In today's dynamic global business landscape, Environmental, Social, and Governance (ESG) practices have become essential drivers of sustainable growth and value creation.
SLASSCOM (Sri Lanka Association of Software and Service Companies) has emerged as a leading advocate for ESG principles in Sri Lanka. By fostering collaboration, offering guidance, and sharing knowledge, SLASSCOM has effectively supported organizations in navigating ESG complexities, resulting in risk mitigation, improved operational efficiency, and the development of responsible entities.
Pyumi Sumanasekara, a Partner at KPMG Sri Lanka, emphasized the growing importance of ESG for businesses. No longer seen as separate from an organization's performance, ESG has today become a priority on the leadership agenda.
Research by KPMG reveals that customers today highly value a company's ethical practices and community engagement. This shift in consumer behaviour underscores the need for businesses to adopt sustainable practices that align with nature and society.
Nature plays a significant role in the global economy, contributing an estimated US$125 trillion per year. Over 50 percent of the world's GDP (US$44 trillion) depends moderately or highly on nature and its services. Protecting and regenerating natural assets is crucial for businesses heavily reliant on nature to ensure survival and growth.
Pyumi stated that today regulators and standard setters have responded by issuing sustainability standards. The International Sustainability Standards Board's recent release of investor-focused sustainability reporting standards provides a global baseline and attracts investors, giving Sri Lanka a competitive advantage.
Organizing operations and fostering a sustainable mindset among staff are crucial for successful ESG implementation. Reporting on current ESG practices helps identify gaps and potential risks, enabling informed decisions for improvement.
She added that Sri Lanka's cultural paradigm, especially among family businesses, has ingrained ESG principles through community building and environmental care. Initiatives like "Garments without Guilt" and "Ethical Tea" exemplify responsible practices, and SLASSCOM's efforts in positioning the IT sector as a Green Tech Hub are commendable.
Measuring ESG performance and identifying areas for improvement are vital components of sustainable practices. Strategies that minimize waste and reduce energy costs not only contribute to sustainability but also generate cost savings. Aligning ESG practices with stakeholder expectations enhances an organization's reputation as a responsible entity in the market.
ESG metrics play a significant role in driving performance. Engaging leaders in strategic discussions ensures alignment with sustainable practices, while integrating ESG metrics into performance management fosters accountability and encourages active employee contributions.
Small and medium-sized enterprises (SMEs) have a unique advantage in adopting ESG principles due to their simpler processes. Assessing current practices, setting specific ESG goals, promoting a culture of sustainability, and transparently communicating efforts and achievements are crucial steps for effective ESG integration within SMEs.
As ESG is expected to constitute over a third of global assets in the future, businesses and financial institutions must proactively integrate ESG principles into their strategies.
Incorporating ESG into succession planning ensures the continuity of sustainable practices and values during leadership transitions. Identifying and developing leaders committed to driving positive change contributes to a more sustainable and inclusive future.
In conclusion, she said that embracing ESG practices is no longer optional for businesses. SLASSCOM's advocacy and promotion of ESG principles in Sri Lanka's IT/BPM sector serve as a guiding example for other industries. By adopting ESG principles, businesses can drive sustainable practices, enhance their reputation, and create long-term value while contributing positively to society and the environment. Collaborative efforts among organizations, regulators, and stakeholders are essential to fully embrace ESG's transformative potential and pave the way to a more sustainable future.
