ESG – An Enabler of responsible business
ESG stands for Environmental, Social & Governance practices that are referred to when measuring the sustainability & ethical impact of a company or investment on the larger community. Large number of investors, companies & regulatory bodies are integrating ESG aspects into their business strategies, assessment models & regulations with the objective to better manage & assess risks beyond “conventional” business & financial performance.
ESG Risk exposure & performance both affect companies’ short- &long-term financial performance & business viability. A company with a strong ESG track record can attract investments from long term institutional investors particularly pension funds. Such funds have a strong voice in the international demand for enhanced ESG disclosure.
Corporate sustainability starts with a company’s value system and a principles-based approach to doing business. This means operating in ways that, at a minimum, meet fundamental responsibilities in the areas of human rights, labour, environment and anti-corruption.
ESG integration is the explicit and systematic inclusion of ESG issues in investment analysis and investment decisions. It is the analysis of all material factors in investment analysis and investment decisions, including environmental, social, and governance (ESG).
USD 40 TN invested in ESG focused investments globally (% of AUM)
India’s ESG investment to increase to 30% by 2030
ESG rating has been accepted by the investor community as a very effective tool to identify companies aligned with their investment interests. Moreover, regulators, financial institutions, think tanks, etc. want to better understand & monitor companies & industries’ ESG performance & impact on sustainable development. Equally, companies increasingly integrate ESG practices in their corporate strategy & boards & leadership teams want to be able to compare their ESG performance to that of competitors.
ESG Risk AI’ rating is an objective, independent & unbiased opinion on a company’s ability to mitigate future/emerging risks associated with Environment, Social, & Governance issues that have material financial impact based on publicly available data. Our ESG ratings foster informed decision-making when it comes to e.g. choosing ESG investments, assessing a particular companies or industries performance, reviewing ESG business strategies & identifying need for policy interventions.
“The Indian economy will be facing tremendous challenges over the next 10 years on environment, social and governance fronts. But it will also provide India with a great opportunity to be a role model in sustainable development. A robust ESG rating framework will help in creating economic incentives for adoption of ESG best practices by corporate India.”
“ESG Compliance will play a strategic role in influencing human capital management and labour governance of Indian companies. As the manufacturing and services sectors expand further to foreign markets, it will be pertinent to ensure that India Inc.’s employment standards and policies are aligned with global practices. ESG Rating will hence be a crucial tool that can establish necessary checks and empower Indian organizations to grow exponentially.”
“With a total asset under management (AUM) of over $40 trillion invested globally using some form of ESG compliance and India’s increasing integration with global markets our ESG Ratings will help investors incorporate ESG factors in their investment decisions. In India, only 7% of domestic AUM is invested in ESG funds at present and our internal estimates show this will grow to 30% in a decade. In this, around 75% of FII funds will be based on ESG themes. These figures clearly highlight the growing significance of Environmental, Social and Governance factors in investment decisions.”
“A very timely initiative by Acuité. India cannot achieve global prominence without ESG leadership and ESG ratings are critical for investors and customers to understand how our companies fare vis-à-vis their global peers.”
ESG Webinar #1 : Mar 25, 2021 Role of ESG reporting in sustainable economic development in India https://youtu.be/cFuEw7230jU SESSION 1: How does corporate performance in the management of environmental, social and governance (ESG) risks link to sustainable economic development? held on 25 March 2021 Key
History of ESG funds There are different interpretations of the origin of ethical investments, now popularly called Environmental, Social and Governance (ESG) funds. One interpretation puts the origins of ethical investment back to the 19th century when the Quakers in Britain and Ireland refused to invest in arms. Then there’s the well-documented Pax Fund launched in 1971 by the Methodists, who
Decoding ESG: How Our Rating Framework Does It?
Have an in-depth understanding of the approach to ESG Risk AI’s ESG assessment, the way it aligns with your decision-making process, and gain insights into the critical areas of responsible business practicesDownload ESG Assessment Methodology