Hitesh Vaidya Director, National Institute of Urban Affairs Sayli Mankikar Head, City Climate Alliance National Institute of Urban Affairs While the term Environmental, Social, and Governance (ESG) is typically used in the context of business houses with a distinct form of responsible investment, there is a growing demand for cities to adopt these processes to attract investments, creating a resilient climate infrastructure. Trillions of dollars are invested in promises of making the world more sustainable and better to live in based on numerical scores derived from ESG records. Urbanisation is being perceived as a key driver to leapfrog towards meeting climate goals and saving the planet. There would be no doubt about the ‘What’ of ESG in cities if it were to be deployed. Such processes would help achieve SDG 11 – making cities and human settlements inclusive, safe, resilient, and sustainable communities. Cities are also critical from a climate mitigation point of view as 70-80 per cent of greenhouse gas emissions globally come from cities. As of 2017, India is the third largest emitter of GHG emissions in the world. The building stock in the country accounts for more than 40 per cent of its total energy consumption, and energy rise from buildings is increasing by 8 per cent annually. Urban India is expected to build 700 million to 900 million sq m of residential and commercial spaces. The decisions on long-lived infrastructure that cities make today will determine the impact of climate change. This includes the efforts made in both, reducing carbon emissions and building resilience. With expanding urban areas and increasing urban population, the stress on these three sectors is prominent. Hence, cities can play a significant role in not only mitigating carbon emissions from these sectors but also enhancing energy efficiency. The National Action Plan on Climate Change (NAPCC) and the National Mission on Sustainable Habitat (NMSH) draws attention to enhancing energy efficiency, heightening the penetration of renewable energy, and driving the construction of sustainable habitats. These instruments advocate for steering energy efficiency in buildings that contribute to the overall reduction in energy consumption by the built environment besides improving the quality of life. The ESG framework includes screening tools and a social and environmental checklist. This helps create socially and environmentally sound pathways and innovative approaches to ensure all plans, projects, and activities align with the economic investments. The solutions, when looked at in a granular approach, directly align with the creation of city climate action plans; bringing down greenhouse gas emissions, using low carbon equipment and material, indulging in socially responsible sourcing and waste management, and balancing green-blue assets and infrastructure which all align with the vision of several urban agglomerates. This will also ensure that adequate and mitigation measures are adopted in a particular project per the prescribed framework for that funding cycle. There is emerging scepticism about the different sustainability scoring systems and methodologies used for ESG processes and their simple objectives. This gives rise to a more standardised and contextualised form of measurement, which could be fixed by looking at existing frameworks that align with ESG structures but are more nuanced based on specific objectives. Indian cities are beginning to understand the high cost of climate change and the need for climate mitigation and adaptation. Building capacities to plan and implement climate-smart measures is crucial for successfully addressing climate risks. One such example is the Urban River Management Plan (URMP), a strategic framework for managing urban river stretches in the Ganga River Basin, which the National Mission for Clean Ganga (NMCG) drew up with the National Institute of Urban Affairs (NIUA). Directed toward river cities, this framework helps them systematically and holistically plan for interventions required to revive and sustain the rivers within their limits. Interestingly, the URMP vision is drawn up on the three elements of environmental, economic, and social and synergises with ESG pointers. The environmental vision is to develop healthy rivers that can provide an environment for diverse species of flora and fauna to flourish in their natural states. The economic vision seeks to support the livelihoods of several communities along the river ecosystem and the services they provide. And finally, the social vision aims to create an environment to make the citizens treasure the river and celebrate it as a valuable common asset, a focal point for religious, social, and recreational activities and interactions. Similarly, another framework, the Climate Smart Cities Assessment Framework (CSCAF), again drawn up by the Ministry of Housing and Urban Affairs (MOHUA) and NIUA, assess the cities through a framework that measures cities’ capacity to mitigate and adapt to climate change. A first-of-its-kind self-assessment framework on climate-relevant parameters, the CSCAF, now in its third iteration and part of the Urban Outcomes Framework (UOF), intends to provide a roadmap to Indian cities toward mainstreaming climate actions within current and future policies, programmes, and projects. These could become baselines for creating more relevant ESG evaluations for cities. However, when we look at ESG from a city perspective, the elephant in the room is the question of effective adoption by agencies, and thus to look at the ‘Why’ and the ‘How’ of climate – the action bit. First, let us look at the Why part. Whether it is climate change or a global health catastrophe like the COVID-19 virus, cities worldwide, particularly in India, were the first responders. Functions that have not been devolved to sub-regional governments through statute also end up sitting on the desks of city leaders in such disasters. With citizens raising their expectations from cities demanding more robust and resilient infrastructure, by adopting ESG, opportunities and investments in the form of sustainability funds based on social and economic well-being can be leveraged. The social aspects would include gender, children, old cities, and the differently-abled and provide better access, security, and safety from the vulnerabilities of climate change and environmental hazards. A more significant challenge is the How. This is related to effective adoption by city agencies. This has to be answered at several levels with an ecosystem approach, looking at it through enhancing skills and capacities, strengthening data governance, and creating effective institutional frameworks. Sensitisation and capacity building of city officials to effectively mitigate adverse social and environmental impacts of city investments. This will involve strengthening the institutional capacity of city agencies and addressing how they can identify and reduce the risks. For this purpose, several screening tools, techniques, and toolkits need to be developed with contextualisation, considering ground zero scenarios. Training and skilling on all three aspects of ESG will need to be imparted across governance levels, including city leaders. The next would be creating updated, relevant, and valuable data freely available and putting this into systems with a transparent approach. This would also have aspects of training and enhancing skills to generate such data and making it available in the most innovative, interactive, and accessible formats. And finally, aligning governance with social and environmental parameters, and getting action on the ground will mean having to bring in effective monitoring and reporting systems with adequate checks and balances. In conclusion, ESG for cities could be viewed through the lens of ‘Smarter Environmentalism’, a term coined by American urban economist Edward Glaeser in his famous book ‘Triumph of the city’. Glaeser posits the concept of smarter environmentalism, which means that action should be louder than words. In effect, the focus in our battle to combat climate change should move beyond raising public consciousness to projects that have a meaningful impact.About the authors Hitesh Vaidya, Director, National Institute of Urban Affairs, has more than 20 years of broad-based urban development policy, project formulation, implementation and program management experience on UN, World Bank, and US Agency for International Development (USAID) assignments. Sayli Mankikar heads the City Climate Alliance at the National Institute of Urban Affairs, New Delhi. She works on the intersection of climate policy and partnerships.