ESG INVESTING

Is it the future of Investing?

You must have come across an ESG (Environment, Social & Governance) Mutual Fund ad.

WHAT IS ESG?

Aim for positive social and environmental impacts through investing alongside financial returns

E - ENVIRONMENT – Aim toward the preservation and conservation of natural resources like reducing the carbon footprint

S – SOCIAL – Way an organization treats its employee and its surrounding like occupational safety or CSR impact

G – GOVERNANCE – Financial disclosure, companies ethical standard, and transparency.

Each mutual fund has its criteria for assessing the factors. Then, creating the portfolio.

DEVELOPMENT

Originated as Social Responsible Investing in 1800 by religious groups. Remained in the backdoor for the next 2 centuries. In 2006, the UN encouraged the investor to follow ESG practices. Finally, ESG was able to see the heyday.

Before FY 2019-20, India has just one ESG fund. Now, we have 7 ESG funds. By the end of FY 2019-20, we will be having around 10-15 ESG funds. Surely, crisis leads to experimentation with ideas.