An Analysis of Key Environmental, Social and Governance (ESG) Metrics in Several Important Manufacturing Segments of India

The worldwide environmental issues present an unending cycle of transition and with it comes an increasing prevalence of environmental, social and governance (ESG) disclosure initiatives which serve as a path towards encouragement of ethical and sustainable business operations and influencing the long-term viability of business. By disclosing ESG aspects, firms can increase their credibility and interest to investors who value sustainable investments. India’s manufacturing sector has consistently contributed over 15% of the country’s GDP. In response to the acute need for diversification of the economy and employment generation, the Indian government has implemented significant efforts to enhance manufacturing opportunities and this industry must gradually adopt sustainable manufacturing practices. This study has primarily focused on the leading manufacturing sub-sectors, namely oil, chemical, cement, metal and automobile industries. The study identifies those sub-sectors which are more progressive towards sustainability. Non-parametric tests, such as the Kruskal-Wallis test, Dunn’s test (post hoc test) and the Wilcoxon signed rank test have disclosed significant variations in ESG performances within the manufacturing sectors. These findings will be valuable to potential investors in identifying those segments that do align with their investment decisions and will also encourage companies to recognize and address their ESG performance gaps.