Forem: GlobeTrend Climate Impact

India’s Climate Budget 2026-27

GlobeTrend Climate Impact — Tue, 31 Mar 2026 13:23:07 +0000

As per India’s climate budget 26-27, a five-year outlay of ₹20,000 crore for Carbon Capture, Utilisation and Storage (CCUS) signals India’s entry into the demonstration stage of hard-to-abate sector decarbonisation. CCUS is particularly relevant for cement, steel and aluminium, where emissions are structurally embedded in production processes.

However, global experience shows that CCUS deployment remains capital-intensive and uneven, even in advanced markets such as Norway, Canada and the U.S. The allocation therefore reflects prudence rather than scale, pointing that India is testing technological and economic viability before committing to industrial roll-out. CCUS pilots will allow Indian industry to test compliance pathways without locking in costly infrastructure prematurely. This allocation is particularly significant given the European Union’s Carbon Border Adjustment Mechanism (CBAM). European Union by financing CCUS pilots, policymakers are effectively enabling industry to explore technically feasible pathways for lowering process emissions, a direct response to near-term trade and competitiveness risks facing emission-intensive exporters.

Rooftop Solar and KUSUM Yojana
On the other-side of transition, the budget strengthens decentralised renewable energy. Allocations for the PM Surya Ghar Muft Bijli Yojana rise to ₹22,000 crore in 2026-27, reinforcing rooftop solar as a tool for lowering household energy costs, reducing transmission losses, and easing land-use pressures.
Similarly, sustained funding for PM-KUSUM at ₹5,000 crore reflects improving implementation capacity, with revised estimates pointing to stronger-than-expected absorption. These schemes demonstrate that well-designed, consumer-facing climate interventions can scale and social and economic co-benefits.

Benefits of schemes:
• Reduce systemic risk by decentralising generation
• Deliver visible household-level gains
• Require limited long-term fiscal support once adoption stabilises

Nuclear and Green Hydrogen Policy Without Conviction Capital
Nuclear energy and green hydrogen are widely recognised as critical to India’s long-term decarbonisation strategy for ensuring grid stability and decarbonising sectors where electrification alone is insufficient.

Nuclear power offers reliable, low-carbon baseload electricity, which becomes increasingly important as renewable energy penetration rises. In budget 2026-27, the extension of zero basic customs duty on imported nuclear plant equipment until 2035. This will lower input costs and signal policy continuity.

Green hydrogen is positioned as a future solution for decarbonising industrial processes, long-haul transport and energy storage. Despite budgetary allocations, actual expenditure continue to lag, underscoring a gap between announcement and execution.

What This Means for Industry
• Heavy-emitting sectors such as steel, cement and aluminium should treat CCUS as an early-stage compliance and risk-mitigation tool, focusing on pilots, emissions measurement systems, and technology partnerships rather than immediate large-scale deployment.

• Solar developers, equipment manufacturers, financiers and discoms are likely to see near-term demand growth, creating opportunities in decentralised generation, consumer financing, and operations & maintenance services.

• While policy continuity reduces uncertainty, high capital intensity and liability risks mean private participation is likely to remain limited unless supported by stronger public risk-sharing mechanisms.

What the Budget Really Reveals?
Viewed analytically, Budget 2026-27 is selective, not conservative. It reveals a deliberate and selective fiscal strategy rather than an under-ambitious one. The government is differentiating between technologies that are ready to scale, those that require testing and validation, and those where private capital is expected to lead.

Public spending is concentrated where outcomes are predictable and absorptive capacity is proven most notably in decentralised solar programmes that deliver immediate economic and social returns. In contrast, capital-intensive and technologically uncertain pathways such as CCUS, green hydrogen, and nuclear energy receive policy signalling and pilot-level support, but not the level of public funding required for rapid commercial deployment.

This approach also reflects a broader shift in climate governance. Industrial decarbonisation is increasingly framed through the lens of competitiveness and trade exposure, while consumer-facing energy transitions are treated as public infrastructure priorities. The underlying assumption is that once regulatory direction and initial de-risking are provided, markets will mobilise capital for the rest of the transition.

Ultimately, the budget reveals that India’s climate constraint is no longer vision or policy intent, but the absence of a mature financial architecture to share transition risk at scale. Until instruments such as blended finance, guarantees, and long-term offtake mechanisms are strengthened, climate budgets are likely to continue signalling direction rather than execution.

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ESG Frameworks and Why They Matter: A Rating Provider’s Perspective

GlobeTrend Climate Impact — Sun, 25 Jan 2026 13:11:49 +0000

Why ESG Frameworks Matter?
As sustainability expectations evolve, companies are navigating an increasingly complex landscape of reporting requirements. Investors, regulators and stakeholders now demand ESG disclosures that are comparable, decision-useful and transparent. In this environment, ESG frameworks play a critical role in guiding companies on what to measure, how to measure and how to communicate their performance.

Beyond corporate reporting, ESG disclosures are used by capital market intermediaries to assess risk, resilience, and long-term value creation. Capital Market Intermediaries such as ESG rating providers rely on ESG frameworks as an analytical anchor to interpret reported information in a structured and comparable manner. Frameworks enable objective evaluation of disclosure quality, risk management maturity and performance outcomes, ensuring that ESG assessments are grounded in recognised standards rather than subjective judgement.

What Are ESG Frameworks?
ESG frameworks are structured set of guidelines, standards and principles that help companies:
•Identify their material ESG issues
•Measure and track performance metrics
•Communicate risks, impacts and progress
•Provide transparency to investors and regulators

They create a common language across industries and geographies, enabling responsible capital allocation and facilitating reliable ESG ratings.

How ESG Frameworks differs from ESG Standards?
ESG reporting frameworks provides guidance and best practices for the companies on how to prepare and structure the information. However, the ESG reporting standards provides specific insights about the topics to be covered and also defines the content to be included and metrics for measurement criteria including rules and metrics to follow up. ESG Framework acts as a reporting structure and ESG Standards tells what content is to be included therein.

Types of ESG Frameworks
a)Regulatory Frameworks
Regulatory frameworks are government-driven frameworks that are mandatory for businesses to report on. These include the ones introduced by governments, regulators or stock exchanges. These frameworks are non-negotiable.

Examples:
1.Business Responsibility and Sustainability Report (BRSR)
BRSR is India’s mandatory ESG disclosure framework for listed companies, aligned with national sustainability priorities and global standards. Introduced by the Securities and Exchange Board of India (SEBI), the BRSR framework is designed for Indian companies to disclose their ESG performance. BRSR is mandatory for the top 1000 listed companies in India.

It aims to standardise ESG disclosures, enhance transparency and enable better decision-making for investors, regulators, and other stakeholders.

How it works?
•Disclosures across environmental, social, and governance indicators
•BRSR Core introduces assured and comparable metrics
BRSR provides a standardised baseline ESG dataset for Indian companies, strengthening domestic comparability and regulatory alignment.

2.Corporate Sustainability Reporting Directive (CSRD)
The CSRD is the European Union’s mandatory sustainability reporting regulation that significantly strengthens how companies disclose ESG information. It replaces the earlier Non-Financial Reporting Directive (NFRD) and is designed to make sustainability disclosures comparable, reliable, decision-useful, and assured, similar to financial reporting.

CSRD applies to:
•Large EU companies
•EU-listed SMEs (with phased timelines)
•Non-EU companies with significant business in the EU (through subsidiaries or branches)

As a result, CSRD has global relevance, including for Indian and other non-EU companies with EU operations, customers, or listings.

How does CSRD work?
CSRD operates through a structured and regulated reporting architecture:

Reporting under ESRS
Companies must disclose ESG information in line with the European Sustainability Reporting Standards (ESRS), which provide detailed, topic-wise requirements across environmental, social, and governance themes (e.g., climate, pollution, workforce, business conduct).
Double Materiality Assessment
CSRD is built on double materiality, requiring companies to identify and report:
•Impact materiality: How the company impacts the environment and society?
•Financial materiality: How ESG risks and opportunities affect the company’s financial performance and enterprise value?
Coverage of Strategy, Governance, and Performance
Disclosures must cover:
•Governance structures and board oversight
•Strategy and business model resilience
•Policies, action plans, and targets
•Metrics, KPIs, and progress tracking
This ensures ESG reporting goes beyond narratives and reflects systems and outcomes.
Integration with Financial Reporting
CSRD disclosures are included within the management report, not as a standalone sustainability report, reinforcing the link between sustainability and financial decision-making.
Digital Tagging
Reported ESG data must be digitally tagged, enabling regulators, investors, and data users to easily access and compare information.
Mandatory External Assurance
Sustainability disclosures are subject to limited external assurance initially, with a transition toward reasonable assurance over time significantly improving data credibility.

b)Voluntary Frameworks
These frameworks offer companies the flexibility to choose and implement ESG practices that align with their objectives and values. They are optional but are widely adopted by companies to serve three main goals in their sustainability reporting:
a. Build credibility
b. Maintain transparency
c. Ensure compatibility

These frameworks provide guidelines rather than strict regulations. They allow for customisation based on unique circumstances and stakeholders.

The voluntary frameworks are for investors, financial analysts and shareholders. These frameworks focus on financial materiality and building investor trust. Subsequently, it helps companies attract capital and strengthen investor confidence.

Examples:
1.GRI (Global Reporting Initiative)
GRI is a globally recognised, impact-focused sustainability reporting framework. It is designed to help organisations disclose their significant environmental, social and economic impacts on society and the environment.

GRI follows a stakeholder-oriented materiality approach, focusing on how a company impacts the world, rather than only how ESG issues affect financial performance. GRI-aligned disclosures enhance the breadth and depth of ESG data, particularly for environmental and social indicators, improving impact assessment quality.

How it works?
•Companies identify material ESG topics through stakeholder engagement and impact assessment
•Disclosures are structured using:
oUniversal Standards (GRI 1, 2, 3)
oTopic-specific Standards (e.g., emissions, water, labour, human rights)
•Companies disclose governance, management approach, and performance indicators

2.SASB Standards
SASB is a financial materiality-based framework that identifies ESG issues most likely to impact enterprise value, on an industry-specific basis. SASB disclosures help assess financial risk exposure, consistency, and relevance particularly useful for governance and risk scoring.

It is primarily designed for investors and financial decision-makers.

How it works?
•Companies identify their relevant industry standard (e.g., banks, metals & mining, chemicals)
•Disclose sector-specific ESG metrics that are financially material
•Metrics are quantitative, comparable, and decision-useful

3.Task Force for Climate Related Disclosures (TCFD)
TCFD is a climate-risk disclosure framework that focuses on how climate change affects a company’s strategy, financial performance, and resilience.

How it works?
Disclosures are organised around four pillars:
1.Governance
2.Strategy
3.Risk Management
4.Metrics and Targets

Scenario analysis is encouraged to assess climate resilience under different transition pathways. TCFD alignment enhances assessment of climate governance, transition readiness, and risk integration.

4.International Sustainability Standards Board (IFRS)
The IFRS Sustainability Disclosure Standards, issued by the ISSB, establish a global baseline for sustainability-related financial disclosures. They are designed to be used alongside financial statements and are increasingly referenced by regulators and stock exchanges worldwide.

•IFRS S1: General sustainability-related risks and opportunities that could reasonably be expected to affect enterprise value.
•IFRS S2: Climate-related disclosures, fully aligned with and building upon TCFD. It requires the companies to report on the governance risk strategy, management and performance.

How it works?
•Focuses strictly on financial materiality i.e., ESG factors that affect cash flows, access to capital, or cost of capital
•Emphasises forward-looking information, scenario analysis (for climate), and integration with financial planning

c)Benchmark/ Management Frameworks
These frameworks act as guidelines and benchmarks that companies use internally to:
a. Design strategies
b. Manage performance
c. Measure sustainability progress

It allows systematic analysis of the company, which can be further reflected upon to identify the strengths and weaknesses. Accordingly, the businesses can plan the improvement methods.
The benchmark or management frameworks are designed for employees, internal management and broader stakeholders. They help businesses enhance their overall corporate strategy and serve as tools for business transformation rather than compliance.

Examples:
1.Science-Based Targets initiative (SBTi)
SBTi is a target-setting and validation framework that ensures corporate GHG reduction targets are aligned with climate science and the Paris Agreement. SBTi validation demonstrates credibility, ambition, and accountability in climate transition planning.

How it works?
•Companies calculate Scope 1, 2 and 3 emissions
•Set near- and long-term targets aligned with 1.5°C or well-below-2°C pathways
•Targets are independently validated by SBTi

2.EU Taxonomy
The EU Taxonomy is a classification system that defines which economic activities can be considered environmentally sustainable. It is a core pillar of the EU’s sustainable finance framework.

How it works?
For an activity to qualify as taxonomy-aligned, it must:
•Make a substantial contribution to at least one of six environmental objectives
•Do No Significant Harm (DNSH) to other objectives
•Meet minimum social safeguards (e.g., OECD, UNGP)
•Comply with detailed technical screening criteria

EU Taxonomy alignment allows assessors to evaluate the credibility of green revenues and investments, particularly relevant for green bonds, sustainability-linked finance, and transition finance assessments.

The EU Taxonomy focuses on six environmental objectives:
1.Climate Change Mitigation
2.Climate Change Adaptation
3.Sustainable Use and Protection of Water and Marine Resources
4.Transition to a Circular Economy
5.Pollution Prevention and Control
6.Protection and Restoration of Biodiversity and Ecosystems

3.Carbon Disclosure Project (CDP)
CDP is a framework for companies to provide environmental information to their stakeholders including investors, employees and customers, covering environmental governance and policy, risks and opportunity management, environmental targets and strategy and scenario analysis.

How CDP works?
CDP offers three questionnaires on the topics of climate change, water and forests, each of which is scored using different methodologies. Each questionnaire includes general questions alongside sector-specific questions that are aimed at high-impact sectors.

How ESG Rating Providers Use ESG Frameworks?
For rating agencies, frameworks are essential reference points that support:
a) Assessment of disclosure quality
Evaluating whether the company reports data that is complete, consistent, comparable, and aligned with accepted standards.

b) Benchmarking ESG maturity
Framework adherence indicates the strength of governance, risk management, and internal controls.

c) Identification of material issues
Frameworks help assess whether a company’s disclosures cover sector-relevant environmental, social, and governance topics.

d) Evaluation of forward-looking commitments
Climate targets, transition plans, social programmes, and governance enhancements are assessed against global best practices like TCFD or SBTi.

e) Enhancing comparability
Frameworks create common baselines, enabling rating providers to compare companies fairly across sectors and geographies.

Why Aligning with Frameworks Improves a Company’s ESG Rating?
Companies aligned with established frameworks tend to demonstrate:
•Stronger governance oversight
•Clearer articulation of ESG risks and opportunities
•Better-defined KPIs and targets
•Higher transparency in performance and data quality
•Lower ambiguity and estimation risk
This leads to more robust assessments and, naturally, stronger ESG performance evaluations.

How Companies Should Choose the Right Frameworks?
With the proliferation of ESG frameworks globally, selecting the right one can appear overwhelming for companies. However, an informed and structured approach can ensure that ESG reporting is aligned with business objectives, stakeholder expectations and regulatory requirements. The following points should be considered before selecting the right frameworks:

•Understand the purpose of your ESG reporting framework to choose a well-aligned solution

•Assess which ESG frameworks are better suited to specific industries and company types

•Consider credibility in the ESG reporting framework based on recognition and acceptance by industry stakeholders

•Assess the scope and coverage of ESG factors in the framework

•Consider the current regulatory environment in your jurisdiction and industry

•Evaluate if using multiple ESG frameworks simultaneously will create a more accurate ESG report

Conclusion:
ESG frameworks bring structure, discipline, and credibility to sustainability reporting. For rating providers, they are essential tools for assessing performance, identifying meaningful risks and impacts, and ensuring comparability across companies.
As the ESG ecosystem matures, companies that align early with credible frameworks will be better positioned both in terms of regulatory preparedness and ESG ratings. Ultimately, a thoughtful, framework-aligned approach leads to stronger governance, clearer disclosures, and a more resilient sustainability strategy.

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UK Proposes Regulation of ESG Ratings to Strengthen Market Trust

GlobeTrend Climate Impact — Sat, 17 Jan 2026 06:41:24 +0000

The UK is moving to formally regulate the ESG ratings industry, marking a significant step in the evolution of sustainable finance oversight.

The Financial Conduct Authority (FCA) has released detailed proposals to bring ESG rating providers within its regulatory perimeter, following draft legislation by HM Treasury. The move responds to growing concerns from investors, asset managers, corporates and policymakers about inconsistencies, opaque methodologies and unmanaged conflicts of interest in a rapidly expanding market.

ESG ratings are increasingly influencing capital allocation, portfolio construction, risk management, stewardship decisions, and regulatory disclosures. However, the market has developed faster than regulatory oversight, creating trust gaps that the FCA now seeks to address.

The regulator estimates that the proposed regime could deliver approximately £500 million in net economic benefits over the next decade, driven by improved transparency, reduced risk and more efficient decision-making across the investment chain.

Sacha Sadan, the FCA’s Director of Sustainable Finance, said the proposals aim to restore confidence in ESG data: “Our proposals will give those who use ESG ratings greater trust and confidence, supporting our goal of increasing trust and transparency in sustainable finance. This will enhance the UK’s reputation as a global sustainable finance hub, attracting investment and supporting growth and innovation.”

Why the FCA Is Acting Now?
Global spending on ESG data, including ratings, is projected to reach $2.2 billion in 2025, underscoring how deeply ESG metrics are embedded in modern financial markets.

At the same time, the FCA’s research highlights persistent unease among users:
•55% of users are concerned about how ESG ratings are constructed
•48% question the transparency of rating methodologies

With ESG ratings carrying growing commercial and regulatory significance, the FCA argues that proportionate oversight is now essential to maintain market confidence and protect the integrity of sustainable finance.

The Proposed Framework: Four Pillars of Oversight
The FCA’s consultation sets out a framework focused on clarity, accountability and trust, structured around four core areas:

Increased Transparency
ESG rating providers would be required to disclose clearer information on methodologies, data sources, assumptions and limitations. This is intended to:
•Enable more meaningful comparison between ratings
•Improve understanding for both users and rated entities
•Reduce disputes arising from opaque scoring approaches
Stronger Governance and Controls
Providers would need robust governance arrangements, documented decision-making processes, and effective systems to ensure consistency, quality assurance and methodological discipline across rating activities.
Conflicts of Interest Management
Given that many providers offer adjacent advisory or data services, the FCA proposes bespoke rules requiring firms to identify, manage and where appropriate, disclose conflicts of interest that could influence ratings outcomes.
Stakeholder Engagement and Complaints Handling
Firms would be expected to establish clear channels for stakeholder engagement and transparent complaint-handling mechanisms. The FCA believes structured engagement will strengthen credibility and reduce friction across markets.

Importantly, the regulator emphasises that requirements will be proportionate, calibrated to the size, risk profile, and business model of each provider, ensuring smaller firms are not unduly burdened.

How the Regime Will Be Implemented?
The FCA proposes to regulate ESG rating providers by applying core UK financial-services standards, supplemented by targeted rules specific to ESG ratings.

1)Core conduct and accountability standards
ESG rating providers would be subject to the FCA’s Principles for Businesses, requiring firms to act with integrity, exercise due skill and care, manage risks effectively and communicate clearly with market participants. While the Consumer Duty will not apply, these principles establish baseline expectations for responsible conduct and credible ratings production.

2)Stronger governance, systems, and internal controls
Firms would need robust governance frameworks covering methodology design, data quality, quality assurance, record-keeping and risk management. The objective is to ensure ratings are produced through consistent, well-controlled processes rather than opaque or ad-hoc approaches.

3)Clear senior accountability under SM&CR
Senior managers would be individually accountable for key functions and decisions under the Senior Managers & Certification Regime. This strengthens oversight at the leadership level and reduces governance risk, including for overseas providers operating through UK branches.

4)Targeted ESG-specific rules
Recognising the unique risks in the ESG ratings market, the FCA proposes bespoke requirements focused on:
•Transparent disclosure of methodologies, data sources, assumptions and limitations
•Identification and management of conflicts of interest, particularly where firms offer adjacent services
•Structured stakeholder engagement and effective complaints-handling processes

All requirements will be applied on a proportionate basis, calibrated to firm size, business model, and risk profile, to preserve competition and innovation while strengthening market trust.

What C-Suite Leaders and Investors Should Watch
If implemented, the regime will place the UK among the first major jurisdictions to explicitly regulate ESG ratings, creating a reference point for other markets considering similar steps.

For corporates, clearer methodologies could reshape how sustainability strategies are externally assessed, with implications for investor engagement, cost of capital, and competitive positioning.

For asset managers and investors, a regulated landscape may reduce operational risk and improve confidence in ESG inputs, though it could also prompt shifts in provider selection and stewardship practices.

Private-sector executives should also anticipate potential changes to regulatory reporting workflows as transparency requirements reshape the data inputs used by rating agencies.

The Bigger Picture
As ESG data becomes part of the financial system’s core infrastructure, regulators are converging around the need for standards that balance innovation with integrity.

The UK’s move reflects a broader global shift: sustainable finance is no longer driven solely by voluntary practices, but increasingly shaped by formal regulatory frameworks. How ESG ratings are governed today will influence not only investment decisions, but also how sustainability performance is judged across borders in the years ahead.

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Double Materiality Assessment and Its Significance

GlobeTrend Climate Impact — Tue, 13 Jan 2026 17:53:45 +0000

What is DMA?
The double materiality assessment is a dual-lens approach that:
• First, assesses the impacts of a company’s actions on natural and human resources, considering both positive and negative impacts. This “inside-out” view focuses on the company’s actual or potential short, medium and long-term impacts on people and the environment that are directly linked to its operations and its value chain.

• Second, evaluates how sustainability risks and opportunities could potentially influence a company’s financial performance. This “outside-in” view focuses on how sustainability matters may pose either a prospective material risk or opportunity that could affect a company’s financial performance and position over the short, medium and long-term.

Unlike traditional materiality, which focuses solely on financial risks, double materiality incorporates a broader spectrum of impacts.

Why materiality matters for climate disclosure?

In 2019, the European Commission formally cited double materiality as the approach organizations should take to identify and manage ESG risks, including climate risks. This laid the foundation for its incorporation into the Corporate Sustainability Reporting Directive (CSRD) and the associated European Sustainability Reporting Standards (ESRS).

Double materiality was further elevated at COP26, the United Nations Climate Change Conference that took place in Glasgow in 2021. The concept has also gained traction among climate-conscious investors who want to minimize the adverse impacts of their financing activities. Certain investors further believe that a double materiality approach provides a more comprehensive understanding of a portfolio company’s true exposure to climate risks and opportunities

Additionally, EFRAG (the EU’s technical adviser on ESRS) has published practical implementation guidance on how to perform a materiality assessment under the ESRS/CSRD framework underscoring that firms must now follow more structured, documented processes for double materiality.

This shift elevates ESG reporting from being a voluntary, narrative-focused exercise to one anchored in structured, dual-perspective assessments combining business-relevant financial risk/opportunity with societal and environmental impact.

Types of Materiality within DMA

Impact Materiality Sustainability matters, which “pertain to the undertaking’s material actual or potential positive or negative impacts on people and the environment over the short, medium and long- term “(including products, services and business relationships). This indicates the company’s contribution to sustainable development.

2.Financial Materiality
• Risk- Uncertain ESG events or conditions, which “have a material negative influence or could reasonably be expected to have a material negative influence on the undertaking’s development, financial position, financial performance, cash flows, access to finance or cost of capital over the short, medium and long-term”.

• Opportunity- Uncertain ESG events or conditions, which “have a material positive influence or could reasonably be expected to have a material negative influence on the undertaking’s development, financial position, financial performance, cash flows, access to finance or cost of capital over the short, medium and long-term”.

Key Stakeholders in DMA

The first step is to identify all stakeholders who are relevant to your business. These may include internal stakeholders (employees, management, shareholders) and external groups (customers, suppliers, communities, regulatory bodies, NGOs, and environmental stakeholders). It’s important to consider both direct stakeholders, who are immediately affected by your business activities, and indirect stakeholders, who may be impacted by long-term outcomes such as climate change or social inequality.

Once identified, stakeholders should be prioritized based on:
• Influence: How much power or influence they have over your business decisions? And how much influence do you have on the stakeholders?
• Interest: How much are they impacted by or interested in your business?
• Knowledge: How well do you know this stakeholder and its needs?
A simple stakeholder matrix, mapping relevance (influence and interest) against knowledge, can help visualize which stakeholders should be engaged more intensely and whose feedback might carry more weight.

DMA in Practice: How It Helps Companies
Beyond conceptual clarity, DMA serves concrete strategic and governance functions. A recent industry write-up summarises benefits as: improved risk management, regulatory and compliance readiness, better investor communication, competitive advantage, and long-term strategic alignment of ESG and business goals.
Some real-world examples:
1.Vardhman Textiles has undertaken a double materiality assessment to identify significant ESG issues across its value chain and use the findings to shape its sustainability strategy

2.Schaeffler India Limited in 2024 carried out its first comprehensive double materiality assessment covering environmental, social and governance topics across operations, supply-chain, product lifecycle and stakeholder interactions2.

3.Within global firms via surveys such as KPMG’s 2024 “Survey of Sustainability Reporting” approximately 42% of 5,800 companies surveyed globally now use double materiality for their reporting, indicating growing mainstreaming of the approach 3.

These cases show that DMA is no longer academic theory as it is being operationalised even in Indian corporates, as part of their sustainability governance and reporting frameworks.
DMA and the Rise of ESG Reporting in India
1.According to a 2022 analysis of ESG disclosures in India, though the formal “double materiality” framework originates in Europe, many Indian companies are increasingly aligning their ESG disclosures with its logic reporting both how ESG issues impact their business and how their business impacts environment and society.

2.According to a recent 2025 article by KPMG in India, ESG is becoming embedded in long-term corporate strategy in Indian firms. CEOs in India expect significant returns from ESG investments within a five to ten-year horizon 5.

Thus, for many Indian firms voluntarily adopting a full DMA (impact + financial) can offer a differentiating edge: better alignment with global ESG expectations, improved risk management, and readiness for future regulatory developments (domestic or global).

Embedding DMA in Your ESG Strategy: What It Means for Indian Firms
For Indian firms, especially those like your clients (ESG-rating, external reviewers, social/ sustainability-linked bond issuers), embracing DMA offers several strategic advantages:
1.It aligns reporting with evolving global norms (CSRD/ESRS)
2.It provides a structured framework to prioritise ESG issues, enabling focused resource allocation, rather than broad but shallow ESG disclosures.
3.It supports better risk management, by integrating ESG risks and opportunities into enterprise risk frameworks
4.It boosts transparency and stakeholder trust, not just among investors, but also regulators, communities, supply-chain partners strengthening long-term legitimacy.

Conclusion
Double Materiality Assessment represents a paradigm shift in sustainability reporting, from narrow financial risk disclosure to a far richer, two-dimensional perspective that reflects both what companies do to the world and what the world (and ESG trends) does to companies.

For Indian firms, large or small, voluntarily embracing DMA is no longer a “nice-to-have.” It can significantly improve strategic clarity, risk management, investor confidence, and long-term value creation, all while ensuring that ESG remains integral to business rather than a side-show.

Given rising global and domestic interest in ESG, and your firm’s mandate to provide ESG rating and methodology-driven external reviews, integrating DMA robustly into your services can position you as a leader helping Indian enterprises navigate this evolving ESG landscape.

Stay Ahead in the Sustainability Game!
Start your ESG journey today to stay competitive, compliant, and future-ready!

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For ESG Rating: support@climate-change.in
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Call: +91 7042800408
https://www.climate-change.in/
Corporate Address: 340, B3 Tower Spaze I-Tech Park Sohna Road Sector 49, Gurugram, 122018

References
1.https://www.vardhman.com/Document/ESG/Double%20Materiality%20Report.pdf?
2.https://www.schaeffler-india-ar.com/double-materiality.html?
3.https://kpmg.com/in/en/insights/2025/01/the-move-to-mandatory-reporting.html?
4.https://indiacorplaw.in/2022/10/27/double-materiality-in-indian-esg-disclosures/?
5.https://kpmg.com/in/en/blogs/2025/01/esg-and-the-growth-imperative-for-indian-companies.html?

How Independent Reviews Enhance Investor Confidence in ESG Debt Markets

GlobeTrend Climate Impact — Fri, 09 Jan 2026 08:35:09 +0000

The global financial system is steadily shifting toward sustainability-aligned capital. Investors today are no longer looking only at returns, they are equally attentive to whether their capital enables positive environmental, social and governance (ESG) outcomes. In this context, ESG debt securities have emerged as powerful financing instruments.

Under SEBI’s updated regulatory structure, ESG debt securities are categorised in three categories (excluding green bonds):

• Social Bonds — The proceeds of social bonds are earmarked strictly for projects that deliver measurable social outcomes. The issuance of these bonds should be in-line with Social Bond Principle (SBP) from ICMA, which aims towards improving disclosures and transparency in social bond markets.

• Sustainability Bonds — The proceeds of Sustainability bonds are utilized to support a mix of environmental and social initiatives. The issuance should follow the Sustainability Bond Guidelines from ICMA, which are aligned with both the Green Bond Principle (GBP) and SBP.

• Sustainability-Linked Bonds (SLBs) — Sustainability-linked bond’s financial or reputational reward/penalty is tied to the issuer achieving pre-defined ESG performance targets (SPTs) measured through credible KPIs.

With SEBI’s introduction of a new framework through Circular SEBI/HO/DDHS/DDHS-POD-1/P/CIR/2025/84 (June 2025)2, India now has a more structured, globally aligned system governing the issuance, reporting and assurance of ESG debt securities excluding green bonds, which already have a separate regulatory framework.

By aligning with global standards and frameworks (e.g., International Capital Market Association (ICMA) Principles, Climate Bonds Initiative (CBI) standards, ASEAN or EU norms), Indian issuers can make their debt instruments globally comparable and attractive to international investors.

Understanding SEBI’s 2025 Framework for ESG Debt Securities
SEBI’s new framework establishes detailed requirements for issuance, reporting, monitoring and verification of social bonds, sustainability bonds and sustainability-linked bonds.

Clear Eligibility & Use-of-Proceeds Requirements For Social Bonds, proceeds must be allocated to clearly defined categories such as: • Basic infrastructure • Essential services (healthcare, education, sanitation) • Affordable housing • Employment generation • Food security • Poverty alleviation • Socio-economic empowerment

For Sustainability Bonds, proceeds must target a balanced portfolio of environmental and social outcomes.

For SLBs, proceeds are for general corporate purposes, but the bond’s performance is tied to achieving KPIs such as:
• GHG emissions reduction
• Renewable energy consumption
• Water efficiency
• Waste diversion
• Workforce diversity

SEBI requires issuers to justify KPI relevance, materiality and ambition aligning with global SLB principles and discouraging superficial target-setting.

Pre-Issuance Disclosures and Governance
Before issuing a Social Bond, Sustainability Bond or Sustainability-Linked Bond (SLB), SEBI requires issuers to make a detailed set of disclosures. These disclosures help investors clearly understand what the bond will finance, how impact will be measured, and how the issuer will be held accountable.

For Social and Sustainability bonds, issuers must disclose:
• Issuers must explain why the bond is being issued and what positive change it intends to create. This helps investors understand the purpose and long-term impact of the bond.
• Issuers must describe how they choose eligible projects, including the screening criteria, policies, and decision-making processes. This ensures that only genuinely sustainable or socially beneficial activities are funded.
• For social projects, issuers must define who will benefit from the outcome such as low-income communities, women entrepreneurs, or rural households. This improves transparency and avoids vague or misleading project descriptions.
• Issuers must outline the internal governance structure for managing the bond proceeds. This includes:

committees responsible for project selection
controls to ensure funds are used correctly
monitoring processes for tracking project implementation

This gives investor’s confidence that the money will be used responsibly.
• Issuers must disclose potential risks (e.g., project delays, regulatory challenges, implementation issues) and explain how they will address them. This helps investors assess the reliability and credibility of the project.

For SLBs, issuers must also disclose:
• Issuers must clearly describe the Key Performance Indicators (KPIs) chosen such as GHG emissions, renewable energy use, or waste reduction. They must also explain why these KPIs are relevant, material and aligned with their sustainability strategy.
• Issuers must disclose:

the baseline year
current performance levels
the Sustainability Performance Targets (SPTs) to be achieved

This transparency allows investors to judge whether the targets are ambitious and realistic.
• Issuers must explain how they arrived at the target including benchmarking against peers, national commitments, sector pathways or science-based targets.

This ensures there is no “target manipulation” or greenwashing.
• SEBI requires clear disclosure of financial penalties if the issuer fails to meet the SPT.

For example:

an increase in coupon rate (step-up)
other monetary adjustments

This protects investor interests and ensures accountability.

Post-Issuance Reporting and Ongoing Monitoring Once the bond has been issued and funds have been raised, SEBI requires ongoing reporting to ensure transparency and integrity throughout the bond’s lifecycle. This is where issuers must demonstrate that the money is actually being used as promised.

SEBI mandates stringent post-issuance obligations:
• Issuers must disclose how much money was allocated, which projects received funds, and how unallocated proceeds (if any) were managed. This helps investors track whether the proceeds are being used as committed.

• For Social and Sustainability Bonds, issuers are expected to provide quantifiable impact metrics. Examples include:

number of households receiving clean energy
GHG emissions avoided
students or beneficiaries impacted
litres of water saved or recycled This allows investors to track real-world outcomes.

• SLB issuers must publish performance updates every year to show progress against their Sustainability Performance Targets. This ensures continuous accountability until the bond matures.
• SEBI requires an accredited third-party verifier (like a sustainability assurance provider) to validate KPI progress. This removes subjectivity and strengthens investor confidence that reported achievements are genuine.
•If the issuer is unable to allocate funds as intended, or if KPI progress falls behind expectations, they must clearly report these deviations. Transparency in challenges is as important as success.

Third-Party Review and Independent Assessment A core requirement of SEBI’s ESG debt securities framework is independent external evaluation. This ensures that the issuer’s sustainability claims are credible, measurable, and aligned with global norms reducing the risk of greenwashing or social-washing. Under SEBI’s circular, issuers of Social Bonds, Sustainability Bonds, and Sustainability-Linked Bonds must obtain a third-party review before issuance. This may take the form of: • A Second-Party Opinion (SPO) • An independent Assurance / Verification Report • A Rating or Framework Assessment

These assessments must be conducted by a credible, independent organisation with the technical capability to evaluate ESG claims. As an accredited independent assessor, this is where organisations like ours play a central role.

What does the independent review cover? What is the role of independent assurance provider in ensuring integrity, trust and transparency?
The reviewer evaluates several key aspects to ensure transparency and integrity:

Alignment with Global Standards
The expert checks whether the issuer’s bond framework aligns with internationally accepted principles such as:
• ICMA’s Social Bond Principles (SBP)
• ICMA’s Sustainability-Linked Bond Principles (SLBP)
• Climate Bonds Initiative (CBI) standards
This helps ensure the bond meets global investor expectations.
Integrity of Project Selection (for Social & Sustainability Bonds)
The reviewer examines whether:
• The chosen projects genuinely deliver environmental or social benefits
• The eligibility criteria are clearly defined and robust
• The expected outcomes are realistic and evidence-based.
This protects investors from overstated or misleading impact claims.
Governance and Monitoring Mechanisms
This includes evaluating how the issuer plans to:
• Allocate funds
• Track expenditure
• Monitor project implementation
• Manage risks and corrective actions
Strong governance is essential to ensure funds are used responsibly.
Quality and Reliability of Data (for SLBs)
For Sustainability-Linked Bonds, the review assesses whether:
• Selected KPIs are material, relevant, and measurable
• Baseline values are accurate
• Targets (SPTs) are ambitious yet achievable
• The issuer has reliable systems for data collection and reporting

This ensures that SLB targets are meaningful and not “soft” or easy to achieve.

Risk of Misuse or Misallocation of Proceeds The review evaluates controls and internal processes to minimise: • Diversion of funds • Double counting • Non-compliance with the stated use-of-proceeds

The objective is to maintain full financial and impact integrity.
Why is Third-Party Review Important?
• Builds investor confidence by ensuring transparency and authenticity
• Protects issuers by preventing compliance lapses and reputational risks
• Improves credibility of ESG bonds in Indian and global markets
• Helps avoid regulatory and market risks, including greenwashing allegations

A strong example of the importance of independent review is DNV’s Second-Party Opinion on L&T’s ESG Finance Framework, which validated alignment with SEBI’s new ESG bond norms and supported India’s first listed ESG bond issuance under the updated framework. This demonstrated how external validation strengthens investor trust and elevates market acceptance.

Case Study
India’s First Listed ESG Bond Under SEBI’s New Framework
In a landmark development, Larsen & Toubro (L&T) issued India’s first listed ESG bond, raising ₹500 crore under the new SEBI framework1.

Key highlights:
• DNV, a global assurance and risk management provider, issued the Second-Party Opinion (SPO).
• The SPO confirmed the alignment of L&T’s ESG Finance Framework with SEBI’s 2025 regulatory guidance as well as international sustainable finance standards.
• The issuance demonstrated strong investor interest, reflecting rising demand for credible ESG-labelled debt instruments in India.
• The transaction strengthened India’s positioning in the global sustainable finance ecosystem.

This issuance sets an early benchmark and exemplifies the importance of robust governance, transparent disclosures and credible assurance.

Challenges and Considerations Ahead
While the framework is comprehensive, implementation may face challenges:
• Issuer capacity to implement robust data and reporting systems
• Inconsistent ESG data across sectors
• Need for scaling third-party expertise
• Risk of treating ESG bonds as compliance exercises instead of strategic tools
• Limited awareness among mid-cap issuers
Building capacity, strengthening assurance standards and enhancing issuer readiness will be critical for long-term success.

Conclusion
SEBI’s 2025 framework marks a transformative moment for India’s sustainable finance landscape. By enforcing robust governance, transparent disclosures, and mandatory independent assurance, the regulator has elevated ESG debt securities to global standards.
For issuers, it offers access to responsible capital.
For investors, it brings credibility, comparability and measurable impact.

For assurance providers like us, it positions independent verification as a central pillar in India’s ESG debt market.
As India continues its journey toward a more sustainable and inclusive financial ecosystem, ESG bonds underpinned by strong regulations and independent assurance will play an increasingly strategic role in mobilizing capital for long-term, impactful growth.

Stay Ahead in the Sustainability Game!
Start your ESG journey today to stay competitive, compliant, and future-ready!

Write to know more:
For ESG Rating: support@climate-change.in
For other Sustainability Services: esg@tsassessors.com

Call: +91 7042800408
https://www.climate-change.in/
Corporate Address: 340, B3 Tower Spaze I-Tech Park Sohna Road Sector 49, Gurugram, 122018

References
1.https://www.dnv.com/news/2025/dnv-supports-indias-first-esg-bond-issuance-by-lt-under-new-framework-for-sustainable-finance/
2.https://www.sebi.gov.in/legal/circulars/jun-2025/framework-for-environment-social-and-governance-esg-debt-securities-other-than-green-debt-securities-_94424.html

GHG Protocol x ISO: A New Partnership to Align Global Carbon Accounting

GlobeTrend Climate Impact — Tue, 06 Jan 2026 13:37:49 +0000

The world of corporate climate reporting is undergoing a big shift. Two of the most influential climate frameworks- GHG Protocol and International Organization for Standardization (ISO) have announced a strategic partnership to align their greenhouse gas accounting standards.

This collaboration comes at a crucial moment. As governments, investors, and regulators demand higher-quality climate data, organizations have long struggled with the differences between GHG Protocol, the world’s most widely used emissions accounting standard, and ISO 14064/14067, the internationally recognized ISO standards for quantifying and reporting GHG emissions.

The new partnership aims to reduce confusion, streamline reporting, and improve global consistency in carbon accounting.

Why This Partnership Matters
For years, companies have faced uncertainty about which standard to use, since both ISO and the GHG Protocol address emissions measurement. The lack of alignment created:
• Duplicate reporting efforts
• Confusion in verification
• Higher compliance costs
• Difficulty comparing emissions data across regions

The partnership solves this challenge by bringing the two systems closer together.

Together, ISO and GHG Protocol aim to create a more unified global framework that will help organizations confidently measure and report their emissions.

What the Partnership Includes
Under the new collaboration, ISO and the GHG Protocol will work together on:

Technical Alignment
They will harmonize methodologies across:
• Corporate GHG inventories
• Product carbon footprints
• Project-level emissions reductions
• Verification and auditing processes
This will make emission calculations more consistent worldwide.
Coordination of Updates
Both bodies are currently updating their standards:
• The GHG Protocol is revising its Corporate Standard and Scope 2 Guidance.
• ISO is updating parts of the ISO 14060 family (14064, 14067, etc.).
Now, these revisions will be coordinated instead of happening in isolation.
Improved Credibility and Transparency
The partnership strengthens:
• Investor trust
• Reliability of climate disclosures
• Comparability of emissions data
• Global recognition of verified emissions reports

This also helps companies preparing for compliance with regulations like:
• EU CSRD
• SEC climate rules
• ISSB/IFRS S2
• SEBI BRSR Core in India

What It Means for Organizations
This partnership makes climate reporting simpler and more efficient for companies around the world.

✔ Less Duplication
Organizations that previously reported under both frameworks can now use aligned methods, reducing effort and costs.

✔ Easier Audits & Verification
With more consistency between ISO verification standards and GHG Protocol methods, audits become smoother and more predictable.

✔ Better Supply Chain Reporting
Suppliers in different countries often follow different standards. This partnership helps unify expectations.

✔ Future-Proof Compliance
As global regulations get stricter, this alignment ensures companies are well-prepared.

Why This Is a Big Step for Global Climate Action
The partnership between GHG Protocol and ISO is more than technical alignment. It’s a signal that global climate frameworks must unify in order to scale credible decarbonization.
It supports:
• Stronger climate disclosures
• Better emissions data
• More reliable corporate accountability
• Faster climate progress
With climate risks rising and regulations tightening, this collaboration is expected to shape the future of global GHG reporting.

In Summary
The GHG Protocol & ISO partnership marks an important milestone in corporate climate reporting. By aligning methodologies, coordinating standard updates, and streamlining verification, the collaboration will make emissions reporting more consistent, trusted, and globally aligned.

For companies, this means:
• Easier reporting
• Lower compliance costs
• Higher data quality
• Stronger global recognition

This is a major step toward a unified, credible, and actionable global carbon accounting system.

Write to know more:
For ESG Rating: support@climate-change.in
For other Sustainability Services: esg@tsassessors.com

Call: +91 7042800408
https://www.climate-change.in/
Corporate Address: 340, B3 Tower Spaze I-Tech Park Sohna Road Sector 49, Gurugram, 122018

Sustainability in Supply Chain Management: A Comprehensive Guide

GlobeTrend Climate Impact — Wed, 24 Dec 2025 10:45:36 +0000

Supply chains are the backbone of every business. Whether it’s a manufacturer sourcing raw materials or a retailer fulfilling customer orders, an efficient supply chain ensures operational continuity, cost efficiency, and customer satisfaction. But as regulations tighten and stakeholder expectations rise, supply chains are under deeper scrutiny not only for performance but for their Environmental, Social, and Governance (ESG) impact.
Modern supply-chain sustainability goes far beyond “going green.” It requires balancing environmental responsibility, social welfare, financial viability, and resilience across a wide network of partners.

What Is a Supply Chain?
A supply chain is the network of activities, processes, and partners involved in designing, producing, delivering, and servicing a product. It typically includes:
• Raw material suppliers
• Manufacturers
• Logistics and transport providers
• Warehouses
• Distributors and retailers
• Consumers
• Waste-management and recycling partners

Four Perspectives of Sustainable Supply Chain
Building a sustainable supply chain requires a multi-dimensional lens that goes beyond isolated environmental efforts. A holistic approach combines the environmental, financial, social, and network perspectives, each contributing to the long-term viability of the system.

Environmental Sustainability
The environmental dimension focuses on reducing the ecological impact of supply-chain activities. Transportation and logistics often represent a substantial share of emissions, particularly when road freight dominates freight movement. Modal shifts to rail or sea freight can dramatically reduce carbon intensity. Similarly, manufacturing processes and digital infrastructure such as data centres consume significant energy, much of which is used for cooling. Transitioning to renewable energy, upgrading machinery, improving energy efficiency, and optimising inventory flows can collectively reduce emissions, waste, and resource consumption. Effective waste management, including packaging redesign and minimizing product obsolescence, further enhances environmental performance.
Financial Sustainability
Sustainability initiatives must be economically viable in order to endure. Financial sustainability involves ensuring that supply-chain operations remain cost-effective while supporting long-term value creation. Efficiency improvements such as optimised route planning, demand forecasting, and inventory management reduce operational costs and waste. At the same time, organisations must invest strategically in sustainability initiatives that enhance resilience, reduce regulatory risk and strengthen market competitiveness. A financially sustainable supply chain aligns operational goals with ESG objectives, creating shared value for the company and its stakeholders.
Social Sustainability
Social sustainability covers the welfare of workers, ethical labour practices, health and safety standards, and community well-being. Many high-profile supply-chain disruptions or reputational crises stem from social issues occurring in supplier facilities, such as unsafe working environments or labour exploitation. Companies are increasingly expected to uphold human rights across multiple tiers of suppliers through supplier codes of conduct, third-party audits, capacity-building programmes, and remediation frameworks. Social sustainability is essential for maintaining stakeholder trust, regulatory compliance, and long-term workforce stability.
Network Sustainability
Supply chains operate as complex networks involving suppliers, customers, regulators, logistics partners, local communities, and industry competitors. Network sustainability emphasises the importance of collaboration and stakeholder engagement. Building long-term, mutually beneficial relationships encourages innovation, reduces risk, and improves coordination during disruptions. Inclusive dialogue with regulators and communities, coupled with collaborative pilot projects with suppliers and partners, can accelerate the adoption of sustainable technologies and practices.

Types of Supply Chains and Their ESG Implications
Supply chains differ across industries depending on how materials move, how products are made, and how markets operate. Each type carries its own sustainability challenges and opportunities. Understanding these models helps organisations prioritise ESG actions more effectively and design interventions that genuinely address the risks within their specific supply-chain structure.

Traditional Linear Supply Chain
A traditional linear supply chain follows a straightforward sequence from sourcing raw materials to manufacturing, distribution, consumption, and final disposal. While this structure is simple to manage, it often results in limited visibility beyond immediate suppliers and provides little scope for recovering value once products reach the end of their life. As a result, companies working within linear models typically encounter higher waste generation, lower traceability, and increased exposure to environmental and social risks occurring deep within the supply base.
Global Supply Chain
Global supply chains span multiple geographies, enabling companies to source specialised materials, access cost efficiencies, and serve international markets. However, this geographical dispersion introduces significant ESG complexity. Longer transportation routes contribute to higher carbon emissions, and varied regulatory environments make it challenging to ensure consistent environmental and labour standards across suppliers. Companies operating globally must therefore invest in robust due diligence, monitoring, and traceability systems to manage risks related to human rights, resource use, and compliance.
Lean Supply Chain
Lean supply chains focus on reducing waste, optimising processes, and maintaining minimal inventory. This approach can support sustainability goals by eliminating inefficiencies, but it also increases vulnerability to disruptions such as extreme weather events or supply shortages. Limited buffers mean that even minor interruptions can force companies into unsustainable choices, such as switching to carbon-intensive transport modes. Additionally, strict delivery expectations may place pressure on suppliers, potentially affecting labour conditions if not managed carefully.
Agile Supply Chain
Agile supply chains are designed for flexibility, allowing companies to respond quickly to changing customer demands, technological shifts, or unexpected disruptions. This adaptability positions businesses well to integrate sustainable materials, adopt new technologies, or collaborate with suppliers that meet higher ESG expectations. However, agility can become a challenge if rapid turnaround requirements create pressure on suppliers, especially those with limited resources. Ensuring that speed does not compromise social and environmental standards is therefore essential.
Circular Supply Chain
Circular supply chains aim to keep materials in use for as long as possible by enabling reuse, recycling, repair, and reverse logistics. This model reduces dependency on virgin materials, lowers emissions, and significantly cuts waste. It also encourages companies to redesign products for durability and recovery. While circularity presents strong ESG advantages, it requires coordinated effort across product design, operations, logistics, and supplier networks. Establishing reverse flows, ensuring material purity, and integrating recycling partners demand both investment and long-term commitment.

Why ESG Matters in Supply-Chain Management
A large share of a company’s environmental and social footprint lies outside its own operations and is concentrated in procurement, manufacturing, logistics, and other upstream processes. This makes the supply chain a critical area for sustainability action. Integrating ESG considerations into supply-chain management is no longer optional; it is now essential for maintaining resilience, meeting stakeholder expectations, and ensuring long-term business viability.

a) High Contribution to Emissions (Scope 3)
For most companies, the majority of their greenhouse gas emissions often between 70% and 90% originate from supply-chain activities. These emissions stem from raw material extraction, energy-intensive manufacturing processes, transportation, and product distribution. Because they fall outside the company’s direct control, they require active collaboration with suppliers, logistics partners, and other value-chain actors to achieve meaningful reductions.

b) Regulatory Pressure
Governments across the world are tightening regulations related to sustainability, responsible sourcing, and corporate accountability. In India, frameworks such as the BRSR Core and Extended Producer Responsibility (EPR) mandate detailed disclosures and traceability. In Europe, the Corporate Sustainability Due Diligence Directive (CSDDD) requires companies to identify, assess, and address environmental and human-rights risks across their global supply chains. Similarly, the US and other jurisdictions are strengthening modern-slavery laws and enforcing greater transparency. As compliance becomes mandatory rather than voluntary, companies must implement robust due-diligence processes within their supply networks.

c) Investor and Customer Expectations
Investors and customers now expect companies to demonstrate responsibility not just within their own operations but throughout their supply chains. Brands are increasingly held accountable for the environmental performance and labour practices of their suppliers. This means that unsustainable sourcing, excessive emissions, or unethical labour conditions at a supplier’s facility can directly affect a company’s market reputation, investor confidence, and sales performance. Transparent ESG practices have thus become a key differentiator in attracting investment and maintaining customer trust.

d) Climate and Business Continuity Risks
Climate-related disruptions such as floods, extreme heat, droughts, and resource shortages have a direct impact on supply availability and pricing. Geopolitical tensions and socio-economic instability further magnify these vulnerabilities. A supply chain that does not factor in climate resilience or sustainability risks can face production delays, increased operational costs, and long-term supply shortages. Embedding ESG principles helps companies build more resilient networks capable of withstanding such disruptions.

e) Reputational and Legal Risks
In today’s interconnected world, any incident within the supply chain can quickly become public. Cases involving forced labour, unsafe working conditions, pollution, or regulatory violations can significantly damage a brand’s reputation and lead to legal consequences. Companies are increasingly expected to have full visibility into their suppliers’ practices and to take proactive measures to prevent, mitigate, and remediate such issues. Strengthening ESG oversight not only protects brand integrity but also helps avoid legal liabilities.

Decarbonisation in the Supply Chain
Decarbonising the supply chain is one of the most challenging yet rewarding components of sustainability. It requires organisations to work closely with suppliers to adopt low-carbon production methods, improve energy efficiency, shift to renewable energy sources, redesign packaging, and prioritise circularity in product life cycles. Logistics-related emissions can be addressed through route optimisation, electrification of vehicle fleets, increased use of rail and sea transport, and improved load efficiency. Waste minimisation, including better material selection, recycling programs, and reverse logistics, forms another essential pillar of decarbonisation. These measures not only reduce emissions but also generate cost savings and strengthen supply resilience.
Key areas of action:
•Low-carbon sourcing
•Energy efficiency in supplier operations
•EV fleets and green logistics
•Route optimization and modal shifts
•Sustainable packaging
•Waste reduction
•Supplier-level renewable energy adoption
Decarbonisation boosts efficiency, reduces risk and unlocks long-term savings, making it both an environmental and financial priority.

Assessing ESG Risks and Ensuring Compliance Across the Supply Chain

While companies increasingly recognise the importance of sustainable and responsible supply chains, many still struggle to put strong ESG systems in place. Research indicates that only around 29% of organisations feel adequately prepared with the tools, processes, and data needed for independent ESG assurance1. The biggest challenge lies in obtaining comprehensive supplier-level data whether emissions information, labour-practices evidence, sourcing traceability, or ongoing risk indicators. Difficulties in identifying diverse suppliers, monitoring real-time risks, and onboarding vendors that align with sustainability expectations further complicate the journey.

To build a resilient, compliant, and future-ready supply chain, organisations can take the following structured steps:

Establish a Clear ESG Baseline
Start by quantifying current emissions (Scope 1, 2, 3), energy use, waste generation, water consumption, labour practices, and supplier compliance levels. A baseline enables to set realistic targets and measure improvements effectively.
Map the End-to-End Supply Chain
Identify all suppliers—direct and indirect and understand their roles, locations, risk exposures, and material flows. Mapping improves visibility, uncovers hidden ESG risks in Tier 2 and 3 layers, and helps prioritise where interventions are most urgently needed.
Conduct ESG Risk Assessments
Evaluate suppliers across environmental, social, and governance parameters such as carbon footprint, human rights, health and safety, waste management, and ethical conduct. Tools like ZOIE streamline this process by consolidating data, standardising risk, and highlighting risk hotspots.
Set Clear ESG Standards and Embed Them in Procurement
Develop a supplier code of conduct, sustainability requirements, and contract clauses that outline expectations around responsible sourcing, emissions reduction, labour welfare, and waste management. Integrate these standards into RFPs and vendor selection to ensure ESG alignment from the start.
Enhance Transparency Through Technology
Leverage digital platforms like ZOIE to centralise supplier data, track compliance, automate assessments, and generate real-time ESG insights. Technology strengthens due diligence, improves audit readiness, and supports reporting under frameworks such as BRSR, GRI, or IFRS S2.
Collaborate and Build Supplier Capability
Engage suppliers through training programmes, toolkits, workshops, and joint improvement plans. Many MSMEs and smaller suppliers need capacity-building support, and collaboration fosters long-term performance improvements across the supply base.
Monitor, Report, and Continuously Improve
Track key KPIs such as emissions, waste reduction, audit findings, safety metrics, and compliance scores. Disclose progress transparently and use insights to refine strategy, address weaknesses, and strengthen resilience as regulations and stakeholder expectations evolve.

Leading companies are applying these practices and demonstrating measurable progress.

Microsoft: Reducing Emissions Through Digital Planning
With AI growth driving the construction of nearly 100 new data centres, Microsoft optimised freight consolidation, inventory positioning, and distribution strategies and achieved a 60% reduction in trucking emissions across North America showing how data-driven modelling can support both growth and decarbonisation2.

Tetra Pak: Strategic Sourcing with ESG Integration
Tetra Pak strengthened its strategic sourcing by integrating ESG criteria into tendering. AI-enabled modelling helps the company calculate savings, understand supplier capacity, and forecast logistics needs. By including emissions and sustainability performance in supplier selection, Tetra Pak is aligning its sourcing decisions with its goal of achieving net-zero emissions by 20303.

Strategies for Implementing ESG Practices Across the Supply Chain
Moving from sustainability commitments to actual on-ground implementation requires a structured and well-coordinated approach. Each step plays a critical role in ensuring that ESG principles are embedded not only within the company’s direct operations but across its wider network of suppliers and partners.

Map and Understand the Supply Chain
The first step is to build a clear picture of the supply chain by identifying suppliers, their locations, the materials they provide, and the processes they follow. This mapping exercise helps organisations understand where risks are concentrated and where targeted ESG interventions will have the most meaningful impact.
Conduct ESG Risk Assessments
Once the supply chain is mapped, companies should carry out detailed ESG risk assessments to evaluate supplier practices across areas such as greenhouse-gas emissions, waste management, water use, labour conditions, human-rights performance, and governance systems. These assessments help determine which suppliers require capacity-building, closer monitoring, or corrective actions.
Set ESG Standards and Integrate Them into Contracts
Clear expectations are essential for driving consistent sustainability performance. Organisations can formalise these expectations by embedding ESG requirements into Requests for Proposals (RFPs), vendor agreements, procurement guidelines, and product specifications. This ensures that sustainability is treated as a core contractual requirement rather than an optional addition.
Engage with and Train Suppliers
Many suppliers especially smaller or resource-constrained ones may lack the knowledge, tools, or systems needed to meet ESG requirements. Engaging them through workshops, training programmes, toolkits, templates, and joint action plans helps build capability and fosters long-term improvement. Collaboration rather than enforcement often leads to stronger and more sustained outcomes.
Implement Green Procurement Practices
Sustainable procurement plays a crucial role in reducing a company’s environmental footprint. This involves prioritising suppliers that use low-carbon materials, offer products with recycled content, or hold recognised sustainability certifications. Choosing such suppliers encourages responsible production practices and creates a market signal that sustainability matters.
Improve Traceability and Transparency
Robust ESG performance depends on accurate, accessible, and verifiable data across the supply chain. Digital tools can significantly enhance traceability and monitoring. Technologies such as blockchain for transaction records, QR-coded product passports for material history, IoT sensors for real-time emission monitoring, and supplier portals for data collection help improve transparency and strengthen accountability.
Track and Report ESG Performance
Continuous monitoring is necessary to measure progress and identify areas requiring further attention. Companies can track indicators such as supplier-level emissions, the percentage of sustainable materials used, waste diverted from landfill, and audit findings along with their corrective actions. This data supports reporting under frameworks such as BRSR, CDP, GRI, and IFRS S2 and helps build credibility with regulators, investors, and customers.
Foster a Culture of Responsibility
Sustainable supply-chain management requires strong internal alignment. Procurement, sustainability, finance, logistics, operations, and leadership teams must work towards shared ESG goals. When sustainability becomes part of everyday decision-making, rather than a separate initiative, organisations are better positioned to meet their long-term commitments.
Additional Elements That Strengthen ESG in Supply Chains
Beyond the core strategies, several complementary actions further enhance sustainability outcomes across supply chains.

Responsible Sourcing
Companies can strengthen ESG performance by avoiding materials associated with deforestation, conflict minerals, illegal fishing, unsafe chemicals, or other ethical concerns. Responsible sourcing ensures that products do not contribute to environmental degradation or human-rights violations.

Circularity
Designing products and packaging for reuse, repair, refurbishment, or recycling helps extend the life of materials and minimise waste. Integrating circular-economy principles reduces dependency on virgin resources and supports long-term environmental goals.

Green Logistics
Sustainable logistics practices such as shared transportation systems, energy-efficient cold-chain infrastructure, and a shift from road to rail or sea transport help reduce emissions and improve operational efficiency.

Sustainable Warehousing
Warehousing operations can be made more sustainable by using renewable energy sources, installing smart sensors for energy optimisation, maximising natural lighting, and improving HVAC efficiency. These measures reduce operational emissions while lowering energy costs.

Supplier Diversity
Engaging a diverse supplier base including MSMEs, women-led enterprises, and local vendors promotes inclusive economic growth and strengthens supply-chain resilience. Diverse suppliers often bring innovation, agility, and stronger community ties.

Social Impact
Investing in community development in manufacturing and logistics hubs—whether through skill-building programmes, health initiatives, or infrastructure support—enhances the social fabric surrounding the supply chain and contributes to long-term stability.

Conclusion
Strengthening ESG in supply-chain management is no longer a “good-to-have”—it is a strategic necessity. Businesses that invest in responsible sourcing, decarbonisation, traceability, and supplier engagement not only reduce risks but also improve operational efficiency, investor trust, brand reputation, and long-term resilience.

A sustainable supply chain is ultimately a competitive advantage one that prepares organisations for the future while protecting people and the planet.

Stay Ahead in the Sustainability Game!
Start your ESG journey today to stay competitive, compliant, and future-ready!

Write to know more:
For ESG Rating: support@climate-change.in
For other Sustainability Services: esg@tsassessors.com

Call: +91 7042800408
https://www.climate-change.in/
Corporate Address: 340, B3 Tower Spaze I-Tech Park Sohna Road Sector 49, Gurugram, 122018

References

EU Simplifies Carbon Border Adjustment Mechanism (CBAM)

GlobeTrend Climate Impact — Wed, 12 Nov 2025 10:04:34 +0000

As global trade faces mounting pressure to align with climate goals, the European Union’s Carbon Border Adjustment Mechanism (CBAM) is emerging as one of the most significant climate policies of this decade.

CBAM is designed to ensure that goods imported into the EU such as steel, cement, aluminium, fertilizer, hydrogen and electricity carry the same carbon cost as those produced within Europe. In doing so, it tackles a long-standing issue known as “carbon leakage”, where companies relocate production to regions with easier climate regulations to avoid emission costs.

In simple terms, CBAM acts as a “carbon equaliser” at the border — promoting fair competition while encouraging other economies to decarbonize. It is also a signal of how trade and climate policy are becoming increasingly intertwined.

Now, the EU has approved a set of simplifications to make the system more practical for businesses, especially small importers, while keeping its environmental scope intact. The move reflects a broader EU objective: to build climate policy that is both ambitious and operationally feasible.

What is CBAM?
The Carbon Border Adjustment Mechanism (CBAM) is the EU’s tool to prevent carbon leakage, a situation where companies move production to countries with weaker climate rules.
In simple terms, CBAM puts a carbon price on imports like steel, cement, aluminium, fertilizer, hydrogen, and electricity, matching the cost European producers already pay under the EU Emissions Trading System (ETS). This levels the playing field and encourages cleaner global production.

The mechanism is currently in a transition phase (since October 2023) and will be fully implemented in 2026, when importers will start paying a carbon levy based on the emissions embedded in their goods.

What Has Changed?
The CBAM simplification regulation, part of the broader Omnibus I legislative package, responds to business concerns about complex reporting, overlapping approvals, and administrative bottlenecks.
Here’s a breakdown of the key reforms shaping the mechanism’s next phase:

New 50-Tonne De Minimis Threshold
•The EU replaced the previous negligible-value exemption with a mass-based threshold.
•Importers bringing in less than 50 tonnes of CBAM-covered goods per year will now be exempt from registration and reporting.
•This change will relieve most SMEs and low-volume traders from onerous compliance while keeping large importers responsible for the bulk of emissions within scope.
•EU officials confirm this keeps the climate coverage steady at about 99% of embedded emissions, preserving the system’s environmental rigor.
Streamlined Registration, Reporting & Verification
•The declarant authorisation process has been simplified and digitised for easier navigation.
•Standardised data collection and clearer emissions calculation rules have been introduced to reduce confusion and ensure uniform implementation across EU states.
•Verification requirements are now more proportionate — cutting duplicate steps and focusing oversight where risks are highest.
•These refinements will cut compliance costs and shorten administrative timelines for businesses.
Transitional Flexibility for 2026 Roll-Out
•To prevent bottlenecks when the system goes live, importers awaiting registration in early 2026 will be allowed to import covered goods under provisional conditions.
•This flexibility avoids trade disruptions and ensures a smooth transition into full enforcement.
Updated Penalties and Financial Framework
•Penalties for non-compliance have been harmonised and recalibrated to enhance fairness and consistency across the EU.
•The rules for indirect customs representatives have been refined to bring more clarity for logistics firms and brokers managing CBAM declarations.
•Together, these adjustments reduce legal ambiguity — a concern previously flagged by customs authorities and importers.
Climate Integrity Preserved
Despite simplifications, the EU has kept CBAM’s environmental backbone intact.

Almost all embedded emissions in covered imports remain captured by the mechanism.

This ensures that the reform is about efficiency, not dilution — making CBAM more workable while keeping its climate ambition strong.

Why the Reform Is Significant?
CBAM is not just another trade tool. It’s the cornerstone of the EU’s green industrial strategy.

Denmark’s Minister for European Affairs, Marie Bjerre, noted:
“If we want to succeed with the green transition and boost Europe’s competitiveness, we must reduce unnecessary burdens.”
This balance — between climate integrity and business practicality — will define how the EU sustains momentum toward net zero while maintaining industrial resilience.

Business Implications
For SMEs:
•Most will fall outside CBAM obligations, avoiding detailed reporting and verification.
•However, firms close to the 50-tonne threshold will need to monitor volumes and plan strategically to stay compliant or exempt.

For Large Importers:
•Core obligations remain unchanged, but simplified reporting reduces friction.
•Early adaptation especially integrating emissions tracking into procurement systems will be key to cost efficiency.

For Investors and Multinationals:
•Clearer regulatory signals reduce uncertainty and aid long-term capital planning.
•Companies with carbon-intensive supply chains will face growing pressure to source low-carbon materials.

For Non-EU Exporters:
•Trading partners like India, China, and Turkey will face stronger measures to decarbonize production and improve emissions transparency to retain market access.

The Bigger Picture
•The CBAM reforms mark a maturing phase in Europe’s approach to climate-aligned trade.
Rather than backtracking on ambition, the EU is streamlining to scale showing that strong climate policy can coexist with economic realism.
•As CBAM enters its final stretch toward full implementation, it’s poised to reshape global supply chains and set a new international benchmark for carbon accountability in trade.

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Understanding Sustainability Roadmap: Aligning Purpose, Performance and Profitability

GlobeTrend Climate Impact — Tue, 11 Nov 2025 07:27:50 +0000

In today’s business environment, sustainability is no longer a secondary consideration; it is a core driver of business success. To build resilience and ensure long-term profitability, organisations must give equal importance to environmental and social performance alongside financial results. In fact, a recent Morgan Stanley poll found that 75% of individual investors are interested in sustainable investing, and 71% believe companies that focus on environmental and social goals will earn better returns1. Hence, a well-designed sustainability roadmap helps achieve this balance by translating vision into measurable actions and aligning sustainability goals with overall business growth.

*What is a Sustainability roadmap? *
A sustainability roadmap is a detailed, step-by-step plan that outlines how a company will achieve its sustainability goals over time. Often referred to as a sustainability masterplan, it spans both operational and strategic actions, from site-level equipment upgrades to long-term budgeting and resource planning.

The roadmap assesses current performance across carbon emissions, water usage and waste, and defines a structured, data-driven pathway to meet future targets. Covering equipment lifecycle, compliance needs, resource allocation and growth opportunities, it provides a long-term strategy aligned with the organisation’s Environmental, Social and Governance (ESG) priorities.

*Why a Sustainability Roadmap Matters? *
A sustainability roadmap serves as a long-term, strategic guide to achieving environmental, social and governance (ESG) objectives. It transforms broad sustainability ambitions into actionable goals, measurable KPIs and clearly defined milestones. More importantly, it ensures that sustainability is embedded into core operations rather than treated as a parallel initiative.
Recent surveys affirm that Indian businesses are increasingly recognising sustainability as a driver of value creation.

According to the Deloitte CXO Sustainability Report (2024), 91% of Indian executives have increased sustainability investments in the past year, with climate action now ranking as their top strategic priority2. Similarly, an SAP Sustainability Study revealed that 77% of Indian companies witnessed measurable revenue or profit growth linked to sustainability initiatives3.These findings reflect a decisive shift, showing that sustainability is no longer viewed as a compliance cost but as a driver of competitiveness and profitability.

Defining Purpose and Priorities
A successful roadmap begins by defining purpose, what the organisation aims to achieve through its sustainability efforts. This could include reducing carbon intensity, managing water responsibly, strengthening diversity, equity and inclusion (DEI), or improving corporate governance.

Once the purpose is clear, organisations should identify priority areas where they can make the most significant impact, such as:
• Reducing greenhouse gas (GHG) emissions and improving energy efficiency
• Conserving water resources
• Minimising waste through circular economy practices
• Strengthening ethical supply chains and sustainable procurement
• Enhancing transparency and stakeholder accountability

Priorities must be aligned with business objectives and stakeholder expectations, supported by quantifiable targets and regular performance measurement.

Setting Goals and Building the Roadmap
An effective sustainability roadmap outlines specific, measurable, achievable, relevant and time-bound (SMART) goals. It should be co-created with leadership and key stakeholders across departments to ensure collective ownership and strategic alignment.

The process typically involves:

Executive Buy-In: Leadership commitment anchors sustainability in the company’s culture and decision-making.
Defining Objectives: Goals must align with the organisation’s mission and ESG commitments.
Identifying KPIs: Energy consumption, carbon emissions, waste reduction and social inclusion metrics serve as key indicators.
Developing the Roadmap: A clear plan of programs, policies and timelines to achieve sustainability targets.
Execution and Communication: Rolling out initiatives and engaging internal and external stakeholders.
Monitoring and Evaluation: Measuring progress, adjusting targets, and reporting transparently.

DHL Group 2030: A Structured Sustainability Roadmap
DHL Group offers a compelling global example of how an organisation can integrate sustainability into its strategic framework. Under its “Strategy 2030: Accelerate Sustainable Growth”, DHL has embedded environmental, social, and governance goals directly into its corporate strategy, treating sustainability as a fourth bottom line alongside profitability.

1.** Clear Targets and Decarbonization Goals**
By 2030, DHL aims to:
• Reduce greenhouse gas emissions to below 29 million metric tons of CO₂,4
• Achieve over 30% sustainable aviation fuel blending in its Express and Global Forwarding businesses4,
• Electrify 66% of last-mile delivery vehicles, and4
• Apply carbon-neutral design principles to all new buildings.4
These targets form part of its long-term commitment to achieve net-zero emissions by 2050, demonstrating a structured, milestone-driven approach to decarbonization.

Social Responsibility and Inclusion DHL’s sustainability roadmap also extends to social dimensions. The company is fostering a safe and inclusive workplace by targeting: • A 34% share of women in management by 20304, • Maintaining employee engagement scores above 80%, and4 • Reducing lost-time injury frequency rates below 3.1 by 2025.

These goals reflect the company’s recognition that environmental sustainability must go hand in hand with workforce wellbeing and inclusivity.

Governance and Ethical Supply Chains
DHL has strengthened its governance architecture by ensuring that:
• All managers receive compliance and data protection training, and
• A growing share of supplier spend is directed toward those who have signed its Supplier Code of Conduct.
This focus ensures that sustainability standards cascade across the entire value chain.
Community and Impact Initiatives
Through its “Go” programs — GoGreen, GoTeach, GoHelp, and GoTrade , DHL aims to plant 5 million trees by 2025, invest 1% of net profits into social impact and expand education and disaster management programs globally. These initiatives extend DHL’s sustainability footprint beyond operations, reinforcing its commitment to community impact.

Hence, DHL’s roadmap demonstrates that sustainability excellence is not achieved through isolated initiatives but through systemic integration across business functions. Key takeaways for other organisations include:
• Integrate sustainability into corporate strategy rather than treating it as a CSR extension.
• Set transparent, measurable goals that balance environmental, social and financial outcomes.
• Empower leadership to champion the sustainability agenda and align it with business growth.
• Engage stakeholders at all levels, from employees to supply chain partners.
• Report progress transparently to build trust and accountability.

The Road Ahead
For businesses across sectors, building a sustainability roadmap is both a moral responsibility and a strategic imperative. As climate challenges intensify and stakeholder expectations rise, companies that embed sustainability into their DNA will be best positioned to thrive in the coming decade.

DHL’s example underscores that sustainability, when planned with clarity and executed with conviction, can drive innovation, profitability and long-term resilience. The path to sustainability is continuous, a living roadmap that evolves with time, technology, and societal needs, but it begins with one decisive step: a commitment to act today for a sustainable tomorrow.

Why Choose Us?
We, GlobeTrend Climate Impact Pvt. Ltd., are a SEBI-accredited ESG Rating Provider and an Independent Assessor/Reviewer of Social Bonds and Sustainability-linked Bonds. Our expertise enables organisations to navigate ESG requirements and build sustainable business practices.

Our sister company, Trendsetters Skill Assessors Pvt. Ltd., complements this by offering a comprehensive suite of sustainability services, including:
• Carbon footprint assessments
• ESG due diligence
• BRSR reporting
• Assurance services
• ESG/ Sustainability Roadmap & Strategy
Together, we deliver end-to-end ESG and sustainability solutions, from data validation and reporting to strategy design and implementation, helping companies transition from compliance to true sustainability leadership.

Stay Ahead in the Sustainability Game!
Start your ESG journey today to stay competitive, compliant, and future-ready!

Write to know more:
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Corporate Address: 340, B3 Tower Spaze I-Tech Park Sohna Road Sector 49, Gurugram, 122018

References
1.https://www.morganstanley.com/access/why-sustainable-companies-can-outperform
2.https://economictimes.indiatimes.com/news/economy/indicators/over-90-of-indian-businesses-raised-sustainability-investments-over-last-year-report/articleshow/115734339.cms?from=mdr
3.https://news.sap.com/india/2024/04/86-of-indian-businesses-see-positive-relationship-between-sustainability-and-business-profitability-sap-sustainability-study/#:~:text=Sustainability%20directly%20links%20to%20SAP's,%2C%20environmental%2C%20and%20economic%20performance.
4.https://group.dhl.com/en/sustainability/sustainability-roadmap.html
5.https://www.sharpcloud.com/blog/how-to-create-a-sustainability-roadmap-the-ultimate-guide-for-roadmap-owners

How ESG-Linked Salary Is Changing Corporate Leadership

GlobeTrend Climate Impact — Mon, 10 Nov 2025 10:28:57 +0000

Executive compensation is evolving beyond traditional financial benchmarks. As sustainability moves to the forefront of corporate strategy, companies are increasingly aligning leadership incentives with ESG goals. According to the ISS Executive Compensation Analytics (ECA) database, the share of firms integrating ESG metrics into executive performance reviews rose from just 3% in 2010 to over 30% in 20211. This shift signals a growing recognition that executive compensations are intrinsically linked to environmental and social accountability.

The Evolving Landscape of ESG-Linked Executive Compensation
The integration of ESG principles into executive remuneration frameworks has gained significant momentum worldwide. IESE Business School highlights that “the percentage of listed firms incorporating ESG performance into pay structures rose sharply from just 1% in 2011 to 38% by 20212, reflecting mounting alignment with the ESG-linked compensation. Hence, enhancing corporate accountability”.

However, adoption patterns vary by geography. ESG-linked pay is more prevalent in jurisdictions with stronger sustainability mandates and disclosure requirements. In the European Union, over 60% of companies have integrated ESG metrics into executive compensation. In contrast, only about 16.5% of U.S. firms have done so. Sector-wise, industries with significant environmental or social footprint such as energy, utilities and mining are more likely to embed ESG measures in remuneration frameworks2.

Companies adopt ESG-linked pay for multiple strategic reasons:
•To align executive incentives with long-term stakeholder value.
•To mitigate ESG-related risks and enhance corporate resilience.
•To signal a serious commitment to sustainability goals.
• To respond to rising institutional investor pressure for ESG integration.

The Four Key Dimensions of ESG Remuneration
As companies like Apple, McDonald's, and Shell adopt ESG-linked executive compensation, it's essential to understand the key design principles behind these initiatives3. Here are the four dimensions that leaders need to consider when integrating ESG measures into pay structures:

1.Internal and External Targets:
oInternal targets are about setting goals within the company, like increasing diversity or investing in sustainable technologies. These are more about the processes that lead to broader societal outcomes.
oExternal targets focus on measurable outcomes, such as the total emissions reduced or improvements in employee engagement scores.

While both are important, external (output) targets are increasingly in demand, as they are easier to measure and more impactful in terms of societal benefits.
Example: Shell uses both internal measures (like increasing biofuel use) and external goals (like net carbon reduction targets) to link executive pay to energy transition goals3.

2.Individual KPIs and Scorecards:
oTo measure progress, companies must track and disclose performance across a range of ESG priorities. A well-constructed scorecard with clear Key Performance Indicators (KPIs) ensures transparency.
oThis multidimensional approach ensures that companies address diverse ESG issues, from environmental impact to social goals like diversity and employee welfare.

Example: Unilever’s sustainable living plan has been in use for over a decade, with a scorecard that tracks their sustainability priorities and influences 25% of their long-term incentive plan3.

3.Long-Term Incentive Plans (LTIP) vs. Annual Bonus:
o LTIPs are well-suited for environmental goals, which often take years to show measurable results.
o Annual bonuses, on the other hand, can address short-term ESG targets like health and safety or gender pay equity, which can be tracked over a single year.
Example: BP (British Petroleum) incorporates ESG targets in both its annual bonuses (15% on safety and emissions reduction) and LTIP (40% on renewables and energy transition goals)3.

4.Underpins and Scale Targets:
oSome metrics serve as a baseline, if these standards aren’t met, bonuses are reduced. Health and safety are often examples of "table stakes" metrics that executives must meet, but don’t necessarily result in extra rewards.
oFor more transformational goals, such as emissions reductions, performance scales should be established. This means executives can earn rewards based on exceeding specific targets, but only if minimum standards are met.

Example: BT Group plc has established "underpins" to its restricted share plan, ensuring no ESG-related reputational damage. Legal & General, another investor, has set minimum ESG target requirements to qualify for rewards3.

Global Trends in ESG-Linked Executive Compensation
An increasing number of companies globally are aligning executive compensation with Environmental, Social, and Governance (ESG) goals. Driven by investor expectations, regulatory pressure, and evolving governance norms, businesses are recognizing that long-term value creation is tied to sustainability and responsible practices.

According to a 2024 study by KPMG, 78% of the 375 publicly listed companies, encompassing the largest 25 by market capitalization from each of the 15 countries, including Australia, Austria, Belgium, Canada, China, France, Germany, Italy, Japan, Luxembourg, the Netherlands, Spain, Sweden, the United Kingdom (UK), and the United States (US), link executive compensation to sustainability performance4.

Europe Leads the Way
In countries like France, Germany, and the UK, 81% of companies tie CEO pay to ESG goals, significantly higher than in the U.S., where only 44% of companies follow suit5.

This highlights Europe’s more advanced approach to integrating sustainability and governance into corporate strategies.
1.Key Focus Areas Driving Compensation Decisions
Climate change and a company’s own workforce are the main ESG themes shaping sustainability-linked compensation targets. These focus areas help define performance metrics that ensure leaders are incentivized to address critical challenges such as emissions reduction, gender equality, and employee well-being5.

2.The Importance of Materiality
Materiality is crucial in linking ESG to compensation. A strong 88% of global companies align their ESG targets with issues that directly impact their business operations and long-term value, ensuring their sustainability goals are relevant and impactful5.
The Role of Regulators and Investors

European regulators and investors are accelerating the move toward ESG-linked executive compensation:
•The EU’s Shareholder Rights Directive II recommends using ESG criteria to assess director performance where appropriate6.
•The UK Corporate Governance Code calls for pay structures that support long-term, sustainable success6.
•Investor groups, such as the UK’s Investment Association, advocate for clear, measurable ESG KPIs tied to company strategy6.

Timeframe Breakdown: Short-Term vs. Long-Term Incentives
KPMG’s report shows that 37% of companies use both short- and long-term incentives tied to ESG metrics, while 40% focus on short-term targets, and 23% on long-term incentives7.

As ESG-linked executive compensation becomes more prevalent across industries, it is clear that aligning financial incentives with sustainability is not just a trend but a necessary step toward fostering long-term business success, corporate responsibility, and resilience in an ever-evolving global landscape.

India Catching Up in ESG-Linked Executive Compensation
As global trends push Environmental, Social, and Governance (ESG) metrics to the forefront of corporate performance evaluation, companies across the Asia Pacific (APAC) are increasingly integrating these considerations into executive pay. While European firms lead this movement with 94% incorporating ESG into incentive plans, India is making deliberate strides forward8.

According to a 2024 study by WTW (Willis Towers Watson) conducted on the top 50 listed firms in India by market capitalization, 56% of the companies that disclosed executive incentive metrics incorporated ESG factors into their executive pay programmes, reflecting steady progress amid evolving disclosure standards in the region8.

Among India’s leading companies embracing this shift is ITC Limited, a diversified conglomerate known for its strong sustainability agenda and stakeholder-focused governance. Its remuneration policy serves as a compelling case study in aligning executive compensation with ESG priorities.

Case Study: ITC Limited – ESG Metrics Driving Executive Pay in India
Among the Indian corporate leaders embracing the shift toward ESG-linked incentives is ITC Limited, a diversified corporation widely recognised for its sustainability agenda and stakeholder-centric governance. ITC’s remuneration policy stands out as a compelling example of how executive rewards can be aligned with long-term ESG goals.

As detailed in ITC’s 2023-24 ESG Factbook10, the company incorporates quantifiable ESG performance indicators into executive incentive frameworks. Key highlights include:
These metrics are incorporated into executive performance scorecards and reviewed by both the Nomination & Remuneration Committee and Sustainability Committees, ensuring accountability and pay-for-performance alignment. This structure directly ties incentive payouts to ESG outcomes as part of ITC’s broader Sustainability 2.0 strategy.

Greenhouse Gas (GHG) Emissions •Achieved 50% reduction in specific GHG emissions (Scope 1 & 2) compared to FY2018- 19 baseline10;p2. •100% of purchased grid electricity is sourced from renewable energy10;p2.

2.** Water Stewardship**
•Cumulatively developed 1,630,000 acres under watershed development as of FY 2023-24, progressing toward the 2,200,000-acre target by 203010;p4.
•Achieved 40% reduction in specific water consumption compared to FY2018-1910;p3.

Solid Waste Management • 99.9% of packaging is recyclable, reusable, or compostable10;p4.

From Boardroom to ESG Score: Why Executive Pay Matters
A landmark empirical study titled “Advancing Understanding of ESG Score and Executive Compensation Relationships in the Indian Context” by Ranjitha Ajay, Surendranath Rakesh Jory, and K.P. Syamraj (2024) offers robust evidence that higher ESG performance is positively associated with higher executive compensation, particularly in business group-affiliated and environmentally sensitive firms. Some of the key highlights of the study are mentioned below:

•Governance and social factors drive executive pay decisions, highlighting the rising importance of governance in ensuring sustained corporate value11;p5.

•Regulatory frameworks, such as the Companies Act of 2013, which mandates 2% CSR spending for qualifying firms, reinforce the accountability mechanisms that support ESG-linked compensation11;p5.

•Firms with strong ESG scores and high executive pay tend to outperform in market valuations, especially those affiliated with business groups and operating in environmentally sensitive sectors, suggesting investor confidence in sustainable leadership. These findings are supported by rigorous methodologies, including instrumental variable analysis and propensity score matching11;p5.

ESG Regulation and Compensation: The Indian Policy Landscape
India’s ESG disclosure landscape has undergone a significant transformation over the past decade, driven largely by regulatory momentum. The Securities and Exchange Board of India (SEBI) has played a pivotal role in this evolution. In 2015, SEBI introduced the Business Responsibility Report (BRR) for the top 500 listed companies, initiating formal ESG-related disclosure requirements. This framework was substantially enhanced in 2021 with the rollout of the Business Responsibility and Sustainability Report (BRSR), which mandates comprehensive ESG disclosures from the top 1,000 listed entities, aligned with global reporting standards.
While SEBI does not prescribe ESG-linked executive pay, the BRSR framework provides the necessary foundation for companies to integrate sustainability considerations into performance management systems. By encouraging structured, comparable, and transparent ESG reporting, these regulations enable companies to align executive incentives with long-term sustainability goals and stakeholder expectations.

Why This Matters
•Business Group Affiliation Matters: Firms affiliated with business groups show a stronger positive relationship between ESG scores and executive pay than standalone firms11;p5.
•Market Valuation Alignment: Companies with high ESG scores and high executive compensation are associated with higher firm valuations, suggesting market approval of ESG-integrated leadership incentives11;p5.

As ESG metrics gain traction in shaping leadership incentives, the reliability and relevance of India-specific, BRSR-aligned disclosures will be instrumental in defining the next phase of corporate accountability and long-term resilience.

Key Challenges in ESG-Linked Executive Compensation
As ESG-linked executive compensation becomes increasingly common, companies face several significant challenges in effectively integrating sustainability metrics into pay structures.
•Greenwashing Risk: Companies may use ESG-linked compensation to create an illusion of sustainability without driving genuine progress, often by adopting vague or superficial ESG targets that prioritize image over impact.

•Lack of Standardized and Measurable ESG Metrics: The absence of clear, consistent, and comparable ESG performance indicators hampers the ability to accurately measure and reward true sustainability achievements, weakening the effectiveness of compensation programs.

• Misalignment with Long-Term Sustainability Goals: Short-term financial pressures and shareholder expectations can conflict with broader ESG objectives, resulting in compensation structures that fail to incentivize meaningful, long-term, sustainable change.

To mitigate these risks, companies must ensure that their ESG metrics are material, measurable, and aligned with long-term sustainability goals. Transparent reporting and a genuine commitment to sustainability are essential to making ESG-linked executive compensation a driver of real change, rather than merely a branding exercise.

Conclusion
To achieve meaningful ESG performance, commitment must extend beyond executives to every level of the organization and its customers. Integrating ESG goals into daily operations, such as supply chains and employee development, ensures sustainability is ingrained in company culture. Involving employees in identifying and addressing ESG priorities boosts engagement and job satisfaction, especially when they are part of the decision-making process.

Customer participation is also crucial, particularly in initiatives like reducing plastic waste. By incentivizing customers to return packaging for reuse, companies can create a closed-loop system that supports sustainability efforts. Fostering a culture of shared responsibility across employees and customers will drive long-term ESG success.

References
1.https://doi.org/10.1111/1475-679X.12481
2.https://www.iese.edu/insight/articles/esg-linked-executive-pay/
3.https://www.pwc.com/gx/en/issues/esg/exec-pay-and-esg.html
4.https://kpmg.com/xx/en/media/press-releases/2025/03/kpmg-international-report-finds-growing-link-between-sustainability-and-executive-pay.
5.https://www.esgtoday.com/eu-companies-nearly-twice-as-likely-as-u-s-to-link-executive-pay-to-esg-goals-kpmg-report/
6.https://www.tandfonline.com/doi/full/10.1080/14735970.2023.2253888#d1e143
7.https://www.rinnovabili.net/business/esg/esg-goals-and-ceo-pay-europe-leads-us-lags-behind/
8.https://www.wtwco.com/en-in/news/2025/01/close-to-three-quarters-of-the-top-50-listed-companies-in-apac-markets-continue-to-adopt-esg-metrics
9.https://www.wtwco.com/en-gb/news/2024/12/european-companies-refine-their-approach-to-esg-metrics-in-executive-pay-programmes-wtw-study-finds?
10.https://www.itcportal.com/itc-esg-factbook.pdf
11.https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4520081
12.https://www.resonanceglobal.com/blog/trending-linking-executive-compensation-to-esg-metrics
13.https://www.sciencedirect.com/science/article/abs/pii/S1044028324000656

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The Untapped Risk of Water Management in Sustainability

GlobeTrend Climate Impact — Thu, 06 Nov 2025 06:46:08 +0000

Water underpins $58 Trillion in economic value (WWF, 2021) yet attracts less than 1% of climate-tech investment (Geschwind, 2023)1. This mismatch is becoming untenable as climate change and population pressures intensify, turning water into a material supply chain risk. Drought-driven shipping limits at the Panama Canal and production halts in Taiwan and Arizona show that water is no longer peripheral, it is a core driver of long-term value and a rising ESG priority.

Climate Change: Amplifying Water Stress
Climate change is the biggest long-term threat to global water markets, intensifying risks across supply chains. From 2001-2019, 74% of natural disasters were water-related, with floods and droughts affecting 3 Billion people at a cost of USD 700 Billion.

Hotter global temperatures are:
•Evaporating surface waters in lakes and rivers
•Stripping soils of moisture, threatening agriculture
•Increasing urban demand for water via residents and power utilities

For investors, climate volatility compounds water scarcity, directly impacting agriculture, energy and urban infrastructure.

Why Water Risk Matters for Investors
Water risk is financial risk. CDP estimates that over $300 Billion in business value is at stake for the financial services sector alone, as droughts in California, floods in Southeast Asia and groundwater depletion in India disrupt global supply chains. Much of this exposure lies beyond direct operations, hidden in agricultural and manufacturing networks, where it drives revenue loss, higher capital expenditure and rising costs of goods sold3.
According to the UN, agriculture consumes 70% of global freshwater. Agribusiness and food chains are highly exposed, while mining, semiconductors, apparel and beverages also face mounting pressure. The World Economic Forum ranks water crises among the top five global risks by impact, yet most financial institutions still fail to integrate water metrics into ESG risk models, leaving a major blind spot for investors.

AI’s Hidden Water Footprint
Beyond agriculture and manufacturing, the digital economy is now facing a similar reckoning. Water risk is no longer confined to traditional industries. The rapid expansion of AI and data centres has introduced new strains on water-stressed regions. In 2022 alone, Google, Microsoft, and Meta consumed an estimated 580 Billion gallons of water for cooling and power, equivalent to the annual needs of 15 Million U.S. households4. Much of this water evaporates instead of being returned to local systems, worsening stress in drought-hit regions like Arizona and Oregon. Even technology companies, often perceived as “clean,” face exposure to local water constraints that can disrupt operations, increase costs, and damage reputations.

Aral Sea: The Ripple Effects of Water Risk
The Aral Sea, once the fourth-largest saline lake in the world, has dramatically shrunk due to water diversion for cotton cultivation in the 1960s. This has created a long-term ecological and socio-economic crisis such as:
Environmental Impacts
•Water levels dropped by ~23 meters, accelerating evaporation and raising temperatures5.
•Desertification intensified, with vegetation loss of at least 40%, stronger winds, and frequent dust storms5.
•Soil salinization and erosion have degraded land and air quality.
•Nearby mountain glaciers are shrinking due to reduced snowfall and dust/salt deposition.

Social & Economic Consequences
•Agriculture now requires up to four times more freshwater to compensate for salinized soils.
•Croplands are flushed repeatedly, depleting essential minerals and increasing operational costs.
•Public health has suffered, affecting over 5 Million people with rises in tuberculosis, typhus, and paratyphoid5.
•Over 100,000 people have been displaced, highlighting the social toll of water mismanagement5.
Hence, the Aral Sea serves as a powerful reminder that water mismanagement can create long-lasting risks across ecosystems, communities and business operations. Sustainable water practices are an essential consideration for resilient supply chains.

Infrastructure and Urban Vulnerability

Ageing water systems are another hidden risk. Globally, USD 39 Billion in water is lost annually through leaks and breaks, while the U.S. alone faces a USD 270 Billion repair bill for outdated infrastructure2;p6. Beyond financial losses, leaky pipes allow contaminants to infiltrate supplies, endangering public health.
Meanwhile, urbanisation worsens flood risk. Asphalt and concrete surfaces prevent absorption, forcing excess water into overwhelmed drainage systems. Without resilient infrastructure, such as permeable pavements, catch basins and engineered wetlands, cities remain vulnerable to costly storm damage.

Intel’s Water-Positive Ambitions
Despite the many challenges posed by water scarcity and climate stress, some companies are taking bold steps to address the issue. Intel, a global leader in semiconductor manufacturing, operates in one of the most water-intensive industries. Recognising this, the company has committed to achieving net-positive water use by 2030 as part of its 2030 Corporate

Responsibility Strategy.
Key Initiatives:
•Conservation: Over the past decade, Intel has conserved 44 Billion gallons of water through operational efficiency and partnerships with local municipalities, with a target to conserve 60 Billion gallons cumulatively by 20306.
•Restoration: Intel invests in water restoration projects designed to restore more freshwater than the company consumes globally. Current projects are expected to restore over 1.6 Billion gallons annually6.
•Innovation: The company deploys advanced technologies such as recycled water for cooling, evaporative cooling towers and smart building designs (e.g., LEED Platinum offices in Israel using 75% less water than typical buildings6).

Impact and Recognition:
•Intel achieved a 38% reduction in water use per unit compared to 2010 levels6.
•Data centre and onsite water reclaim projects reduced cooling-related operating costs from 49% to 6% of total expenses6.
•The company’s efforts are publicly reported via the Carbon Disclosure Project (CDP), receiving top ratings for supply chain engagement6.

Intel’s ambitious water-positive goals demonstrate that even the most water-intensive industries can lead in sustainability. Through a combination of conservation, restoration and innovative technologies, the company is not only reducing its own water footprint but also contributing to the replenishment of freshwater resources globally. Projects from smart buildings to advanced cooling systems show that strategic water management can coexist with operational efficiency and technological advancement, setting a benchmark for responsible water stewardship worldwide.

Turning Water Risks into Opportunities
Water is no longer just a resource; it is a strategic driver of resilience, innovation and sustainable growth. Industries and communities face increasing pressures from climate change, urbanisation and regulatory requirements, but these challenges are also spurring groundbreaking solutions.

Key Opportunities and Innovations:
•Advanced Technology: Nanomaterials, high-efficiency membranes and smart water analytics are enabling higher levels of wastewater recycling and more precise monitoring of consumption and leaks.
•Nature-Based Solutions: Green roofs, urban wetlands and permeable pavements help absorb rainfall, replenish aquifers and provide co-benefits such as biodiversity and urban cooling.
•Low-Cost Resilience Measures: Rainwater harvesting, solar-powered pumps and precision drip irrigation empower communities and farmers to access and conserve water efficiently.

Beyond operational and technological responses, water remains a cross-cutting enabler of sustainable development. It underpins key SDGs, supporting clean water and sanitation (SDG 6), human health (SDG 3), resilient infrastructure (SDG 9), sustainable cities (SDG 11), responsible production (SDG 12), and ecosystem protection (SDG 14 & 15). Without secure and well-managed water resources, progress across nearly all sustainability goals is compromised.

For investors, businesses and policymakers, this landscape presents a dual opportunity: to mitigate risk and to unlock value. Companies that proactively adopt water-smart strategies stand to enhance operational stability, reduce costs, meet regulatory expectations and create long-term competitive advantage. By embracing both technological and nature-based solutions, stakeholders can help shape a future where sustainability, resilience, and growth flow hand in hand. In the era of climate volatility, companies that treat water not as a utility cost but as a strategic asset will define the next frontier of resilient growth.

Stay Ahead in the Sustainability Game!
Start your ESG journey today to stay competitive, compliant, and future-ready!

Write to know more:
For ESG Rating: support@climate-change.in
For other Sustainability Services: esg@tsassessors.com

Call: +91 7042800408
https://www.climate-change.in/
Corporate Address: 340, B3 Tower Spaze I-Tech Park Sohna Road Sector 49, Gurugram, 122018

References
1.https://inrate.com/blogs/investing-in-water-sustainability/
2.https://www.robeco.com/files/docm/docu-202109-sustainable-water-investment-opportunity.pdf
3.https://inrate.com/blogs/water-risk-supply-chains-esg-investors/#:~:text=ESG%2DFocused%20Investors-,Water%20Risk%20in%20Supply%20Chains%3A%20A,Priority%20for%20ESG%2DFocused%20Investors&text=As%20climate%20change%20and%20population,for%20ESG%2Doriented%20financial%20institutions.
4.https://www.foodandwaterwatch.org/2025/04/09/artificial-intelligence-water-climate/
5.https://planet-tracker.org/wp-content/uploads/2024/02/Ripple-Effects.pdf
6.https://www.aquatechtrade.com/news/water-security/intel-reveal-its-2030-water-stewardship-ambitions

Cement and Concrete in Net Zero

GlobeTrend Climate Impact — Tue, 04 Nov 2025 11:59:07 +0000

Global Cement & Concrete Association Expands Collaboration to Accelerate Net Zero

Background:

Cement and concrete together account for nearly 7% of global CO₂ emissions, making them one of the hardest-to-abate industrial sectors. The Global Cement and Concrete Association (GCCA) has been leading the industry’s 2050 Net Zero Roadmap, focusing on cleaner technologies, alternative materials, and carbon capture solutions. However, real progress requires coordinated efforts across the entire construction value chain from suppliers to builders and policymakers.

Latest Development:
To enable this, the GCCA has launched a new membership category Net Zero Value Chain Partners (NZVCP) aimed at fostering broader collaboration across the ecosystem. The program extends membership beyond cement and concrete producers to include equipment suppliers, admixture companies, infrastructure providers for carbon capture, and solution developers.
Early members include CDE, KHD, Master Builders Solutions, Saint-Gobain, Schneider Electric, and Sinoma International, signaling momentum for a value chain-wide decarbonization effort.
“Concrete is the essential material underpinning our modern world. It makes great sense to engage more deeply with those who provide our industry equipment, services, and solutions,” said Thomas Guillot, GCCA Chief Executive.

Through this expansion, the GCCA seeks to drive joint programs, working groups, and innovation partnerships that bring the cement industry closer to its net zero ambition.

Net-Zero Banking Alliance Winds Down Amid Realignment of Global Climate Finance

Background:
The Net-Zero Banking Alliance (NZBA) was launched in 2021 under the UN’s Glasgow Financial Alliance for Net Zero (GFANZ). It united over 140 banks representing $74 trillion in assets, all committed to aligning their lending and investment portfolios with net zero by 2050. However, rising political backlash against ESG initiatives particularly in the U.S. and diverging interpretations of climate commitments have put pressure on several financial coalitions in recent years.

Latest Development:
In a major shift, the NZBA has announced it will cease operations, following a vote by its member banks. The coalition will transition from a membership-based alliance to a non-binding guidance framework, maintaining public resources for banks to set and implement their own net zero targets.

The move follows the exit of major global banks including Goldman Sachs, HSBC, UBS, and Barclays, many citing regulatory and political complexities.

While the closure may appear as a setback, experts see it as a recalibration of climate finance strategy. According to Gill Lofts, Global Sustainable Finance Leader at EY,
“This shift is not a retreat from climate action but a strategic course correction opening the door to broader global participation, particularly from emerging markets.”

This development mirrors similar restructurings across the GFANZ ecosystem, including the Net Zero Asset Managers Initiative and Net Zero Insurance Alliance, marking a transition from ambitious pledges to practical frameworks enabling capital mobilization for low-carbon transitions.

ESG Insight:
Both developments signal a maturing global approach to net zero from pledge-based alliances to collaborative, action-oriented frameworks. Whether in cement manufacturing or financial services, the emphasis is shifting toward inclusivity, innovation, and implementation as the next phase of the global sustainability transition unfolds.

Stay Ahead in the Sustainability Game!
Start your ESG journey today to stay competitive, compliant, and future-ready!

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Corporate Address: 340, B3 Tower Spaze I-Tech Park Sohna Road Sector 49, Gurugram, 122018