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The ESG Illusion: 3 Hard Lessons from GreenGlow’s Boardroom Wake-Up Call

Swati Balani
ESG Illusion: Boardroom Story

ESG Illusion: A Company That Believed It Was Doing Everything Right

GreenGlow Energy had become a name synonymous with sustainability in India.

Listed on the NSE, operating across solar and wind assets, and frequently quoted in media as a “model renewable energy company”, GreenGlow’s leadership genuinely believed they were ahead of the curve. Their sustainability reports were polished, visual, and optimistic. Each year, they won awards. Each year, their ESG section grew thicker, glossier, more confident.

Inside the organisation, ESG was a source of pride.

Inside the boardroom, ESG was considered “handled.”

Until it wasn’t.

The London Roadshow: When Applause Turned into Silence

The investor roadshow in London was meant to be routine. Meetings with global funds, climate-focused investors, and ESG-themed portfolios were expected to reinforce GreenGlow’s premium positioning.

The presentation went smoothly—until the questions began.

One analyst flipped through the sustainability report slowly before looking up.

“You report under GRI. Can you also show us your SASB metrics—particularly how climate risks affect asset profitability?”

Another followed.

“Your report highlights 70% renewable energy usage. But there is no disclosure on Scope 3 emissions. Why?”

A third question cut deeper.

“MSCI rates you AA. Sustainalytics categorises you as High Risk due to governance concerns. Which rating reflects reality?”

The room grew quiet.

There was no hostility. No accusation.

Just a pause that felt uncomfortably long.

For the first time, GreenGlow’s leadership sensed something unsettling: their ESG story sounded strong—but did not feel investable.

The Emergency Board Meeting: Where ESG Became a Strategic Issue

Back in India, the board convened earlier than scheduled.

Some directors felt the investors were being unreasonable.

“We already report under GRI,” one executive argued. “It’s globally recognised. We win awards. Why complicate things?”

Others were uneasy.

The Independent Director, entrusted with protecting long-term shareholder interests, listened carefully. What was unfolding was not a reporting debate—it was a trust dilemma.

And the Independent Director framed it clearly for the board:

“This is not a debate about frameworks. This is a debate about credibility, capital, and regulatory readiness.”

The board was asked to step back—and look at the bigger picture.

Question 1: GRI or ISSB? The False Choice Boards Keep Making

Why GRI Felt Safe

GreenGlow’s comfort with GRI was understandable.

GRI had allowed the company to:

GRI answers one powerful question:

How does the company impact the economy, society, and environment?

For stakeholders, NGOs, employees, and policymakers, this mattered deeply.

But the Independent Director reminded the board of an uncomfortable truth:

“Capital markets do not invest in intentions. They invest in risk-adjusted future cash flows.”

GRI, by design, is impact-focused, not financial-risk-focused.

Why Global Investors Were Asking for SASB, TCFD, and ISSB

The London investors were not rejecting sustainability. They were demanding decision-useful ESG information.

The Independent Director explained it plainly:

“GRI explains values. ISSB explains valuation.”

ISSB does not replace sustainability—it disciplines it.

The Regulatory Reality: Why BRSR Changes Everything

At this point, the board realised something critical had been missing from the discussion.

SEBI’s BRSR Core.

From the next financial year:

BRSR is not merely an Indian compliance document.

It quietly pushes companies toward:

In spirit, BRSR aligns far more with ISSB discipline than with pure GRI storytelling.

The Independent Director issued a clear warning:

“If we delay ISSB alignment, BRSR compliance will become a last-minute firefight—with reputational and regulatory risk.”

The Strategic Conclusion

The board was guided to a mature, non-binary decision:

GRI would tell the story. ISSB would protect the balance sheet.

Question 2: The Credibility Gap Between Glossy Reports and Investor Reality

The board then confronted a harder question:

Why didn’t investors believe what they read?

The Independent Director identified three deep cracks beneath the surface.

1. Scope 3 Emissions: The Risk That Wasn’t Named

GreenGlow proudly disclosed Scope 1 and 2 emissions.

But Scope 3—supplier emissions, lifecycle impacts, logistics—accounted for 65% of its carbon footprint.

And it was missing.

The Independent Director explained the investor mindset:

“When a material risk is absent, analysts assume it is unmanaged—not immaterial.”

Best practice was not perfection.

Best practice was:

Silence, the board realised, was the most damaging disclosure of all.

2. Governance: ESG Without Ownership Is Theatre

ESG responsibility at GreenGlow sat across teams:

No single board committee owned ESG risk.

The Independent Director was firm:

“If ESG is not owned at board level, it is not believed by the market.”

The recommendation:

This transformed ESG from narrative to oversight.

3. Assurance: The Difference Between Claims and Evidence

GreenGlow’s data was internally reviewed—but not independently assured.

Investors noticed.

The Independent Director reminded the board:

“In capital markets, unaudited ESG data is treated like unaudited financials—interesting, but not trusted.”

With BRSR Core mandating assurance, the path was clear:

Trust, the board learned, is built through verification—not vocabulary.

Question 3: ‘ESG Ratings Don’t Matter’—A Dangerous Illusion

One executive still resisted.

“Different ESG ratings don’t matter,” the argument went. “Investors choose whichever they prefer.”

The Independent Director countered—not with theory, but with reality.

How Ratings Shape Capital Access

Many global funds use ESG ratings as entry filters:

A “High Risk” label does not invite debate.

It quietly excludes the company.

“You don’t get rejected,” the board was told. “You simply stop being considered.”

The Reputation Multiplier Effect

Divergent ratings signal inconsistency:

The market has seen this before:

The lesson was stark:

“Markets punish uncertainty more aggressively than poor performance.”

Management Bandwidth Drain

Rating divergence triggers:

Instead of discussing growth, management explains gaps.

ESG stops being strategic—and becomes reactive.

The Board’s Realisation: ESG Is Now a Capital Discipline

By the end of the meeting, something fundamental had shifted.

ESG was no longer seen as:

It was recognised as:

The Independent Director summarised it simply:

“Sustainability earns applause. Credibility earns capital.”

The Choice That Defined GreenGlow’s Future

GreenGlow did not abandon GRI.

But it stopped hiding behind it.

ISSB alignment began—not overnight, but deliberately.

Scope 3 was disclosed—with caveats and courage.

BRSR Core was treated not as compliance, but as preparation.

And ESG finally moved from the design studio to the boardroom.

Final Message to Boards and CEOs

If your ESG report looks impressive but triggers uncomfortable investor questions, the problem is not communication.

It is governance.

In today’s markets:

And trust—once lost—is always more expensive than transparency.

Read more blogs on sustainability here.

Reference:
IFRS Foundation – ISSB and Global ESG Reporting
https://www.ifrs.org/groups/international-sustainability-standards-board/

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