Corporate Governance and Esg Performance in Indian Power Sector

Abstract

Purpose

The power sector in India exhibits substantial investment, wielding the potential to significantly influence the nation's economic growth. Given this pivotal role, it is imperative to assess the Environmental, Social, and Governance (ESG) performance of entities within this industry. Such an evaluation should delve into the causal factors, particularly focusing on Board characteristics..

Methodology

In this investigation, the ESG score model is employed to discern the characteristics of Environmental, Social, and Governance (ESG) components within the identified companies. The analysis involves scrutinizing textual materials through content analysis, subsequently classifying them. The selection of firms for sampling was conducted by considering the companies' overall size, determined by the gross market value of their shares in India, and the accessibility of pertinent reports and documents.

Findings

This research reveals that a well-defined Vision statement, aligned with national or international ESG guidelines, is predominantly associated with enhanced ESG performance. Companies with favorable scores also exhibit the adoption of value creation strategies across the standard capitals for ESG, including Financial, Manufacturing, Intellectual, Human, Social, and Natural dimensions. Additionally, the classification of board characteristics is identified as a significant factor influencing ESG scores.

Value of the Study

The study's discoveries represent a unique contribution to the business landscape and its ESG contributions. By establishing a connection between organizations' articulated commitment to ESG and their tangible performance, the research scrutinizes and assesses the effectiveness of the ESG model within the Indian Power sector—a novel endeavour not undertaken previously.