While socially-responsible investing has been gaining ground over the past few years, the COVID-19 pandemic is proving to be a turning point to recognise the importance of sustainable and socially responsible investment practices, as people look towards making more meaningful investments. In ESG (Environmental, Social and Governance) investing, investors look to invest with a conscience and hence evaluate a company’s environmental, social and governance ratings alongside traditional financial metrics.
Though ESG investing is catching up worldwide, in India, it's still at a nascent stage. But with the launch of several dedicated ESG funds in India, it's imperative to understand the importance of ESG investing in India, and share the many ways in which one can invest in socially-conscious companies. In the third webinar of the ‘Decoding the World of ETF’ series, we brought together an expert panel to discuss the rise of ESG investing, shed light on the evolving ESG landscape and explore Indian and international ESG trends.
The panel moderated by CNBC-TV18’s Surabhi Upadhyay included Swarup Mohanty, Chief Executive Officer (CEO), Mirae Asset Investment Managers (India) Private Limited (‘Mirae Asset’), Manoj Nagpal, MD and CEO, Outlook Asia Capital, and Srikanth Subramanian, Head – Private Wealth, Investments and Advisory, Kotak Investment Advisors Limited.
Here are excerpts from their discussion:
Surabhi: ESG investing has become a massive trend with a significant amount of money being poured into these funds. Can you tell us more about this?
Swarup: ESG is about an organisation not only talking about its profits, but also about its awareness about the environment, and its social responsibility to people within and outside of their organisation. So, when you combine the three together it leads to formation of organisations that can stay sustainable in the future.
When we look at investing in the past, our discussions revolved around the organisation's financials; adding a bit on their governance in the last few days to prevent governance-related issues. But, the world in the next 20-30 years is going to be very different. So one cannot ignore the environmental impact of organisations. Companies that don't focus on these key factors may not survive in the future. Hence, what appears to be fad at this moment will become the core of people's lives.
Surabhi: Though ESG funds are still picking up, fund houses in India are looking at using this theme to form an investment strategy. What are your thoughts on this?
Srikanth: Times are changing and as consciousness across all things continues to grow, we can't run away from the fact that investments are not only about maximising your returns, but also following sustainable practises. Investors are really intuitive and understand the power of environment and social issues.
Surabhi: Are you surprised to see how quickly Indian fund houses are adopting ESG investing?
Manoj: Investing using some code of conduct has been intrinsic to Indian investors for a long time, with some of the largest High Net-worth Individuals (HNI) investors following this strategy. ESG also brings in a risk framework on overall fund management portfolios, which is crucial for emerging markets. Basically, three kind of investors are enamoured by ESG; one is the HNI community who wants to make a difference in society, second are young millionaires who are more affiliated towards ESG, and third women investors who have shown empathy towards ESG.If you missed this webinar, you can watch it here:
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