Embedded ESG: How Sustainability Metrics Are Rewriting GCC KPIs

This shift isn’t happening in a vacuum. A perfect storm of client demands, regulatory changes, and investor pressure is making ESG a competitive necessity.

• Global Client Demands: Sustainability clauses are becoming standard in contracts. A 2024 report found that 70% of global companies now consider a supplier’s ESG performance when making purchasing decisions.
• Regulatory Push: India’s Business Responsibility and Sustainability Reporting (BRSR) is now mandatory for the top 1,000 listed companies. In Europe, the Corporate Sustainability Reporting Directive (CSRD) extends climate reporting requirements to subsidiaries worldwide, including captive centers in India.
• Investor Demand: The Indian sustainable finance industry is in bust. Sustainability-linked loans have expanded at rates of 35 per cent year-over-year, which can provide financial benefits to firms that achieve their ESG targets in the form of reduced interest charges.

To integrate ESG, the following four-step journey has been proving successful to GCCs:

1. Carbon and Resource Hotspots: Leverage data and technology to monitor your environmental footprint, including power consumption, corporate travel and your supply chain impact. An example is that calculating Scope 3 of IT hardware is an essential activity.
2. Integrate ESG into OKRs: Leave behind blanket objectives. Instead of setting cost-cutting targets, set out quantifiable sustainability targets, like cutting CO₂ per employee by 12-percent in FY2025.
3. ESG-Friendly Supplier Contracts: Require your vendors to self-report on their ESG compliance so that your organisation is prepared in the case of new regulations like BRSR and CSRD.
4. Link ESG to Rewards: Eliminate leadership bonuses based on business growth and focus them towards the attainment of important sustainability enactments, including energy efficiency enhancements, waste reduction and employee diversity in recruitment.

Beyond the traditional financial metrics, these are the new numbers driving success:

It is not only a conceptual change but also a practical change to ESG that is currently taking place:

• A major tech hub in Bengaluru, India, achieved an 18% reduction in its electricity bills through the migration of workloads to a data center that operates on a renewable energy supply.
• A Pune R&D GCC won a $50 million A multi-year contract by proving itself capable of assisting the client to achieve their Scope 3 reduction objectives.
• An employee wellness center in Hyderabad raised employee retention rates by 9% by incorporating ESG-based wellness policies in work practices.

It is estimated that India’s GCC sector will realise more than $100 billion in revenue and 2.8 million direct jobs by 2030, with a potential of 2 per cent of Indian GDP. Among the GCCs that will show this growth are the ones that embed ESG into their core strategy. They will be in better positions to pursue high-valued international contracts, access to high-calibre human resources, as well as favourable funding.

We foresee that AI-enabled ESG dashboards will become commonplace to track both market expansion strategy compliance and performance in real time. The cities with increased renewable energy capability can also become the citadels of ESG-preferred GCC clusters, further establishing India as the destination of next-generation captive centers.

ESG is no longer merely a compliance box. It is the latest currency of the competitive advantage. Leaders of the future will not only provide results but will provide them with a clear conscience, a carbon label and a diversity badge.