3 minute read 14 Nov 2023
The role of GCCs in ESG

ESG excellence: Unlocking potential through GCCs

Chaitanya Kalia
By Chaitanya Kalia

EY India Climate Change and Sustainability Services Leader

Committed to sustainable development, a climate change expert, advisor on non-financial reporting. Digitally savvy and a nature lover. Amateur cyclist, swimmer and an ornithologist.

3 minute read 14 Nov 2023
Related topics Climate change and sustainability Sustainability Consulting Long-Term Value Workforce
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  • State of Play: the role of GCCs in ESG

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The strategic rise of Environmental, Social, and Governance (ESG) makes it crucial for Indian Global Capability Centers (GCCs) to proactively enhance capabilities, contributing to the global sustainability agenda.

In brief

  • Global Capability Centers (GCCs) are transitioning from being cost drivers to strategic business enablers and value creators for businesses worldwide.
  • In Indian GCCs’ perspective, there is a clear potential for their role as ESG Centers of Excellence (COEs), in driving corporates’ sustainability agenda at a global level.
  • However, there are a few areas of concerns that GCC’s must overcome, such as the nascent nature of ESG functions, enterprise level technology solution to manage ESG across dimensions, as well as the ESG related skills gaps, among others. 

Global Capability Centers (GCCs) are undergoing a significant transformation, shifting from cost drivers to strategic business enablers and value creators on a global scale. Within the realm of sustainability, there is a clear recognition of their potential as Environmental, Social, and Governance (ESG) Centers of Excellence (COEs). This evolution is driven, in part, by a regulatory push as governments worldwide intensify calls for non-financial reporting and stringent compliance, requiring that GCCs take on the responsibility of staying abreast of evolving regulatory landscapes.

Looking ahead, GCCs are envisioned to support organizational goals through foundational ESG reporting, creating ESG data hubs, establishing or amending process workflows for data capture, and developing a technology ecosystem for real-time ESG reporting. By assuming these roles, GCCs will be positioned as global drivers of corporate sustainability agendas.

Centralized ESG functions, such as those in an ESG COE, offer numerous benefits. These include centralized regulatory compliance, integration of siloed activities, ensuring data consistency and integrity, and effective program governance.

The integration of ESG into GCC profiles can be illustrated through several use cases, one of which is the ESG reporting tower. This tower serves as a centralized hub for capturing, analyzing, and visualizing ESG data. Additionally, there are also opportunities to utilize technology for emissions computation, supplier ESG performance analysis, climate risk profiling that aligns with Task Force on Climate-related Financial Disclosures (TCFD) recommendations, conducting Life Cycle Assessments, and preparing for assurance readiness.

While there have been improvements, there are still obstacles that GCCs in India must overcome. The nascent nature of ESG functions in comparison to more mature processes handled by GCCs poses a unique challenge. The complexity is further compounded by the fact that there is currently no comprehensive enterprise-level software solution available for managing ESG across all dimensions. Additionally, there is also a significant skills gap in the ESG domain, which must be bridged to unlock the capabilities of GCCs in this space.  

In conclusion, as organizations globally amplify their focus on ESG factors, the role of GCCs emerges as pivotal. To truly capitalize on their potential as ESG Centers of Excellence, GCCs must leverage their skills and technological capabilities. The journey ahead involves overcoming challenges, including the nascent nature of ESG functions and addressing the skills gap. As GCCs navigate these challenges, they have the opportunity to reshape global sustainability narratives and contribute significantly to the ESG evolution.

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EY ESG Compass

EY ESG Compass is a comprehensive digital ecosystem that seeks to help organizations evaluate their ESG maturity levels and adapt a sector-specific strategy, using the power of analytics.

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How EY can help

Global Capability Centers

As Global Capability Centers (GCCs) are evolving from being a source of cost arbitrage to becoming Global Value Organizations, the EY GCC Advisory practice is supporting the GCC community in India to drive digital transformation and innovation.

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Sustainability and ESG strategy services

EY sustainability and ESG strategy teams can help you create long-term value through strategy, M&A, capital allocation, ESG due diligence and portfolio optimization.

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EY ESG Compass - Innovation to transform sustainability journey

EY ESG Compass is a comprehensive digital ecosystem that seeks to help organizations evaluate their ESG maturity levels and adapt a sector-specific strategy, using the power of analytics.

Read more

Summary

There is significant potential for GCCs to act as ESG Centers of Excellence, playing a pivotal role in advancing corporate sustainability on a global scale. Although their role in enhancing business resilience is still evolving, they are actively making substantial contributions in crucial areas related to governance, environmental conservation, and social development.

About this article

Chaitanya Kalia
By Chaitanya Kalia

EY India Climate Change and Sustainability Services Leader

Committed to sustainable development, a climate change expert, advisor on non-financial reporting. Digitally savvy and a nature lover. Amateur cyclist, swimmer and an ornithologist.

Related topics Climate change and sustainability Sustainability Consulting Long-Term Value Workforce
Upvote