ESG Investing and India Inc

The rise of #ESG investing has had profound implications for India Inc. As the world’s largest democracy, India has prided itself on its sustainability and its emphasis on principles of good corporate governance. In this sense, ESG investing offers an opportunity to create further positive change in the country's corporate culture. ESG stands for Environmental, Social and Governance, and these three pillars are at the core of ESG investing. By investing in companies that align with sustainable values, investors can make sure their money is supporting companies that are making an effort to reduce environmental harm, promote social welfare, and ensure good corporate governance.

As ESG investing has become more popular, it has been embraced by Indian companies as well as institutional and individual investors. Some of the most prominent Indian companies to embrace ESG investing are Infosys, Tata Power, and Reliance Industries. Many of these companies have incorporated ESG into their corporate governance scheme, with policies and targets related to environmental protection, corporate social responsibility and good governance initiatives. Additionally, ESG investing has been spurred on by the implementation of the National Voluntary Guidelines on the Implementation of Responsible Business Practices by the Indian government. These guidelines are designed to promote a sustainable approach to business conduct and include factors such as adequate resource utilization, considering the interests of all stakeholders, and promoting gender equality.

The influx of ESG investment into India Inc has sparked a positive ripple effect, with other companies beginning to focus on reducing their carbon footprints. The 21st century has seen an upsurge in investments geared towards a more sustainable future. Environmental, social, and governance (ESG) investments are becoming a popular way to both create economic returns and promote sustainable values. ESG investments emphasize a holistic approach to investing by including more than just the financial performance of a company.

ESG investments operate similarly to any other type of investment: you are pooling money together to acquire a stake in a company that you believe has the potential to earn you a return on your investment. The difference between ESG investments and traditional investments is the criterion used. Instead of focusing on solely financial performance, ESG investments take into account a company’s environmental and social impact, as well as its corporate governance practices. In essence, ESG investments focus on the?three Ps—People, Planet, and Profit.

Given the attention and money provided to ESG investments, it’s no surprise that this sector has been growing in recent years. The potential for long-term returns on ESG investments is attractive to many investors, particularly those interested in generating returns while working for the greater good. For instance, a potential investment that considers water conservation and the environment may be viewed positively, as it could have long-term benefits in preserving natural resources.? From an organizational standpoint, ESG investments can be seen as an extension of corporate social responsibility. Companies are striking a balance between making profits and focusing on sustainability.

The world has been facing the looming threat of global warming and climate change for the past couple of years and this has generated attention towards ESG investments in India that are aimed at helping the environment. ESG stands for Environment, Social and Governance, and these investments help foster sustainable growth.? The Indian government has set a target of achieving carbon neutrality by 2047 and has set up guidelines to support and promote investments in clean energy and green initiatives. India is expected to be the third-largest producer of solar energy in the world by 2022, and many contributing investors such as renewable energy firms, venture capitalists, and others have been helping the country achieve its goal.?

Lack of skilled ESG Professionals is a major roadblock

India is working towards achieving a net zero carbon economy by the year 2030 and is making efforts to reduce carbon footprints and create a sustainable environment. However, the country is facing a major roadblock in the way of achieving this goal – the lack of skilled professionals to drive the country's ESG (Environmental, Social, and Governance) initiatives. In India, ESG has only recently started gaining prominence and there is a huge lack of professionals who specifically specialize in ESG and understand the complexities of the environmental and corporate governance related aspects. This is leading to inadequate implementation of ESG initiatives in India and is hindering the country’s progress towards a net zero carbon economy. In order to overcome this challenge, it is essential to focus on providing ESG professional training opportunities, recognizing ESG credentials and qualifications, and creating a practitioner's network to promote knowledge-sharing. Organizations such as Network 18 Environment, CII Institute of Corporate Sustainability and Responsibility, and IICSR have taken the lead in terms of providing these training opportunities.?

In addition, industries and companies should also focus on developing and empowering their existing employees to understand ESG issues, and use this understanding to promote sustainable development practices. Professional ESG certifications also hold a lot of potential in elevating India’s ESG capabilities and promoting sustainability among businesses.?

As the Indian government works to reach its net zero emissions target by 2030, one of the major roadblocks is the shortage of skilled ESG (Environment Social Governance) professionals. These professionals are needed to help businesses and governmental organisations understand the complex environmental and social requirements of transitioning to a low-carbon economy. In India, the number of trained professionals who specialize in ESG is very small relative to the population. This means that businesses and governments are having to rely on small, inexperienced teams of personnel to map out their net zero pathways. However, this lack of expertise results in budgeting and resource allocation that is not optimized, decision making that is not rigorous, and failure to consider the long-term impacts of a net zero transition. Moreover, the current education system does not produce the required amount of ESG trained professionals. What is needed is for a shift in the education system that produces graduates with an in-depth knowledge of ESG and climate change that has a focus on sustainability. For instance, universities can offer courses that educate students on the science, technology and governance of ESG.

Finally, support from the government is also crucial in addressing the current shortage of skilled ESG professionals in India. A state-sponsored ESG certification program, for example, can help create a qualified talent pool of ESG professionals. The government can also provide specialised grants and funding to individuals and organisations studying or implementing ESG and climate change.