“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.”
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Shah: people are more conscious now
