Page 31 - BCICAI-Connect-Dec-2023

Article

Beyond Profits

Sustainability a moral imperative or a
financial one

CA Vivek Gupta

SUSTAINABILITY: UNDERSTANDING THE • The issuance of green bonds in India alone,
IMPACT TODAY reached $10.3 billion in 2020, up from $3.3
billion in 2019, according to the Climate Bonds
As we indulge ourselves in the growth mindset,
with the concepts of Above and Beyond, we as Initiative
Chartered Accountants have a proven track record • On a global scale, the issuance of green bonds
of going beyond measures to ensure efficacy in reached a record $270 billion in 2019, up from
our professional as well as personal areas of work. $168 billion in 2018, according to the Climate
This time, the bar is set to go ‘Beyond Profits’. Bonds Initiative
In the current era of drastic developments, • The Securities and Exchange Board of India
the warrior of finance is holding a sword of (SEBI) introduced guidelines for sustainability
Sustainability, and the vast majority of the cavalry reporting in 2020
has yet to learn ‘How to use it?’ • The sustainable funds in the US attracted
Sustainability has become integral to accounting, $20.9 billion in net flows in 2019, according to a
finance, and investing worldwide. With this article, report by Morningstar
we try to touch base on the current state of According to a report by MSCI, companies with high
sustainability practices, and its impact on finance ESG ratings outperformed companies with low ESG
and finance professionals. ratings by an average of 2.7% per year from 2007
The relationship between Sustainability and Finance to 2019
as a profession, is complex and multifaceted. With POSITIONING THE PROFESSION – IN THE GAME
the increasing demand for sustainable practices, OF SUSTAINABILITY
the role of finance professionals has expanded
beyond just financial reporting to embedding Sustainable finance is not a trend, it’s the future.
sustainability into decision-making processes. Those who embrace it will be well-positioned
for success. Where, connecting financial and
Among others, one most prominent trends in sustainability-related information is key.
sustainability is the increasing focus on impact
investing, i.e., investments made to generate As per one of the surveys published by Reuters in
measurable social or environmental impact 2023, with sustainability increasingly climbing up
alongside a financial return. This trend is driven by corporate agendas, decision-makers are navigating
a growing interest among investors in aligning their two primary disruptions:
investments with their values and the increasing • the pressure to decarbonize their operations;
recognition of the potential for impact investing to and
drive positive social and environmental change.
• the regulatory need to report.
To further put into perspective the reach of It is an undeniable fact that Chartered Accountants
sustainability and its impact, below are some key are in an ideal position to leverage and apply their
development that supports ‘increased focus on existing financial reporting skills, knowledge, and
Sustainability’ in recent years:
expertise to sustainability-related disclosures.
• In India, the Reserve Bank has introduced
guidelines for Banks to lend to renewable CAs are best placed to develop approaches that
energy projects and sustainable infrastructure consider all relevant factors, including impacts
along the value chain and over different time

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