Businesses can empower SMEs with training, support, and incentives to overcome ESG barriers and drive continuous improvement across the supply chain, says Wilfred Sigler, managing director of Crif Solutions

In recent years, the economic and financial impact of climate change and environmental, social, and governance (ESG) risks have gained significant recognition. As a result, ESG funds have gained traction in India, with companies increasingly prioritising these factors. Both investors and regulators are urging companies to make ESG-related disclosures to their stakeholders.

The use of ESG ratings and related products by investors is also on the rise, with many factoring ESG criteria into their investment decisions. Talking with BW Sustainability World, Wilfred Sigler, Managing Director, Vas India and South Asia, Crif Solutions, highlighted key barriers such as lack of awareness and resources among supply chain partners, particularly SMEs, to adopt ESG practices. He believes that businesses should regularly monitor and provide feedback to ensure continuous improvement across the value chain.

Edited Excerpts:

How does Crif’s ESG assessment platform, Synesgy, help companies understand the specific environmental, social, and governance risks that may not be immediately apparent in their current operations, especially for companies new to ESG?
Operating in 90 countries, over 500,000 companies worldwide are under Crif’s Synesgy platform on supply chain basis. With more than 25 languages, It provides companies with a comprehensive ESG assessment framework that identifies potential risks across environmental, social, and governance factors. The assessment framework and methodology lead to a scoring engine which helps companies identify the areas for improvement. The technology-enabled action plan helps companies to get on par with Industry Standards and sustainability principles while suggesting areas for improvement. For companies new to ESG, it highlights areas underscore buckets from all parameters, helping companies enable changes and monitoring those particular elements. Offering a structured analysis of risks based on global standards (like GRI and UNSDG), enables companies to uncover hidden ESG risks and create a clear roadmap for improvement, even for organisations unfamiliar with ESG frameworks.

What kind of data-driven insights have you seen through Synesgy that highlight the potential for ESG improvements within Indian companies’ supply chains, and how can businesses leverage these insights to drive long-term sustainability?
Through Synesgy, we have observed data-driven insights that reveal ESG gaps within supply chains, such as poor environmental practices or inadequate social responsibility efforts. These insights allow companies to identify ESG Risks among the suppliers and the action plan feature for suppliers encourages improvements.

Businesses leverage features like Performance Measurement and Action Plans by setting up targeted action plans, working with suppliers to improve ESG compliance, and using data to monitor progress over time. This drives long-term sustainability by fostering stronger relationships and a more resilient supply chain.

Governance has turned out to be an important factor in supply chain assessments. Understanding a simple factor that how many of the suppliers are actually have renewable energy facilities and plants in their premises can help buyers enable decisions for making their supply chain or products greener and less CO2 emitting.

Utilising tools like Synesgy, businesses are better positioned to enhance their operational efficiency and stakeholder trust, leading to long-term success. Businesses can align operations with sustainability goals, ensure compliance with environmental and social regulations, and ultimately contribute to a more sustainable and resilient business model.

Given that the BRSR guidelines are still in a nascent stage in India, how do you think these standards could evolve in the next 5 years, and what role do you see Crif playing in shaping that evolution?
The BRSR guidelines are expected to develop in the coming years, becoming more comprehensive and aligned with global ESG standards. As these guidelines evolve, Crif, leveraging its experience with European ESG practices, will continue to support businesses in India with tools like Synesgy, helping them comply with emerging BRSR requirements. We aim to play a role in guiding companies through these changes by adapting our platform to meet evolving regulatory needs, thus fostering broader ESG adoption.

As Crif operates across both credit and ESG services, how do you integrate insights from the financial risk perspective with ESG assessments to provide a more holistic view of a company’s overall sustainability?
Crif integrates financial and ESG data to offer a comprehensive view of a company’s sustainability. By combining credit risk analysis with ESG assessments, we can provide businesses with insights into how their ESG performance influences financial stability and vice versa. This integrated approach allows companies to assess not just the financial risk but also the long-term viability of their operations, aligning both financial and sustainability goals for better strategic decision-making.

In terms of ESG adoption, many companies face resistance due to costs and resource constraints. How do you encourage companies, especially SMEs, to invest in ESG assessments despite these challenges?
We emphasise that ESG assessments are a long-term investment in business sustainability. For SMEs, we provide software-as-a-service solutions that are tailored to their needs and budgets. Through Synesgy, companies can start small, focusing on areas where they can make quick improvements, which will yield significant long-term benefits. By positioning ESG as a means to enhance competitiveness and attract investors, we help SMEs see it as a strategic investment rather than an additional cost.

How do global ESG standards, such as the Global Reporting Initiative (GRI), compare with the BRSR guidelines in terms of their approach to measuring social impacts, and what can India learn from Europe’s earlier adoption of ESG norms?
Crif’s platform aligns with over 50 frameworks and 5,000 plus ESG metrics through its harmonised digital taxonomy, simplifying compliance with global sustainability standards. ​Global standards like GRI are more comprehensive, covering a wide range of social, environmental, and governance issues. The BRSR guidelines are more tailored to Indian Companies. While GRI offers a broader, more global perspective and is open for all to report, BRSR focuses on the local Indian context and is mandatory for the top 1000 listed companies as per MCAP. India can learn from Europe’s early adoption of ESG norms by aligning its standards with international frameworks, which would facilitate cross-border comparisons and improve global competitiveness.

You mentioned the need for internal alignment across different departments in a company to implement ESG practices effectively. What steps should organisations take to ensure seamless collaboration between diverse departments, such as finance, operations, and sustainability teams?
To achieve seamless collaboration, companies need to establish clear communication channels between departments, fostering shared ownership of ESG goals. Internal ESG champions should be appointed within each department to ensure consistent alignment. Regular cross-department meetings can help align the financial, operational, and sustainability teams around common ESG objectives, ensuring that the ESG strategy is integrated into all areas of the business.

How can companies use their ESG ratings or certifications to not only attract investors but also strengthen their relationships with customers who are increasingly prioritising sustainability and ethical practices?
ESG ratings and certifications help companies showcase their commitment to sustainability and build trust with both investors and customers. Companies can display their ESG score on websites, marketing materials, and social media platforms to enhance credibility. Additionally, by demonstrating ethical and sustainable practices, companies can attract customers who prioritize these values, thereby increasing customer loyalty and engagement.

With India’s evolving ESG landscape, what do you think are the biggest barriers preventing supply chain partners from complying with ESG standards, and how can businesses overcome these barriers to create a more sustainable value chain?
One of the key barriers is a lack of awareness and resources among supply chain partners, particularly SMEs, to adopt ESG practices. To overcome this, businesses can provide training and support to suppliers, helping them understand the benefits of ESG compliance. They can also create preferential arrangements for suppliers that meet ESG standards, incentivising others to follow suit. Furthermore, businesses should regularly monitor and provide feedback to ensure continuous improvement across the value chain.