ESG Investing In India

Aparna Singh, Amity University, Lucknow Campus

Aishwarya Pandey, Asst. Professor, Amity University, Lucknow Campus

ESG investing nowadays, gaining momentum, though the investors is making investment in the corporations who are practicing ESG standards and thereby doing the right thing and also making corporate owners to build such companies and handling such operations which are as per the ESG standards. As ever-changing times, and severe climatic circumstances, a demand for such investing criteria evolved and fostered its expansion, idea that is primarily driven by responsible investors’ desire to have an influence on society and environment in addition to economic rewards of investing. This expansion is the net outcome of larger trend cycle that is being noticed throughout the world to factor in efforts to contribute to a worldwide cause and, as a result, enhance environmental conditions.

The principles behind this practice have existed for centuries in the form of religious codes and moral norms as well as cultural values. More specifically, the United Nations (UN) was the driving force behind the first ESG investing initiatives, which can be traced to the year 2004. ESG Investing is the investment strategy that takes non-financial factors, i.e. Environment, Social and Governance into consideration whilst making a financial portfolio. ESG Investing is the concept that arises from Socially Responsible Investing (SRI) and Corporate Social Responsibility (CSR). SRI is the predecessor of the ESG.

ESG investments are still in early stages in India, but they are gradually gaining ground there. Recent policy initiatives have mostly strengthened the country's focus on climate-friendly investments and private investment for green energy. Even the Government of India's Economic Survey 2020–21 acknowledged the need to combine financial and environmental policy and outlined a number of initiatives that would encourage ESG investments in the nation.