3 minute read 5 Apr 2024
ESG GCC Survey 2024

Eight ways GCCs are anchoring global ESG initiatives

By Arindam Sen

EY India Global Business Services & Operations Partner

Seasoned technology executive with rich experience in digital transformation. Leader in setting up GCCs. Enjoys playing badminton, drums and composing electronic music.

3 minute read 5 Apr 2024

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  • Eight ways GCCs are supporting global ESG initiatives

Global Capability Centers (GCCs) need to effectively implement and transform their operations at a large scale and with speed.

In brief

  • Over 50% of GCCs are anchoring global ESG initiatives.
  • GCCs are leveraging existing capabilities to anchor end-to-end ESG implementation agenda.
  • 70% of GCCs are eying process enablement and tech collaborations. 

With 196 countries committing to combat climate change at the historic COP21, the global Environmental, Social, and Governance (ESG) regulatory landscape is rapidly evolving. European Union has enforced reporting obligations through the Corporate Social Responsibility Directive, while the US Securities and Exchange Commission (SEC) has mandated disclosure under Climate Regulations. Globally, countries are adopting diverse internationally recognized frameworks, compelling companies to report on a consistent set of non-financial metrics.

The scope of ESG is broad. Today, companies are facing significant challenges in the identification, collation and reporting of sustainability data points. Reporting on these metrics will require companies to build newer capabilities to support.

Insights from EY India's inaugural ESG GCC Survey 2024 highlight that 51% GCCs in India have initiated efforts to help their global counterparts to advance the ESG agenda. GCCs are working with global sustainability leaders in enabling the end-to-end ESG implementation journey across key capabilities such as project management, supplier risk management, process and controls enablement, reporting, technology, and analytics.

The role of GCCs as drivers of reporting and transformation is not new. GCCs are accelerating the adoption of the ESG agenda through leveraging their existing capabilities, including record to report, project management, technology transformation, supply-chain management, risk management and continuous improvement
Arindam Sen
EY India Global Business Services & Operations Partner
    ESG capabilities being built at GCCs                                           
ESG capabilities being built at GCCs

From harnessing project management expertise to establishing data governance measures, harmonizing data collection processes, assessing the impact of carbon regulations, building predictive emission models, GCCs are at the forefront of sustainability innovation. For instance, an agro commodity GCC played a crucial role in streamlining data collection and monitoring processes for over 50 ESG metrics across seven business units. These metrics were integrated into the organization’s IT systems, where ESG frameworks, logics and rules were built into the organization’s data lake. 

Another GCC developed the entire framework for internal controls in data reporting. A leading alco-bev GCC designed a supplier engagement platform with interactive Power BI reports to gather and oversee GHG emissions. The platform includes self-assessment tools for suppliers and provides ways and means to improve the supplier’s ESG score. Two additional GCCs implemented processes, workflows, and monitoring systems to track circular economy metrics, such as recycling of beer bottles and insulin pins.

As GCCs anchor global business processes, they are strategically positioned to identify the scope of ESG reporting, pinpoint process and control gaps, formulate remediation strategies and continuously improve the process. Today, 70% of GCCs are planning to assist global companies with building ESG reporting processes. In this, the role of the controller is paramount
Aman Dutta
Partner, GCC Consulting, EY India

According to the report, 70% of GCCs are collaborating or planning to collaborate with technology and data analytics support. This involves not just improving current IT systems but also rethinking data integration methods to better incorporate ESG factors. By embracing innovative solutions, GCCs are poised to navigate the complexities of ESG integration with agility and precision.

How are GCCs anchoring the technology agenda
How are GCCs anchoring the technology agenda

It is evident that Global capability centers (GCCs) play a crucial role in advancing the ESG agenda. While some have embarked on this journey, there remains substantial untapped potential. The survey highlights four critical challenges that GCCs must overcome to realize these initiatives: ambiguity in ownership, lack of buy-in from global stakeholders, scarcity of in-house skill sets, and insufficient expertise.

Given the rapidly evolving regulatory landscape, the big win theme for GCCs is to be able to implement and transform at scale and speed. ESG is a multifaceted agenda, and global stakeholders are leveraging the advantages of centralization, digitalization, and offshoring offered by GCCs to spearhead these efforts.

The article is also contributed by Aman Dutta, Partner, GCC Consulting and Ramya Agrawal, Manager, GCC Consulting.

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Summary

GCCs are moving up the value chain, with 52% of them focusing on the ESG agenda. They are now developing the necessary capabilities to implement ESG initiatives from start to finish. This includes designing processes and controls, providing technology support, conducting analytics, and managing projects.

About this article

By Arindam Sen

EY India Global Business Services & Operations Partner

Seasoned technology executive with rich experience in digital transformation. Leader in setting up GCCs. Enjoys playing badminton, drums and composing electronic music.