Responsibility and Sustainability Report (BRSR) required by the 1,000 largest listed companies in India, mandating disclosures from GHG emissions to gender and social diversity.
What are the implications for Indian companies?
Compliance with ESG regulations — both originating in India and elsewhere around the world — thus, pose a significantly different challenge than India’s CSR regulations. In particular, compliance by Indian companies with the ESG regulations of the U.S., the U.K., the European Union, and elsewhere will be critical if India is to take full advantage of the growing decoupling from China and play a more prominent role in global supply chains and the global marketplace overall.
The rise of ESG Investing in India
- Environmental, social, and governance (“ESG”) investing is rapidly gaining popularity in India, as investors are becoming more conscious of the impact their investments can have on the environment, society, and other stakeholders of companies.
- ESG investing focuses on companies that have strong ESG practices. Such companies are considered to be more sustainable and are likely to be more profitable in the long run.
- Due to its increasing relevance, Indian corporations are facing increasing pressure to disclose information about their ESG performance and to meet certain performance standards.
- The Government of India has been working on creating a framework to encourage more companies to adopt ESG practices.
- The Ministry of Corporate Affairs has issued a draft National Action Plan on Corporate Social Responsibility (“CSR”), which aims to promote sustainable and inclusive growth by mandating companies to undertake CSR activities.
- Government of India has also launched various schemes like ‘Swachh Bharat Abhiyan’ and ‘Make in India’ to promote sustainable practices and inclusive growth in the country.
- The Securities and Exchange Board of India (“SEBI”) under its Business Responsibility and Sustainability Reporting (“BRSR”) mandate has issued guidelines and the companies listed on Indian stock exchanges are now required to disclose their ESG performance in their annual reports. This move is aimed at increasing transparency and encouraging companies to adopt sustainable practices. Companies that fail l to meet these standards may be at risk of reputational damage and potential financial penalties.
Conclusion: Companies that wish to maximize their opportunities in the global economy need to embrace these new requirements and adjust their organizations accordingly.
In conclusion, ESG investing is gaining traction in India and it’s becoming increasingly important for Indian corporations to understand the implications of ESG investing and take steps to meet the growing demand for sustainable investments. This can be achieved by disclosing ESG performance in the annual reports, adopting sustainable practices, and following the guidelines and regulations framed by SEBI and Government.
Karma Global works across a wide variety of industries, constantly looking for ways to offer new services and increase its global businesses.
In order to serve today’s technology to tech-savvy clients and employees, Karma Global planned much ahead of its time by adapting to processes and systems to accommodate the quickly changing markets.
As the Industry is continuing to get more and more competitive, Karma Global is bridging the gap, setting itself in tune with the latest technology trends in order to maintain a competitive advantage for all of its over 400 domestic and global clients.
Automation and AI – Karma Global was among the first to improve efficiencies, the first in the vendor auditing process to fully automate and streamline any and all processes surrounding the auditing business of entities and vendors.
The chatbot and AI did a fabulous job of giving machine output, with a quicker pace, cheaper rate, and more accurate level of auditing and reporting.
This helped in elevating the roles of our Auditors to focus on complex tasks that require more brainpower or the human touch, leaving some of its tasks to the capabilities of the machine.
Incorporating chatbots in customer service allowed time for our expert representatives to spend time dealing with more complex issues which could ultimately add to the user experience and this is what set us apart from others.
Automating repetitive processes in our systems helped us free the valuable time of our expert staff allowing them to reach out to more clients.
For this purpose, Karma Global has both full-time IT-related staff and also indirect staff who are freelancing with us for enhancing our IT capabilities to the next level on the cloud platform.
Also, clients with issues such as litigation, disputes, closure, lockdown, retrenchment, and layoffs could take the help of Karma Global in sorting this out since it now has a formidable partner by the name of Sundeep Puri & Associates to provide further solutions on such or any legal entanglements.
Proprietary blog of Karma Global Tech Management LLC
This blog has been collated and compiled by the internal staff of Karma Global with the knowledge and expertise that they possess, besides adaptation, illustration, derivation, transformation, collection as well as auto-generation from various sources, for its monthly newsletter Issue 10 of April 2023 and in case of specific or general information or compliance updates for that matter, kindly reach out to the Marketing Team – Kush@karmamgmt.com / yashika@karmamgmt.com