Business India ×
  Magazine:
Market News

Published on: Sept. 24, 2020, 5:13 p.m.
ICICI Prudential's ESG agenda
  • Shah: people are more conscious now

By Lancelot Joseph. Executive Editor, Business India

“The silver lining of the Covid-19 lockdowns, albeit a slender one, is that reduced human activity has meant cleaner air and water. This situation presents to the world a unique opportunity to carefully plan its recovery and gives further impetus to the environmental, social and governance (ESG) agenda which had already been gaining momentum,” says Santhosh Jayaram, partner and head, sustainability and CSR advisory at KPMG.

It was in 2018, when climate change increasingly came to be seen as crucial to companies’ long-term growth prospects, that ESG gained momentum. “While 2019 can be considered the inflection point as investments made record flow into ESG, The year 2020 is likely to see the focus on ESG intensify as the pandemic has helped fast-track the trust stakeholders have in ESG. Whether it is governments, investors, employees, vendors, contractors, suppliers or the community at large, they will hold corporations more responsible on ESG parameters going forward. The pandemic has given society a pause to reflect on what really matters,” adds Jayaram.

ICICI Prudential Mutual Fund has launched a new fund offering (NFO - ICICI Prudential ESG Fund), an open-ended equity scheme investing in companies identified based on the theme. This encourages sustainable investing, by investing in companies which follow ESG theme. 

“Companies will be assigned a composite ESG score based on the factors mentioned and exposure will be taken in companies by assessing them on the mentioned factors. ESG investing is synonymous with sustainable investing. In the coming years, ESG way of investing will be a new normal in India as most of the millennial and young population in India are more conscious and diligent while making an investment decision,” explains Nimesh Shah, MD & CEO, ICICI Prudential AMC pointing out that “majority of studies highlight that companies with good ESG scores tick-off most of the check-boxes for investing, tends to mitigate environmental and social risks and tends to have stronger cash flows, lower borrowing costs and durable returns.”

  • ESG focused companies show better growth which may translate into better wealth creation for investors and could demonstrate better resilience in downturns

So, the ICICI Prudential ESG Fund addresses the growing need of responsible investing and allows investors to benefit from investing in companies which are able to maintain suitable ESG scores. Shah adds that ESG focused companies show better growth which may translate into better wealth creation for investors and could demonstrate better resilience in downturns.”

So, the scheme will invest 80 to 100 per cent in companies with strong ESG scores which reflects the strengths and stability of the companies. It can also invest in foreign securities i.e. global companies with a high ESG score, “The selection process of the scheme will be based on internal research and/or from the Nifty 100 ESG universe,” adds Shah.

In India, the ESG concept is at a nascent stage and has huge scope to explore. Whereas globally, responsible investing i.e. ESG-based investing has been present for a while, with investors happily accepting this concept as showcased through the flows received in 2019 ($154 billion) as opposed to 2009 ($21 billion), according to a Morningstar Direct data as of December 2019.

“In a recent turn of events, for the first time, CDP, an alliance of global investors with combined assets of over $10 trillion, has accused 37 Indian companies of allegedly not disclosing the full extent of their impact on climate crisis, water shortage and deforestation,” observes Jayaram.

“The market economics were ignoring the warnings of science for some time and this incident should bring back the discussion to the forefront. This is also an opportunity for companies to enhance the trust quotient of their stakeholders. The road to recovery from this crisis should be collaborative and inclusive. It’s time to reboot corporate strategy and align incentives, create guardrails and alter fiduciary responsibility to encompass ESG priorities,” says Jayaram.

Cover Feature

Lalithaa Jewellery's shining moment

With the gold & jewellery industry catching up with the fastest-growing Indian economy, Chennai-based Lalithaa Jewellery looks to cash in on its cost advantage

Focus

Will it be glad season for the hospitality sector?

Feeder cities and spiritual tourism should bolster Indian hospitality sector

Corporate Report

TVS Mobility group hits the top gear

The Madurai-headquartered TVS Mobility Group appears to have hit the right lane for faster growth

Corporate Report

With quality products, Brigade transforms real estate

Brigade emerges as one of the leading, trusted property developers in the country

E-MAGAZINE
Modi 3.0
Economy in election mode
The untold story of the king of gold
FROM THIS ISSUE

Government

Corporate Report

Automobiles

Feature

Corporate Report

Corporate Report

Agriculture

The introduction of black pepper as an inter-crop in the sopari and coconut orchards, has enabled farmers to cultivate crops simultaneously

Skill Development

In 2020-21, the programme reached over 112,482 girls in urban and rural locations across six states in India, including 10,000 across Delhi

Collaboration

The event brought together stakeholders and changemakers to participate in a series of conversations on global trends and recent developments

Healthcare

The programme will focus on educating children on oral health and building awareness around the dangers of tobacco use

Biogas

German BioEnergy enters Indian market

Published on Aug. 17, 2023, 11:54 a.m.

BioEnergy will showcase its innovative biogas technology in India

Mobility

Ather looks to double its market share

Published on Aug. 17, 2023, 11:26 a.m.

Ather aims to produce 20,000 units every month, soon

Green Hydrogen

‘Kerala Hydrogen ecosystem a model for all states’

Published on Aug. 17, 2023, 11:06 a.m.

German Development Agency, GIZ is working on a roadmap for a green hydrogen cluster in Kochi

Renewable Energy

Adani Green eyes 45GW RE

Published on Aug. 17, 2023, 10:45 a.m.

AGEL set to play a big role in India’s carbon neutrality target