1. India’s rise in the global supply chain: The supply chain and logistics sectors stand at an inflection point and is poised for exponential growth. This growth is driven by factors ranging from rising disposable incomes, government initiatives like “Make in India,” and the rise of emerging technologies.

• AI will be the foundation for supply chain resilience: In the coming year, the country will accelerate building autonomous, AI-enabled supply chains to enhance operational efficiency and responsiveness. As companies navigate more complex supply chains, AI-enabled programs will be essential for them to stay competitive and efficiently address issues as they happen. Organizations will use cutting-edge capabilities along with additional tools like digital twins to monitor asset wear and tear, enhance lead-time predictions, and investigate production problems more quickly. Businesses will be able to produce quantifiable business results even when disruption seems like a normal part of life if AI is integrated, relevant, and accountable.
• Anti-fragile supply chains will become the new normal: ‘Anti-fragile’ supply chains will be the defacto standard, as Indian businesses strive to future-proof their supply chains from incoming disruptions. Using data-driven technologies such as analytics and machine learning, organizations will be able to better predict risks, enhance business resilience, and optimize operations. For a diverse manufacturing ecosystem with a growing export potential such as India, anti-fragile supply chains will not only be a necessity but a strategic advantage enabling industries to stay competitive in increasingly dynamic market conditions.

2. India’s rise as the data powerhouse: India is rapidly transforming from an emerging market to a developed economy and digital technology with all its data sits at the center of this evolution. The government’s focus on fostering secure data privacy environment is an impetus to fostering conducive business climate and stakeholder confidence.

• Establishing trust in data will become the top priority for leaders.ÌýIn the AI era, data will be the cornerstone of resilience and creativity. Businesses will continue to find it difficult to employ emerging technologies like artificial intelligence (AI) or make well-informed decisions if they lack confidence in the data they possess and use. It will take more than just technology to establish this trust; leaders must increase data literacy and adopt a data strategy that prioritizes quality and capacity.
• A data fabric will become accepted as a pre-cursor to using AI at scale: Making sure AI is reliable, accountable, and pertinent is still a major concern as companies use it more and more to spur innovation. AI systems must be trained on actual, business-specific data rather than artificial or generic data to produce precise, useful insights. A growing number of enterprises will employ a data fabric as their data strategy to make this a reality because it offers the deep business context and semantics needed for AI to be applied in actual business applications.

3. AI will become a critical component of customer experience: In 2025, AI will be at the heart of all customer experiences, helping businesses understand and connect with their customers like never before. Companies will use AI to deliver hyper-personalized interactions, seamless automation, and predictive insights, making every interaction thoughtful, instant, and meaningful. From intelligent copilots handling complex inquiries to sentiment analysis enhancing emotional connections, AI will help businesses customize models for unique operational needs, and drive flexibility, competitive advantage, and innovation at scale, creating customer experiences that not only meet but exceed expectations.

4. With potential policy changes on the horizon, leaders must prioritize transparency to reduce risk and boost sustainability: In 2025, we will see companies focusing on their ‘green lines’ — measuring environmental impact —alongside the traditional top and bottom lines of revenue. Enhanced connectivity with everyone and everything in your ecosystem will increase transparency and traceability in supply chains. Leaders will prioritize visibility and transparency to gain real-time insights, enabling them to monitor operations and safeguard against unethical practices. As the coming year brings a shift in policy and governance priorities, technology solutions can help businesses track their compliance with constantly changing regulations to back up their sustainability claims. For instance, India is likely to see increased emphasis on local sourcing and production, prompting businesses to refine their tracking of materials at every stage, ensuring accountability and fostering sustainable practices throughout the supply chain. Enhanced visibility will also help manage risks and improve collaboration among supply chain partners.

By 2025, India will cement its position as a global economic powerhouse, driving innovation through AI and resilient supply chains. As we keep our focus on cutting-edge technologies, data trust, and sustainability, India is set to create a competitive edge in an increasingly interconnected global marketplace. These trends will enable India to rise as a global leader, poised for exponential growth in the digital era.

• The author is Manish Prasad, President and Managing Director, 51·çÁ÷Indian Subcontinent.

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As 2023 gets underway, let us look at how green trends are poised to transform the auto sector:

Electric Vehicles (EVs) going mainstream

on the back of the Paris agreement signed by the government to reduce carbon emissions, improve air quality, and reduce oil imports. 2023 will see an uptick in EV offerings as auto brands help fill gaps in the public transportation network. Further, electrification of the last mile will be prioritized by introducing electric pickups, SUVs, plug-in hybrid EVs, e-three-wheelers, e-buses, and e-bikes, among others. Emerging technologies, ranging from , and the to , will accelerate this shift further by aiding in demand forecasting, route optimization, cost savings, and compliance.

Greener supply chains will spur net zero goals

Innovation in the auto industry will have a ripple effect on the logistics sector with technologies such as machine learning and Big Data analytics creating intelligent supply chains. This will ensure better utilization of storage capacities while avoiding empty runs in logistics. Additionally, efficient information flow can improve decision-making across the value chain.

Digitization will be a force multiplier for sustainability

AI and IoT’s emergence as potent drivers of improving vehicle and manufacturing performance will allow for wider adoption of these technologies and further result in reduced operational costs, product optimizations, enhanced business efficiencies, and better driving experience. For instance, AI-enabled monitoring systems can enable real-time monitoring of the factory power grid and energy usage. Improvements in monitoring blind spots, alerting drivers of dangerous conditions, and adjusting body position during a mishap will be driven by technology. This will result in creating more sustainable practices and processes within the sector.

Embracing Metaverse will bring us closer to sustainability

Metaverse has successfully penetrated the auto industry and is already catalyzing sustainability, specifically in the production phase. Through virtual analysis, real production has improved drastically as it eliminates unnecessary testing and development costs and improves operational and product efficiency. Crucially, it helps in reducing CO2 emissions generated during all production processes. Renault, one of the leading international automobile companies, believes Metaverse can lead to optimizations capable of saving €‎320 million on processes and €‎260 million on the costs of storage, by 2025. The automaker estimates that their shift to Metaverse will cut down their overall carbon emissions by 50%.

Data defining the future of sustainable mobility

ÌýUndeniably, innovation is a product of accurate data, and this applies to automobiles as well. In the coming years, AI-powered data engineering will play a huge role in tracking emissions. Real-time processing and analysis of data collected from sensors, combined with AI’s power and predictive analytics, will result in faster and smarter decision-making.

Push for a circular economy will be crucial:

Government programs like Corporate Average Fuel Economy (CAFE) norms, upcoming vehicle scrappage policy, or commitments under the Extended Producer Responsibility (EPR) will drive innovative thinking in the industry. Rethinking value and abolishing obsolete processes will help the industry transition to sustainable development. Organizations must ditch the current linear ‘take-make-waste’ philosophy and adopt a circular economy approach. Auto companies must embed sustainability right from product design and development through the life cycle of all products. Responsibility of a vehicle manufacturer will therefore extend beyond manufacturing to the post-consumer stage of the product including its take back, recycling, and final disposal.

In conclusion, the automotive industry’s contribution to harmful emissions must result in a higher responsibility towards tackling the same in a definite and permanent way. To quantify the social and environmental impact of their activities, all ecosystem players must concentrate on incorporating a green dimension into their top and bottom lines. The automobile sector will be crucial in assisting India firmly establish itself as a global leader in sustainability as we advance towards Amritkaal.

The author is Manish Prasad, Vice President – Metal, Mining & Automotive Industry, 51·çÁ÷Indian Subcontinent.

The article originally appeared in The Financial Express on February 26, 2023.

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The emerging Environmental, Social, and Governance (ESG) mandate in corporate governance presents a new challenge for Indian companies. This rides upon the Indian Government’s focus on the need to adopt ethics, transparency, and accountability among businesses to promote responsible and sustainable business practices. The focus now is on how these sustainable growth practices will contribute toward value creation for the companies and their stakeholders. ESG-led discussions are finding more airtime in discussions on decisions around mergers, acquisitions, and divestitures, as well as new product launches and innovations. But how do these factors relate to corporate performance and structuring deals? While in the previous edition, we looked at shifts in governance and reporting, this edition explores the fast-changing financial and consumer preference landscape.ÌýÌý

Financial Performance: How the lower cost of greener capital is driving ESG decisionsÌý

One of the first questions asked in boardrooms is this: “To what extent does good ESG translate into good financial performance?� The easy answer is that there is an overwhelmingly positive relationship between ESG scores on the one hand and financial returns on the other, whether measured by equity returns or profitability, or valuation. But interestingly, there is a new element in the mix: the cost of capital. There is increasing evidence that a better ESG score translates to about a 10 percent lower cost of capital as the risks that affect your business, in terms of its license to operate, are reduced if you have a strong ESG proposition.

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In a four-year study published in 2020, Morgan Stanley Capital International (MSCI) reported that companies with high ESG scores experienced lower capital costs than companies with poor ESG scores in both developed and emerging markets

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Moreover, the cost of equity and debt followed the same relationship. All these studies continue to indicate that incorporating ESG into the management framework helps companies enhance the efficiency and value of the organization while lowering downside risk. While experts agree that investing in companies that do well on ESG standards is a comparatively new theme in the Indian market, it is only a matter of time before this becomes the norm.

Consumer Preferences: The Shift to GreenÌý

We are seeing a definite green shift in the preferences of the Indian consumer after the global pandemic. Sustainability and health have become important factors when making purchase decisions. Of the Indian consumers surveyed in a recent global study, 78% were willing to change their purchasing behaviour to reduce a negative impact on the environment. (Source: ) Urban Indian consumers are most willing to do this. The percentage of respondents is the highest across all countries surveyed.Ìý

Moreover, Indian consumers are at the leading edge of the shift compared to other countries studied, including the United States, India, United Kingdom, Canada, Germany, Mexico, Spain, Brazil, and China. Across various parameters related to lifestyle choices and shopping behaviour, those surveyed in India showed higher awareness and concern for sustainable alternatives. For example

This makes it amply clear that the Indian consumer, particularly from an urban background, is increasingly concerned about the global climate crisis. If you’re a company stepping up your response to sustainable practices, such as adopting greater use of renewables in your supply chain, reducing plastic waste, and investing in ESG outcomes, your consumer will notice. Nowhere is this better illustrated than the study of Indian consumers that reported that 48% of consumers share an emotional connection with products or organizations that demonstrate eco-friendly qualities.
The shift doesn’t affect the purchase behaviour alone.

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In conclusion, the trends driving ESG in India foretell a future we will not have to fashion. We are on an inevitable march towards a greener tomorrow, led by markets and consumers. The successful organizations of the future will see that shift today before it comes as a surprise.ÌýÌý

In the subsequent post, we will deep dive into industry–specific imperatives for ESG.ÌýÌý

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As the delegates concluded negotiations in November 2021 at Glasgow, it became clear that climate commitments would reshape the agenda for businesses around the world. India demonstrated the intent to move away from fossil fuels as much, and as early as possible pledging to:

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With greenhouse gas emissions becoming central to any discussion on energy system choices, it is time to look at India’s role in the global context, given its unique challenges. As sustainability becomes critical to business success and not an afterthought, India is keen on keeping pace with the world in its race to net zero. That’s why there has never been a better time for Indian businesses to understand the acceleration of climate action across industries.Ìý

India is now committed to the energy transition of decarbonization and achieving a state of net zero emission, making remarkable progress in recent years. It now has the 5th largest solar and 4th largest wind power capacity in the world, with its total capacity being over 100 GW. But there still is a long road to travel if it is to realize its commitments, and this is where private businesses come in. Responsible companies are throwing their weight behind net-zero commitments that are outpacing the formation of supply chains, market mechanisms, financing models, and other solutions and structures needed to smooth the world’s decarbonization pathway. For the Indian business, these conditions will create opportunities to innovate and to lead coordinated action by industry peers, value-chain partners, capital providers, and policymakers.Ìý

By accelerating the strategic shift towards carbon-neutral operations, 51·çÁ÷is standing by its commitment to the role of a frontrunner in climate protection.Ìý

With sustainable development and the climate change movement gaining momentum in India, the sustainability reporting landscape is changing rapidly. The push from investors has further accelerated this movement, and it is now incumbent on companies to report their sustainability performance in order to maintain transparency with stakeholders. Sustainability reporting frameworks have evolved over time and companies worldwide have adopted these frameworks for measuring, monitoring, and disclosing performance in areas related to environmental, social, and governance (ESG). Ìý

The Evolving Indian Regulatory FrameworkÌý

While global ESG disclosures and frameworks such as the Global Reporting Initiative (GRI), Integrated Reporting (IR) and Sustainability Accounting Standards Board (SASB) are well known, India is gradually moving towards developing regulations around ESG. With the introduction of the Business Responsibility and Sustainability Reporting (BRSR) framework, SEBI has joined the group of countries and international organizations to have released comprehensive sustainability reporting frameworks. Though the reporting mandate is presently restricted to the top 1,000 listed companies by market capitalization, there is reason to believe that a wider range of companies would soon be covered under it. Advancements in the regulatory climate mean that mandatory disclosureÌýwill be part of the evolving operating environment in India. All companies will need to have policies and practices to manage and report policies related to consumption and emissions, and more crucially the leadership and intent to see these changes through. Technology will play an increasing role in internalizing the way these changes will affect how businesses are run.Ìý

Incentivizing Energy Intensive SectorsÌý

The economics of carbon offsets is going through rapid development, incentivizing energy-intensive companies to fundamentally change the way they do business. The Perform, Achieve, Trade (PAT) scheme by the National Mission for Enhanced Energy Efficiency is a regulatory instrument aimed at reducing specific energy consumption in energy-intensive industries. It operates on a market–based mechanism that enhances the cost-effectiveness of energy efficiency via certification of energy savings with ES-Certs. These can be traded on the power exchange. Meanwhile, international operations present their own regulatory norms that are driving the shifts in mindset towards a greener way of doing business. For example, the Carbon Border Adjustment Mechanism (CBAM) is Europe’s move towards sourcing more sustainable future products from countries that export to it. The move will introduce a carbon price on certain products imported into the EU, to align with the overarching goal to achieve climate neutrality in Europe by 2050. It is clear that global technology partners who have deep expertise in sustainable business practices will be better placed to partner with tomorrow’s successful companies.Ìý

As India emerges from the shadows of the COVID-19 pandemic, we are seeing the economic landscape resonating with that of the world – on a wave of activism, financial innovation, and government policies aimed at positive societal change. A growing number of CEOs, policymakers, and consumers know that big social and environmental problems, particularly climate change, are accelerating beyond the boundaries of our current system.Ìý

In the next editions, we look at evolving consumer preferences and access to greener capital markets. Stay tuned!Ìý

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