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.”

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.

Don't miss this

Cover Feature

The great Indian infra dream

National Infrastructure Pipeline (NIP) offers post-Covid-19 opportunity for economic revival. But is the government up to it?

Feature

Electrifying India’s vehicles

With a shortage of fossil fuels and tougher emission norms, cars driven by electricity could be the new normal in decades

Focus

Exports show formidable revival signs

It is time for India to resolve issues and take a fresh stance in the international market

Corporate Report

The Parliament project pushes Tata Projects higher

The company has emerged as one of India’s leading infrastructure companies

Our letter to you, once a week.
Register with The CSR Weekly for free!

E-MAGAZINE
The great Indian infrastructure dream
Cyrus-Mistry-the-$20-billion-question
Man of Steel
FROM THIS ISSUE

Corporate Report

Corporate Report

F&B

Corporate Report

States

Guest Column

Social Responsibility

Innovation

Infotech company KPIT works with MAGIC in Aurangabad

Published on Oct. 21, 2020, 4:37 p.m.

The Marathwada Accelerator for Growth and Incubation Council is partnering with KPIT Sparkle 2021 to support student innovators

Social Inclusion

CRI Pumps in Coimbatore has a host of socially responsible programmes

Published on Oct. 21, 2020, 4:37 p.m.

The company works with Coimbatore Corporation and leading NGOs to organise cleaning drives and awareness programmes

Healthcare

Ola provides 120,000 meals to drivers through The Akshaya Patra Foundation

Published on Oct. 15, 2020, 2:37 p.m.

The cab company’s Foundation has expanded its outreach to the community in 13 cities

Technology

Valliappa Foundation’s Anadhanam makes a start in solving global hunger

Published on Oct. 5, 2020, 1:02 p.m.

The Bengaluru-based group’s digital platform marks the International Day of Awareness on Food Loss and Waste Reduction

Climate Change

Waste Management

GD Environmental sees an opportunity in medical waste

Published on Oct. 21, 2020, 5:34 p.m.

The company sees strong opportunities in fundamentally shifting the costs and process of waste management

Environment

India and Denmark to be at the forefront in the global fight against climate change

Published on Oct. 21, 2020, 5:33 p.m.

The prime ministers of the two countries agree to elevate India-Denmark relations to a Green Strategic Partnership

Energy

Renewables leader Rajasthan will see a dramatic shift in its generation composition

Published on Oct. 15, 2020, 2:22 p.m.

Solar and onshore wind power will meet most of the incremental electricity demand by 2029-30

Energy

Energy storage leaders call for policy measures to create Atmanirbhar Bharat

Published on Oct. 8, 2020, 11:48 a.m.

Global thought leaders and policymakers discussed the issue to mark World Energy Storage Day recently

Stay ahead of the times.
Register with The Climate Change Weekly for free!