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Investment In Environmental, Social and Governance Assets in The Indian Market Is Growing, Experts Say

Investment In Environmental, Social and Governance Assets in The Indian Market Is Growing, Experts Say
October 20
09:47 2021

India’s relationship with sustainability has been – and continues to be – a tumultuous one. But things are about to change, according to experts and the latest updates in this area.

Following the recent webinar “Capturing the Essence of ESG in the Indian Market”, where experts have explored the significance of the Environmental, Social, and Governance or ESG funds in India, many topics and innovative ideas were discussed. Apart from the need to invest in them and ways of doing this, performance and growth can be better achieved with data-centric models and analytics.

Therefore, there is no denying that actions must be taken urgently, with India being the third country in the world when it comes to significant greenhouse gases emissions. Apart from this, there are numerous environmental issues present in the country, including heavy water, air, noise, and solid waste pollution. Not to mention, there is significant deforestation in India, with only 21.3% of the country containing forests now. The time has come to tackle these problems and find and implement greener solutions.

Given this reality, many investors who are environmentally conscious, and financial companies that prioritize eco-friendly initiatives and are looking to provide and increase ESG funds, are all coming together to finally change the dire situation in India due to many environmental issues.

Understanding ESG investments in India and worldwide

In countries around the world, funds and assets allocated for ESG are continuously increasing. This goes to show how other places worldwide are seeing the urgency of acting upon environmental issues. Unfortunately, these days, there is no time to waste when it comes to tackling climate change and minimizing the negative impact individuals, businesses, and organizations still have on the environment. For this reason, ESG funds are growing, according to experts. More specifically, it is forecasted for the ESG AUM figure alone to reach $50 trillion by 2025, being more than a third in total assets globally, according to Bloomberg Intelligence.

Compared to India, which only has 22 ESG funds so far, amounting to $4.5 trillion, there are as many as 10,000 label funds globally. Even though it may not seem like a lot, expert Akanksha Sharma who is the Global-Head ESG at the Indian multinational company, Sterlite Technologies Limited, emphasizes the fact that there is a rising interest regarding ESG in India. Hence, even though a comparison with the world doesn’t necessarily do India justice, there are signs of improvement. Plus, there is also potential for the public sector to collaborate with the private ones to implement data-centric models.

Steps are taken towards a greener economy in India

As mentioned earlier, India has taken third place when it comes to greenhouse gases emissions. Therefore, it is a top priority to reduce these emissions by at least 33% by the end of 2030. According to the Paris Climate accord, India has promised to reduce the levels from 2005 in the following decades. In order to accomplish this, there is a need for renewable energy projects, specifically to shift 40% of electric power from toxic sources, such as fossil fuel.

When it comes to how transparent, sustainable businesses are in India compared to other countries, and the percentages found this year by Refinitiv, a global company providing financial market data, are thought-provoking. As many as 98% of Indian companies disclose ESG strategies and sustainability reports. However, a lower percentage of 41% shows the companies that publish such reports and performance data which adhere to Global Reporting Initiative standards.

Indeed, there is a long road with many challenges towards achieving a greener economy in India, but steps are being taken. There already are many businesses that have employed a sustainable business model, encouraging a shift from negative impacts to positive ones on the environment. From beauty brands that produce chemical-free products to others that manufacture home care and organic laundry detergents, it is certain that more and more Indian entrepreneurs focus on sustainability. For example, when it comes to recycling, some businesses contact suppliers that have the machines for rental or hire, providing industrial waste compactors or balers. And, depending on the business size, you can find smaller options that fit better your business’ needs.

Younger generation to support sustainable initiatives

Now that India’s focus on sustainability is growing, like implementing environmentally friendly practices and investing more in ESG assets to promote change and minimize environmental risks, many opportunities for the younger generation in India arise. There is a massive potential for the nation’s youth to raise awareness in this direction and support sustainable initiatives.

What’s more, it is necessary for the younger voices to engage in this discussion, as there is no denying that they can be influential. They are the ones who will be most affected if environmental issues are not tackled urgently and hence have the most substantial influence in the matter. Indeed, the decision lies with government officials and institutions around the world, but with the youths being vocal and asking for urgent actions to be made, more pressure is added.

Indian consumers’ stance on sustainability is that a growing number of them are becoming more conscious when it comes to the environmental impact and footprint. Given these changing habits, Indians are shifting towards more sustainable choices, with 88% of them thinking of buying more sustainable products. This doesn’t mean that the country is close to achieving urgent milestones, but it is reassuring to see that consumer awareness is constantly rising.

Final words: What does the future look like?

There is no denying that the road towards accomplishing a greener economy and reducing heavily environmental risks and issues is long, complex, and highly challenging. This applies to many countries worldwide, not just to India. However, even though India is among the countries that must urgently tackle these issues mentioned above, there are various signs that show improvement and the possibility of a greener future. With entrepreneurs building companies on sustainable business models, more investment in ESG assets, the younger generation engaging in sustainable initiatives, there is a great potential for positive change.

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