 Good evening, everyone. Amongst us, we have CA Dr. Rajkumar Azuppia, who is a council member of the ICI, presently, and he had also held this term here. We have been receiving requests from a lot of professionals to understand the nuances of overview and framework of environment, social, and governance. Since earlier, like we used to hear about CSR, corporate social responsibility. Now, this term, that is ESG, has caught up. So we had requested Dr. Rajkumar, and he was kind enough to accept our request. And we know that since it's the evening time, those who are in the office, they would be glued to their office work. And at the same time, those who are in the jobs like nine to five, they would be pushing off to their offices. But the fortunate part is that since we are live on the YouTube and thereafter also, the sessions would be available on the YouTube of Beyond Law CLC. So those who miss it can always catch up. And other previous webinars of Beyond Law CLC, where we have crossed the journey of more than 600 YouTube sessions, that can also be seen. I'll not take much time, and we are indebted to Dr. Rajkumar, who has been quite a motivating force. I've been a member of the, a lot of WhatsApp member groups, where in Dr. Rajkumar is the leading force and the brain behind that. So I will request sir to share his insights. People are raring to hear him. Over to you. Thank you Vikas. I consider Vikas as an encyclopedia. We can see the books lying behind him. And, you know, searcher of knowledge, sharer of knowledge, from the beautiful city Chandigarh. Now, today's topic ESG, it is the topic of law. It is the topic of management. It is the topic of humanity. And it is the topic for the lifetime. Till there is a life on this planet, this topic, there will be scope. Now, each one of us, do we feel difference in weather? Now there's a winter, so compared to a winter of 2021, do we feel a difference? What is your answer? Put in the chat box. So I'll see that there is a participation, the answer is, yes, there is a difference. And this difference is because of environment. So, the three alphabets which are there, ESG, means environmental, social, and governance. Now, what these three alphabets means, and what is the significance, why be as a commercial professional, or as a business person, or as a layman should know about ESG. Now, these three terminology are different than terminology which we have been using like sustainable development, terminology like corporate, social responsibility, CSR, and there are other terminology like global warming, climate change mitigation. So, the first time this word ESG has been used, I would request because make me co-host, so if I wish to share my PPT and want to solve some other knowledge things, I can do that. So, environmental relates that when any business enterprise is doing any commercial activity. But you have been allowed to share PPT. Okay, so this terminology for the first time ESG is used by, there is a report of International Finance Corporation. In 2005, this terminology came integrating environmental, social, and governance value drivers in asset management and financial research. First time, something which was talked about the environment was in 1972. We are in 2022. So, this is about 50 years back. So, there was a United Nations conference on human environment at Stoke Home. And then there was a talk in 1992. There was a conference at Rio de Janeiro called Earth Summit and there was an agenda 21. Why 21? Because shortly 2000 was getting over and we had another 1000 years which we call millennium. So, I'll be using certain jargon, but those are very simple to understand ESG comprehensively. My objective is the available time of 45 minutes. I explain the subject in between, you can raise the question. And then we had a millennium development goals for 15 years, 2000 to 2015. And sustainable development goals from 2015 to 2013. Now, the PPT which I want to share is A2Z of ESG. I'll make it a full screen one minute. So, what is A2Z of ESG frameworks and reporting? So, what is ESG concept? Environmental, social governance. Why ESG? Why this terminology has become very famous? We can compare with the book of Simon Sinek. Start with why, why, what, how? So, without ESG, the businesses and this earth will not be a livable place maybe after 50 years, after 100 years. And what are the advantages of ESG value creation? And the various terminologies called climate change mitigation, greenhouse gas emission, carbon credit, carbon tax, carbon neutrality, the green buildings, the United Nations, there are six organs, six entities which work. One is economic and social council, which talks more on ESG, then there's a general assembly, international court of justice, the secretariat of United Nations Security Council, and the four pillars on which United Nations is established is the peace and security, human rights, rules of law and development. The evolution of ESG as we saw Stockholm conference and then the Rio de Janeiro and then we had this terminology who cares win. We had CSR in 2013, there's a Bruntlade commission, our common future and now we have G20, one earth, one family, one future. There are other organizations who works on ESG, United Nations Environment Program, there's a United Nations Framework Convention on Climate Change, UNDP, Principal Responsible Investment, OECD, GRI, Integrated Reporting Council. So my request to all viewers and listeners is, please do not get confused with this terminology. We spent some time, we can easily understand this, environmental factors, laws, impact assessment, ESG standards, the SEBI framework, the current guidelines which will be mandatory for financial year 2022-23, nine principles and social stock exchange, ESG metrics. So the three alphabets, environmental, covers climate change strategy, biodiversity, water efficiency, energy efficiency. So the legal part in environmental is the compliance of the environmental laws. The management part is environment impact assessment, EIA, and also how we can neutralize various pollutions which are emitted. Then the second alphabet social part is the equal opportunities. It's more on a human side, human rights of the entity and of the various organizations who are involved in the supply chain. So the health and safety, the customers and products responsibility, child labor should not be engaged. So here again, there is a law part. That means all labor laws need to be complied post. And then the third G is a governance which is business ethics, compliance, board independence, internal audit committee, risk committee, whistleblower policy, internal audit, statutory audit, evaluation of board performance. So governance, we have been seeing that since 2000 and Ron DeBuckel, Adrian Catebury, that is again a very interesting area for business as well as professionals. The independent directors and things like that. ESG, we can also say that there are three P's, people, planet and profit. So people is a social aspect. The planet is the environment and the profit is the economic value governance aspect. Now in these three things, how does the company treat the environment? In social, how does the company treat employees, consumers, various, the community? And governance is how is the company run? What is the transparency? So in the ESG, what we do is we do a measurement which is known financial. And there is also for any auditors, it is not only for chartered accountant, there's a terminology called social audit. So in environment, we do the measurement of environmental impact and sustainability of a particular enterprise, the utilization of natural resources and how in the supply chains, these aspects are covered by those who are supplying the goods. So environment improved all living and no living things, animal, plant, fisheries, forest. So especially the pollution emitting businesses, the chemical businesses, is how they are discharging their pollutes? Are they doing the treatment before they are discharged in the environment? The social aspect covers human rights, working conditions, labor policies, equality and diversity. And the governance is very important which cover the whole organization. It is a governance for the whole entity, even including the board of directors, suppliers, buyers, the employees. And so there should be a mixed board. There should be different committees, CSR committee, nomination and remuneration committee, internal audit, ethics. In companies at 2013, there are various provisions like in schedule four, we have a code for independent director. Chapter nine of the company's act contains provisions for accounts. Section 135 requires 2% of the profit to be spent by certain companies on CSR. 149 section talks about board directors, certain companies as a woman director required. Section 177 audit committee, independent director should be the chairman. And like that, we have other provisions, section 178, 134. So corporate governance is shareholders, managers, employees, then there are classes of directors, resident, independent, woman director. I'll skip certain slides. I have shared this PPD in the WhatsApp group because I want to cover the whole aspect and focus more on environment and social. So the board committees, we saw audit committee, stakeholders, nominations, CSR, and now there can be a ESG committee. And audit committee requirement, PEDUP say capital of 10 crore or more, turnover of 100 crore, aggregate outstanding loans, debentures. So minimum three directors required in case of public listed companies, independent directors who form the majority. And like this, we have a provisions in section 177. Then there's a CSR committee for listed companies similar to audit committee. One should be independent director. Now, the ESG, why it requires, because the five major advantages of ESG compliance and ESG framework is, one, the business will be more competitive. It will be more successful compared to others. Secondly, every lender, there is something called sustainable finance like Citibank has committed one trillion US dollar for they will give only to those businesses which are sustainable business. And there may be a subsidized interest rate. So the lenders and the investors, there's something called responsible investment banking. And then third is the improving financial performance. The customer loyalty and business becomes sustainable. So top line growth, cost reduction, reduced regulatory and legal interventions, employee productivity uplift, investment in asset optimization. Currently in India, only listed top 1,000 listed companies requires the ESG reporting. We call it BRSA, Business Responsibility and Sustainability Reporting. And many companies have adopted even for March, 2021, where it was voluntary. And for 23, it is mandatory. Now, few terminologies, what is climate change mitigation? Climate change mitigation is prevent emission of greenhouse gases. There are three fossil fuels, the coal, oil and natural gas. They emit more of carbon dioxide and 1,000 kg carbon dioxide is equal to one carbon credit. So we call it C, our certified emission rights. So greenhouse gas emissions is a CO2, nitrous oxide, ozone, methane. Now, before industrialization, before 1900 and compared to today, the earth warming is one degree more, one degree Celsius. And every 10 years, there is a 0.02 degree Celsius increase in the earth warming. So global warming is different than climate change. Climate change is like we are feeling that the winter is less in few places. Carbon credit is an instrument that represents the ownership of one CER. Then there is something called carbon tax. Carbon tax is the type of penalty, like now in the Paris Agreement, which has taken place in 2015. And we had a conference of parties, all 193 countries of United Nations. So we had in this conference 27, so those countries who are not following the renewable energy, whose production they emit CO2, then the buyers will put carbon tax. That means their product will become costlier. And there is a terminology called carbon neutral, having a balance between emitting carbon and absorbing carbon. And then there is a sustainability. Sustainability means my activity should not affect the efficiency of the future generations. So they should get the pure water, they should get clean air, they should get other natural resources. So it is a balance between economic growth, environmental care and social well-being. And then there are CSR provisions in Companies Act. Then there is something called green buildings. Green buildings is a building that because of its construction, it improves the quality of life of the environment. So it consumes less energy. Then there are renewable energy. So we have energy from air, water, natural resources. So especially in the cities, which are warm cities like in Rajasthan, North Rajasthan, Jodhpur, Bikaner, their solar plant is very much established there because of solar energy. Similarly, in the areas where there is a dam and those things, we have a water energy. Then there is something called sustainable investing. Sustainable investing is the balance between the traditional investing compared to the businesses who are conscious of ESG compliance, environmental, social and governance. So the Reserve Bank of India has published a paper on sustainable finance. There will be a sustainable branch or a green branch, which will give the loans only to those businesses who are in the ESG or sustainable business. One second. Yeah, thank you. If the participants want to put any questions in the chat box, they are welcome to do that. So... If they want, they can put it also on the YouTube. Those who are watching on the YouTube. Yeah, yeah, yeah. Then the whole ESG revolves around sustainable development. So what is sustainable development? This was defined in 1987. It is a development that meets the needs of the present. Like our needs, it meets without compromising the ability of our grandchildren, our children, maybe our great grandchildren. And in 2019, it was defined as satisfying the needs of current and future generations, depending on appropriate circumstances of human, natural and economic capital to provide for human welfare. You know, I as a learner on this subject, I feel this subject is going to be there permanent. And you know, like there is a saying, beauty lies in the beholder's eyes. So what are the opportunities for a professional or for entrepreneur depends on us. I as a, you know, having studied the law, studied the accountancy, company secretary, I feel as a law, there may be a cases on human rights. There may be a cases on violation of environmental laws. There may be a case on that, why ESG standards were not followed. For an auditor, there may be a social audit. There may be a ESG audit for a management consultant. How to have an ESG framework how to measure the environment impact assessment. So how we perceive this subject, the opportunities lies. Then there is a terminology sustainable business. That means a business which do not harm the environment, do not harm the community. That means one do not community, one do not engage child labor, one who do not compromise with the safety of the workers. That is on community, social side. The environment side, we do not have the environment. Then there is a sustainable finance. Sustainable finance is the taking into consideration the ESG, environmental, social and governance before making the investment decisions. And there is a sustainable banking. The strategic planning and execution of banking. I'll just see the... So since Sharmaji is saying as a professional leader, you should guide us how to position ourselves as professionals and to know how to navigate the business. See, I'll say it here. To be a leader, I would say become a thought leader. That means use social media to create an awareness and to tell the world that we know this subject. So have a YouTube channel, have a blog, have a flyer made on Kenwa or CoralDraw or similar graphic design platform and post every day one message on Facebook, LinkedIn, Insta, Twitter. So we are doing our ESG, our duty. And at the same time, the society who need our services they will approach us. So in none of the code of conduct for legal profession, chartered accountant, company secretary, cost accountant, none of the code of ethics gets violated. Procuring the business, the close five for securing the business, getting the professional work through advertisements. Then this we have seen there are six organs of United Nations. And the third, the Economic and Social Council deals with the ESG subject. And there are four pillars, peace and security, human rights. So the human rights and development is one which takes care of ESG. Now the whole subject of ESG took the first, it was talked in 1972. And there were 26 principles which were developed for action plan on the human environment. In 1987, the Brent Lent was Prime Minister of Norway. So there was a report created our common future. Now G20, India is a president from 1st December and we have one earth, one family, one future. And then there was an earth summit in 92. And then in 94, there is a body created which gives carbon credit. It's again a very interesting area. There's a United Nations framework convention on climate change. So those projects, we save emission of carbon dioxide. So on saving of 1000 kg carbon dioxide, we get one CER, carbon emission rights, carbon credit. And we can sell that in market. And those who emit more CO2, they need to buy the carbon credit. Then there was a Kyoto protocol in 1997. There's a Paris Agreement on climate change. And Paris, this was COP 21. Every year, there is all 193 countries, they get together and they decides how they will see that there is a climate change. And that's the climate change mitigation. The first report in 2004, this terminology was who cares, wins. Only those who care, they will win. And then in 2005, there are United Nations principles for responsible investment that body was formed. Principles in 2006. And 2014, the United Nations Environment Program, they launched an intensive inquiry into global financial system. Now there is another terminology used as a CSR, Corporate Social Responsibility. Now, Howard Bowen in 53, he's considered an American economist, a father of CSR. The difference in CSR and ESG is CSR we spent, it is an expenditure which is done for the benefit of the society. In ESG also, in CSR we just spend a monetary amount. But in environment, social, and governance, this is measured more comprehensively. And in 2011, the Ministry of Corporate Affairs, they came out with the voluntary guidelines on social environment and economic responsibilities. And on the basis of this, SEBI issued the VRR, Business Responsibility Report, which was for 500 top listed companies. And then there was an Earth Summit in 92, there was Agenda 21, why Agenda 21? This was for 21st century. So the comprehensive plan of action to be taken. And then in 2000, there was a Millennium Development Goals, eight goals. And after 2015, there are 17 goals which are known as sustainable development goals. I was seeing the earlier comments. Now, Subham Gupta has asked, these norms are suitable for industries operating at a very large scale. And that too in the long run, how should the small industry, especially MSMEs comply with ESG and what steps can be taken in this regard? And then ESG and CSR has been mandated under section 135 of the Companies Act, but not in other legislations and business organization. How should they be made liable again, considering the most of the small businesses? Very good question, Subham Ji. Now, answer to this is that once there is an awareness by the buyers, by the lenders, now by that awareness, every business, say on a product, if somebody writes, like say, take a mobile phone, if a manufacturer writes that they have complied the ESG framework, or in the annual report, there is an ESG report. So, in stock exchange, the market price of such a company will be more. And from the buyer's perspective, the products which will have an ESG framework compliance, there will be a more demand for those products. That is the way this awareness will come. And maybe slowly in other legislations, also this will be included. So, any movement is a progressive movement. This awareness itself is a good awareness. When the shareholders read about, say, a large listed company report, that about ESG, when the bankers see that ESG, like recently there was a seminar organized by Indian Bank Association. And I had an opportunity to address that. The Reserve Bank of India coming out with a paper on sustainable financing. So, this will grow, compliance will grow. Then Sanjay Rikhi is, how do we draw and develop potential of the business world towards ESG? Once we, the top advantages of ESG is, there will be increase of the profit, there will be the employees, productivity will increase because employees are taken care of in terms of the safety and health conditions, the security given to them. Then Sanjay, another question, do we see risk assessment framework considering ESG can be a good beginning to relate any business house to that risk? Now, see risk management, risk framework is a part of governance. In the governance, we have a risk management, we have internal control, internal audit. So, of course the risk management, where there is a good risk management, the investor will invest in the stock of that company. Manoj Kamra has put a question, what are the activities which are permissible under CSR funds? CSR funds can spend on those activities which are in the schedule 7 of the company's acts. So, these are, you know, eradicating hunger, promoting education, promoting gender equality, environmental sustainability, national heritage, then contribution to certain funds like central armed forces fund, then training for rural sports, then contribution to certain funds, prime ministers, national relief fund, like we had PM care fund. So, the contribution to the intubator for research, rural, Islam rural development. So, these are the various, there are 12 activities in 7th schedule. There are 7 schedules only in the company's act, which then Subram has asked a question, most practicable solution to sensitize the industry. However, I suggest that government, especially the history, give a wake up call to enforce the pollution control norms. Yes, it will happen Subramji. I'll share the rest of the PPT. The 17 sustainable development goals which are currently, we are in 2022 ending. So, till 2030, each country is supposed to work on this. We may not achieve 100% result. So, the first goal is that every citizen is above the poverty line. Nobody should sleep hungry, no hunger, zero hunger, good health and well-being, quality education, gender equality. In fact, all these 17 HDG, if we see the schedule 7 of the company's act, they are included there. So, clean water and sanitation. That is the 6th goal. 7th is the affordable and clean energy. 8th is the decent work and economic growth. 9th is the industry innovation and infrastructure. Then, reduced inequalities. 11th is a sustainable cities and communities. 12th is the responsible consumption and production. There is a new terminology called circular economy compared to the linear economy. The linear economy is we buy the product, we use it and we discard it. Circular economy is the manufacturer takes back that product and they find out whether there is any part which is usable, that part they will use. And the rest of the things, they will recycle. So, responsible consumption and production and climate action is the 13th goal. 14th is the life below water. 15th is life on land. 16th is the peace, justice and strong institutions. And 17th is, you know, the countries may come together to achieve these goals. Then, you know, I have put a little bit about economic and social council. This was established in 1945 when the United Nations was established. And India is also a member since 2020. And then there is a United Nations climate change. There is a COP 27, the 27th conference which was held in November in Sarm Elsek. This is the name of the city in Egypt. And the next will be the venue is not decided. Then the principles on responsible investment is only those businesses who will have ESG compliance There will be active owners. There will be a disclosure on ESG. They will promote the principles within the industry. They will enhance effectiveness. And they will report on the activities and progress towards these principles. OECD also has worked on ESG. So ESG investing, climate transitions, they have given the report on that. CAAK Ghosh, he has asked a question, there is a difference between European, American CSR concept and our Indian CSR concept. See the difference. There is no difference in the CSR. The whole meaning of the CSR is that the business has a responsibility towards the society. Like I read out what is there in the 7th schedule of the company's act. And if we look at, I also gave an example of what is in the sustainable development goals. So the whole CSR revolves around the life below earth, life on earth and below water, the environment. So there are environmental factors like temperature, air transmission, humidity and those who want to become experts in ESG, all this terminology, all this science, those who are from a known science background also can be learned easily. For a legal professionals on environment, there are many laws which will, their compliance, there is a national green tribunal which handles the environmental cases. There is a compliance under environment protection act under energy conservation act. There is an energy audit required for certain businesses. There is an air control of pollution act, 81 water, 1974. Then there is something called environmental impact assessment. So what this tool is used, before and a project is set up. So like Enron when it came to India or like what happened in Union Carbide in Bhopal. If today this would have happened, the Union Carbide would have gone out of existence in the whole world. There are ESG ratings. There are rating agencies who give the rating triple A, double A, A. Then there is an environmental score like carbon emissions, what is the product carbon footprint, financing environmental impact, climate change vulnerability, then water sourcing, biodiversity and land use, raw material sourcing. There is an environmental score for pollution and waste category, toxic emissions and waste, packaging material, electronic waste. Then environmental opportunities, clean technology, green building, renewable energy. In human social school, how labour is managed, the health and safety practices, worker training, what are the labour standards in supply chain, those who are supplying the raw materials to us. Then product liability, product safety and quality, chemical safety, consumer financial protection, privacy and data security, responsible investing, stakeholder Sanjay has asked, can we not enlist various laws under the umbrella of ESG so that it becomes easy to familiarize the industry and business towards ESG. Yes, Sanjay, we can do because in E those are the environment laws. In S, these are more of a labour laws and human rights laws. And in the governance, these are the laws pertaining to internal control, audit committee, independent directors, the performance of the board of directors, performance of the each director. So there are many reports in those areas. And you know, section 447 in Companies Act is a very salutary provision. Anyone who do not disclose an information or whose duty bound, the penalty is three times the amount involved like what it is in FEMA or other legislations. Then social opportunities are access to communication, access to finance, access to healthcare. The governance score composition of the board in terms of diversity and independence, executive compensation, ownership, accounting practices, business ethics, transparency. And there is something called, you know, ESG matrix. So in environmental pillar, how the climate change is dealt with natural resources, carbon emissions, water. In social pillar, what is the labour management, chemical safety, human capital development, access to healthcare. And similarly, governance pillar, board diversity, executive pay, ownership, accounting, corruption. Manoj's camera is saying whether CSR funds are in the public domain. Can we access CSR fund invested of any company under Companies Act? I'll just very quickly show the, how, then ESG score, then SEBI is in LODR listing obligations and disclosure requirements. There is a format for compliance report. Then there are various international frameworks like GRI, European financial reporting advisory group. There are sustainability accounting standards, board, task force on climate. So related financial disclosures. I just wanted to, you know, the question which has come from Manoj, you know, about CSR funds. CSR as well as, you know, those who are, so, you know, top 20 companies with CSR fund in India. There's a national CSR portal. So depending on, so, like in 2021, 18,000 crore, 18,000 companies were in this segment. In 1920, 25,000 crore was spent on CSR. So the Google Baba is a various information which one wants will be available. You know, there is something called one hour investing. God has given us 24 hours. And if we spend one hour every day on whatever thing which we want to learn, we can do wonder. Now this is a current reporting for top 1,000 companies. We call it BRSR, business responsibility and sustainability report. Section A, general disclosures, the detail of the company, product. And section B is management and process disclosures. And section C is there are nine principles. Now I would like to take questions, you know, I could have gone through these nine principles, but I would appreciate if there are more questions. Mr. Vikas, we can discuss the time. Those were already posted on the thing. If anybody wants a fresh question to be posted, we are more than happy to take those questions. But after your session, I think that a lot of people would understand as to otherwise also we say that as a responsible citizen also, you should be environmental friendly, socially responsible and governance free. How to do a better governance, not only within the company, within the society as such. And as you said that one has to try to improve daily and reminded of the famous book of the atomic habits by James Clear, which said that every time you do something and how beautifully explains that a small change in the mindset, small change in the habit helps you to improve better. I would say I'm taking you from what Dr. Rajmar had said that one should read that book, Atomic Habits by James Clear. It's a wonderful book. Though it goes akin to what his name is to the fact that he says clear, I think that if you read that book, the clarity of thoughts, clarity of mind and clarity of mindset would definitely be there. And once you know people like Dr. Rajmar, I'm quite sure that your skill sets and mindset would automatically improve to a level of a different point. And so thank you friends for staying connected with us and we would be happy in this knowledge sharing with all the professionals of the stature of Dr. Rajmar was despite the busy schedule, his passion to pay back to the society is what makes him move forward. And what we say that if you have some name, I would say though his parents thought of Rajmar but for us he's a king and he will continue to remain the king of hearts. Thank you everyone.