Ep. 246: Sunil Deshmukh and Sandhya Sriram - CFO Views on India's ESG Evolution

Tune in to the latest episode Count Me In, where host Adam Larson brings you an engaging conversation with some of finance's leading voices in India. We're thrilled to feature Sunil Deshmukh, IMA’s Chair Elect boasting over three decades of global business management expertise, and the astute Sandhya Sriram, Group CFO of Narayana Health, renowned as one of India's Top 100 Women in Finance.

In this episode, Sunil shares his distinctive perspective on sustainable finance’s competitive edges, such as improved global market access and cost of capital benefits. Sandhya, on the other hand, offers a deep dive into the real-world applications of ESG strategies within large organizations, while addressing the intricate issues surrounding ESG disclosure transparency.

With this powerhouse duo, you're privy to a rich discussion that spans everything from the transformative ESG initiatives at Narayana Health to the visionary roadmap laid out for sustainable finance under India's G20 presidency.

Don’t just listen, be part of this enlightening session. Whether you're a CFO grappling with ESG strategy, or simply intrigued by the evolution of sustainable business practices, this is an unmissable dialogue loaded with experience and insight. Plug in and join us for a compelling narrative where finance and responsibility converge.

Full Episode Transcript:
< Intro >

Adam: Welcome back to Count Me In. I'm your host, Adam Larson, and today we're diving deep into a topic that's reshaping the corporate landscape in India, ESG, or Environmental, Social, Governance, factors and their growing influence. We have two esteemed guests joining us. First, Sunil Deshmukh, who is IMA's chair-elect and an expert with over 30 years of global experience in business management. Also, we have Sandhya Sriram, the group's CFO for Narayana Health, and she is among India's top 100 women in finance.

In this episode, we're not only looking at the current regulations and the evolution of reporting requirements. But also how Indian markets are responding to the pressing need for ESG integration in risk management and long-term sustainability. Sunil will highlight the rewards tied to sustainable finance, has enhanced global reputation and reduced capital costs. While Sandhya will shed light on the practical challenges and opportunities like achieving transparency in ESG disclosure, and leveraging sustainable solutions through startups.

Get ready to impact the complexities and innovations within the world of ESG, with insights from the CFO's desk. As the G20 turns its eyes to India for sustainable finance directives, we, too, focus on how Indian companies can translate these directives into competitive advantages. Let's get started.

< Music >

Sandhya and Sunil, I'm so excited to have you both on the podcast, today, as we talk about ESG, and especially ESG in the Indian market. And to just jump right into the conversation, how would you describe the importance of ESG integration, within financial strategies for companies operating in the Indian market?

Sunil: Thank you very much, Adam. A great question, very relevant question to the Indian market conditions. Before we get into the formal discussion, I would say that the concept of triple bottom line was already existing in the world before ESG, which was coined by John Elkinton in 1994. Where we used to talk about 3P's, Profit, People, and Planet. I would say that ESG is a formal expansion of that concept, which has come into the existence.

Now, ESG is in existence in India, I would say right from 2011. Indian Companies Act Department or, Ministry of Corporate Affairs, as well as the Securities and Exchange Board of India, have been coming out with different regulations, different advisories, guidelines, and some reporting requirements by Securities and Exchange Board of India, on this topic.

Now, you asked me the question about the importance of ESG in financial strategies. I would say that in today's world, almost all companies in their financial strategies start with a concept of risk management first. And when we talk about the risk management, one of the most important strategy that comes is the sustainability. Whether your business is going to be sustained for a longer period of time or not. And there comes the ESG, which is of course sustainability pertaining to environment, risk relating to the environment, risk relating to the social, which is typically the people. And, of course, the governance, which is more of a compliance risk based on the requirements of the stock market or government regulations, and all those things.

So I would say that most of the companies start with integrating the ESG in their risk management strategy, and from there they take it. And, in today's world, ESG has become very important not only from a financial strategy point of view or a business strategy point of view, but also accessibility to the capital. If you want to access the capital at the world level or global market, and if you want to have a cheap capital or affordable capital as compared to the market prices, I think sustainability and ESG is going to play a very important…

ESG strategy integrated into a financial strategy, will help the companies have a competitive advantage as compared to their competitors. It will also help the companies to have a long-term sustainability strategy. And we also talk in finance domain, that every single business is supposed to have a going concern concept or is a perpetual continuation.

So from that point of view, ESG will help companies to look into, naturally, how long the business strategy is going to sustain and stabilize. So long-term aspect of ESG is also going to help the companies in their financial strategy.

Other small things, or other very important but small things, which are helping companies due to ESG is talent retention. The today's generation Z employees, they don't want to work for companies which are not following the people strategies or governance strategies. So talent acquisition and talent retention is one area.

I would say supply chain resilience. In today's world, the Indian companies use global supply chain. We import a lot of raw material. So if we have a sustainability strategy, in the global supply chain, that's also going to help the companies. And, obviously, the last but not the least is the stakeholder engagement.

And when I say stakeholder engagement, it could be your customers, it could be your suppliers, it could be your employees, it could be government, a municipal corporation, and, of course, shareholders, investors of the company. All these stakeholders are looking at ESG as a strategy from a long-term continuity, as well as comprehensive success formula for the company.

Adam: Now, I think that's an amazing overview of where to look at things from a 10,000-foot point of view, to see how everything's working within the organization. Now, Sandhya, as a CFO, how do you perceive your role changing and developing, especially, as you try to implement these strategies and some of the things that Sunil talked about?