In the global transition towards sustainable financial choices, India is making waves. Spearheading this movement are the country’s millennials and emerging High Net Worth Individuals (HNIs). Their discerning preference for ethical investments, fueled by a keen awareness of socio-environmental issues, is crafting a new narrative for India’s investment horizon.
How is Sustainable Focus helping companies?
Sustainability is more than a trend; it’s a business imperative:
Loyal Customer Base: Sustainable practices can increase repeat customers by up to 15%.
Strengthened Client Relationships: Financial advisors with sustainable portfolios foster deeper, value-driven bonds.
Market Outperformance: Companies strong in ESG often see swifter stock growth, as highlighted by Harvard Business Review.
Attracting Top Talent: 76% of millennials prioritize a firm’s ESG stance before joining.
How Sustainability is Shaping India?
While at its nascent stage, India’s journey toward sustainability is marked by robust government action, regulatory push, a surge in ESG-centric funds, and corporate commitment to greener practices.
Rise of ESG-centric Funds
Avendus Capital predicts a 30% annual growth in ESG-specific funds’ AUM over the next 5-10 years, potentially constituting 34% of India’s total AUM by 2051. Their data suggests ESG-focused companies tend to outperform their counterparts.
The Nifty 100 ESG index has been outperforming Nifty 100 for the last few years. In the past six months, Nifty 100 ESG gave a return of 17.71% compared to 15.20% returns by the Nifty 100.
Government and Regulatory Backing
Government’s Initiatives: Top Indian fund houses are on the cusp of rolling out ESG-focused offerings, with many reportedly integrating ESG research into their core investment strategies.
SEBI’s Involvement: SEBI has mandated the top 1,000 listed companies to disclose their ESG activities, aiming to enhance transparency and spur better ESG practices.
Corporate Best Practices
CEOs of major corporate houses have initiated reduce and recycle practices in recent years. Sustainability examples from few major sectors include:
Green Real Estate: With LEED-certified properties valued at INR 825,000 crore, India’s realty sector is aligning with global sustainability benchmarks.
Automotive Sector: Alongside refined emission norms, there’s a pivot toward electric vehicles and alternative fuels. Trading carbon emissions and adopting carbon indices are becoming mainstream practices for corporations focusing on ESG.
Essentials of Sustainable Investing
As the drive towards sustainable investing grows, predominantly influenced by the values of millennials but predominantly funded by HNIs, it’s important to understand that this investment approach melds financial objectives with broader societal and environmental imperatives. This includes considerations of diverse facets, ranging from climate change and resource scarcity to labor standards, human rights, and ethical business operations.
Investment Cornerstones for the Conscious Investor
Stay Updated: In an ever-evolving sustainable investment landscape, being informed is crucial. By leveraging various online resources and platforms, investors can ensure their decisions are not only fiscally sound but also sustainability aligned.
Diversify Wisely: Navigate the vast Indian financial ecosystem to uncover opportunities resonating with ESG principles. From green bonds to sustainable real estate, explore diverse avenues while always aiming for a balanced portfolio. Leading sustainable sectors often offer the most promising prospects.
Build Value-Driven Networks: Engaging in sustainable investment communities helps in refining one’s investment acumen. Platforms offering sector-specific insights abound; select those upholding transparency and reliability. By optimizing technology and networking, especially for HNIs, one can align investment choices with both financial and ethical objectives.
Conclusion
India’s sustainable investing landscape, championed by millennials and HNIs, is bolstered by strong governmental and corporate initiatives. As this trend shapes the nation’s financial future, informed decision-making, astute diversification, and building value-based connections are paramount for forward-thinking investors.
-The author is CEO, WiseX. Views expressed are personal.
Comments
0 comment