Do you feel strongly about climate change or wish to contribute to society but don’t know how to go about it? One way to achieve it is through investing in companies/mutual funds which are aligned with your values.
For instance, in the US, investors who feel that they can contribute towards a cleaner environment are backing the California-based automotive firm Tesla which produces zero-emission electric cars.
In investment parlance, this method of investing is known as socially responsible investing which is fast gaining popularity. Morningstar defines sustainable investing as a long-term approach that incorporates environmental, social, and governance, or ESG, factors into the investment process.
Investors increasing focus on ESG is evident by the growth in ESG assets globally. According to a McKinsey report, ESG assets totaled USD 22 trillion across Asia, Australia, New Zealand, Canada, Europe and the US at the start of 2016. There are 187 US-listed open-end funds and ETFs in this space, with total assets of USD 75 billion.
Back in India, ESG is still a niche market. That said, the government and SEBI has recognized the importance of adopting responsible business practices in the interest of the social set-up.
The size of the ESG linked investments in India is pegged to be $30 billion and estimated to touch $240 billion in next 10 years, as per cKinetics.
Learn how the ESG landscape will evolve in India by interacting with Sivananth Ramachandran, Director of Quantitative Research at Morningstar India, at the forthcoming Morningstar Advisor Forum on May 30. Register here.
