We don’t need ESG activism: Narayana Murthy

India Inc. should adopt ESG [environmental, social, and corporate governance] as a way of doing business and not under compulsion from foreign investors, believes N. R. Narayana Murthy, co-founder of Infosys.

“I do believe that ESG is a very important framework for today’s corporations. ESG aims to enhance the harmony between the corporation and its stakeholders. Every company whether it is promoter under or not should follow the best practices of ESG since it is good for the corporation itself, just like exercising is good for keeping your body in shape... I don’t think we need ESG activism,” Murthy tells Fortune India in an exclusive interview.

Murthy's comments come in wake of the growing green chorus from climate-conscious foreign investors, who are urging Indian companies to come clean on their sustainable practices. For instance, the non-profit CDP has got a pulse on India Inc’s sustainability intent. The green NGO’s questionnaire sent to companies has the approval of the 590-plus financial investors who manage over $110 trillion in assets.

As part of the NGO’s annual (2021) Non-Disclosure Campaign (NDC), 12 investors with around $3 trillion in assets are urging 39 listed Indian companies to disclose their environmental impacts. Some of the companies that are part of the list include Reliance Industries, Asian Paints, Bajaj Auto, HDFC, and ICICI Bank—cumulatively worth $647.82 billion in market cap. Of the 12 investors participating in the campaign, the prominent asset managers are Amundi Asset Management ($1,630 billion), HSBC Asset Management ($478 billion), Aviva Investors ($448 billion), and AQR Capital Management LLC ($143 billion).

The fact that Indian companies—especially in capital intensive sectors such as commodities and energy—need to raise capital, listening to overseas investors has become a business imperative. As per data from Refinitiv, a global provider of financial market data, since 2015, Indian companies have raised $12.88 billion through green bonds.

Even as green investors are turning on the heat, Murthy’s environmental concerns were not exactly alien to India Inc. “It is not fair to say that values, sustainability, and good corporate governance have come only from the west. My business hero, JRD Tata followed the best ESG principles of his time almost 80 years ago. I have also come across so many contemporary Indian corporate leaders who are second to none in their commitment to sustainability and in their sense of fairness, transparency and philanthropy. So, let us be fair to our corporate leaders and applaud their efforts,” feels Murthy.

While India is the only country to have enshrined corporate social responsibility as an act, Murthy believes no one can help the weak, the poor, and the less fortunate people in society or a country unless he or she has the power to bring in change and is strong morally, economically and physically. “A sick doctor cannot cure sick patients. Patients go to a doctor only if he or she exudes physical and mental capacity. In the case of a corporation, strength and power comes from two important values—moral and economic strength.”

Murthy went on to add that a true leader should always put the interest of the company ahead of individual interest and need. “It is very, very important to remember that the most essential aspect of doing good, is to demonstrate excellence in values, excellence in everything a corporation does to deliver on every promise to every stakeholder and to pay every rupee of the legitimate taxes to the government. No corporation can succeed unless they become strong using legal and ethical means.”