Key Trends in ESG Investing in India for 2024

As India advances into 2024, the emphasis on Environmental, Social, and Governance (ESG) investing is becoming more pronounced. The Indian market is witnessing significant shifts as companies, investors, and policymakers increasingly prioritize ESG factors. This article delves into the key ESG trends shaping India’s landscape this year, highlighting how these developments are influencing corporate strategies and investor decisions.

1. Enhanced Focus on Scope 3 Emissions: In India, the focus on Scope 3 emissions—those occurring in a company's value chain—is intensifying. Indian companies are now required to measure and disclose these emissions, aligning with global trends. The Securities and Exchange Board of India (SEBI) has been encouraging more detailed ESG disclosures, including Scope 3 emissions. For instance, major Indian corporations like Reliance Industries and Tata Group are now prioritizing transparency in their Scope 3 emissions reporting, reflecting a broader commitment to comprehensive climate strategies.
2. Climate Risks and Adaptation: India is particularly vulnerable to climate risks such as extreme weather events and rising sea levels. In response, the Indian government and businesses are ramping up efforts to mitigate and adapt to these risks. Government has introduced regulations requiring companies to disclose their climate risk management strategies. Companies like are leading the way by integrating climate resilience into their operations and reporting frameworks.
3. Regulatory Developments: The introduction of the Business Responsibility and Sustainability Report (BRSR) in India marks a significant shift in sustainability reporting. As of April 2022, listed companies in India must adhere to the BRSR framework, which requires detailed reporting on environmental and social impacts. This regulation aligns with global standards and reflects a growing emphasis on transparent and standardized ESG disclosures.
4. Health and Climate Change: The intersection of health and climate change is becoming a critical issue in India. The government’s National Action Plan on Climate Change includes provisions for enhancing public health systems to cope with climate-related challenges. The recent COP28 conference highlighted the need for investments in climate-resilient health systems, with India pledging to strengthen its healthcare infrastructure against climate impacts.
5. Voluntary Carbon Markets: India’s voluntary carbon market is evolving, with increased efforts to improve the quality and transparency of carbon credits. Indian companies are increasingly participating in carbon offset programs to meet their sustainability goals. The Indian government’s carbon market frameworks aims to provide a regulatory framework for voluntary carbon trading, enhancing market integrity.
6. Investor Demand for Specific ESG Strategies: Indian investors are becoming more discerning, demanding targeted ESG strategies that align with long-term global trends such as decarbonization and sustainable development. Investment firms in India are integrating specific ESG criteria into their investment strategies to meet evolving investor expectations.
7. Higher Quality ESG Measurement and Reporting: As ESG reporting becomes more prevalent in India, there is a growing emphasis on the quality of data and the effectiveness of strategies. According to a report by the Global Reporting Initiative (GRI), nearly 90% of listed Indian companies now issue sustainability reports, with a focus on enhancing data accuracy and reporting standards.
8. Increased Investment in ESG Technology: Anticipated regulatory requirements and the need for robust ESG data management are driving increased investment in ESG technology in India. Companies are investing in advanced technologies to streamline ESG reporting and compliance. A recent survey indicates that 85% of Indian companies plan to boost their ESG technology investments by 20% in 2024 to stay competitive and compliant.

Conclusion

The ESG investing landscape in India in 2024 reflects a transformative shift towards more rigorous and transparent sustainability practices. Indian companies and investors are not only enhancing their ESG reporting and compliance but also investing in technologies and strategies to address climate risks and achieve sustainability goals. As these trends continue to evolve, stakeholders across the Indian market will need to stay informed and adapt to drive meaningful progress in ESG investing. Embracing these changes will not only meet regulatory expectations but also contribute to a more sustainable and resilient future for India.