Once primarily considered as a way to cut costs in back-office operations, global capability centres (GCCs) have evolved into strategic hubs of innovation and excellence, helping organisations drive important environmental, social and governance (ESG) initiatives. Usually set up in places where skilled talent is accessible and cost savings are possible, the offshore operations typically support multinationals’ core business functions on a global scale.
Within the sector, India has quickly positioned itself as a global leader. According to a recent Nasscom-Zinnov report, the country has the world’s highest concentration of GCCs, at 17%, with a market size of US$64.6bn, while a recent PwC India report noted that more than 100 GCCs have been set up over the past two years.
‘GCCs provide organisations with a foundation to mitigate risks’
Sustainability picture
As organisations’ responsibilities towards ESG grow, so too does the role of GCCs in supporting them. ‘GCCs are driving sustainability initiatives and helping organisations navigate the complex regulatory landscape with their deep understanding of technology, data and operations,’ says Rajesh Ojha, partner and GCC market segment leader at PwC India.
GCCs provide stakeholders with an accurate, transparent and comprehensive picture of an organisation’s sustainability performance. ‘GCCs facilitate the development of a robust risk management framework that can be integrated into business strategies,’ says Gargi Ghorpade, executive director of climate and energy at PwC India. ‘By utilising climate modelling, scenario analysis and data analytics to evaluate climate-related risks, GCCs provide organisations with a foundation to mitigate risks.’
A survey of 45 Indian GCCs by EY found that 66% are in the process of formulating internal strategies geared towards enhancing their ESG performance, with dedicated teams working closely with global sustainability counterparts. At the same time, 70% are leveraging their capabilities in reporting and technology transformation to build centres of excellence for ESG reporting: innovation hubs concentrating on advanced analytics, artificial intelligence (AI), cybersecurity and industry-specific technologies and processes.
‘The GCC is in a unique vantage point where it has visibility of data across the business value chain’
‘We see GCCs increasingly becoming a digital nerve centre for the global organisation,’ says Shalini Pillay, office managing partner for KPMG India. ‘The GCC is in a unique vantage point where it has visibility of data across the business value chain, and hence the ability to influence how they actually record, report and monitor data, including ESG and compliance data.’
Driving data consistency
Becoming an ESG-ready company requires ensuring that diverse metrics drawn from multiple data owners can support informed decision-making.
‘Companies need to start understanding where the data ecosystem of their organisation is,’ says Namrata Rana, partner and national head for ESG in KPMG India, adding that data often languishes in legacy systems or Excel sheets.
GCCs are equipped to take on many other functions like supply chains and back-end operations management – and ESG sits right with all the existing capabilities of these centres. ‘GCCs can actually contribute in a big way in the standardisation of information, standardisation of reporting and integration of those reporting standards and processes with the rest of the organisation,’ Rana says.
‘Technology solutions can automatically monitor changes in regulations’
To iron out the kinks presented in data, GCCs work closely with teams worldwide to ensure data consistency and comparability across regions and departments, says Ghorpade. ‘Utilising data analytics and automation tools, they simplify the process of monitoring, comparing and reporting ESG performance on a global scale,’ she says.
Dedicated ESG reporting software platforms have also helped to standardise the reporting process throughout organisations, ensuring that data is collected and reported in line with regulatory requirements. ‘Technology solutions can automatically monitor changes in regulations and update compliance requirements, helping GCCs maintain alignment with current standards,’ Ghorpade adds, noting that audit trails meticulously track any changes made to ESG data. ‘This thorough documentation promotes transparency and accountability for both internal evaluations and external audits.’
Risk role
In addition, GCCs are well positioned to support risk management, assisting companies in prioritising ESG initiatives by directing resources towards areas where compliance risk is high. ‘Using risk assessments and materiality analysis to avoid investing in less impactful areas, GCCs prioritise addressing ESG issues,’ Ghorpade says.
Meanwhile, reporting obligations under different frameworks require the evaluation, oversight and disclosure of various supplier metrics. As crossborder carbon regulations continue to emerge, multinational firms are evaluating their value chains to bolster their sustainability ratings.
One GCC that was part of an EY survey, for example, developed a platform that gathers greenhouse gas emission data from more than 2,000 suppliers; another created a scoreboard to assess the data quality provided by various suppliers.
‘By moving beyond regulatory requirements, GCCs are fostering sustainable practices’
‘Technology supports the integration of ESG considerations into business operations by utilising automation tools, enterprise resource planning systems and supply chain management software,’ says Ghorpade, adding that these systems can incorporate metrics and standards into the supply chain, enabling organisations to monitor performance in real time.
Take blockchain technology, which can be employed to enhance the transparency and credibility of ESG data by creating immutable records. Audit management software can also streamline internal audits through automated workflows for tracking audit trails and generating required reports for external assurance.
‘Digital tools and platforms establish the foundation for ensuring data precision and reliability, which is essential for third-party assurance,’ says Ghorpade. ‘By moving beyond regulatory requirements, GCCs are fostering sustainable practices that benefit both their organisations and the wider community.’
More information
Find out about resources and support at ACCA’s sustainability reporting hub and Accounting for a better world hub.
Accounting for the Future, ACCA’s annual virtual conference, includes sessions on topics such as data analytics, technology and sustainability. Register to attend live on 26-28 November or on demand.
