What Are Esg Funds And Why Do You Need To Know About Them

By Author: Avendusgroup
Total Articles: 19
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Environmental Social Governance funds, popularly known as ESG funds in India are an excellent form of mutual fund investments. These funds are mostly made of shares and bonds of a company and are evaluated based on certain environmental, social and governance factors. In the recent years, organisations or investment banking companies who are doing well are required to be esg compliant in order to enjoy continuous development.
Any company that wants to become ESG compliant has to go through a rigorous assessment procedure. Owing to an increasing number of organisations and investment banking companies looking for opportunities to invest in companies that are trying to create a sustainable and positive impact on the environment, ESG funds in India are on a rise. These parameters help an investment banking firm to judge a company’s culture, their motives and provides an insight into the way their management operates. Organisations that are following the ESG guidelines are looked upon favourably by the regulators and their chances of being shut down are extremely low. Apart from the regulatory measures, organisations are ...
... also expected to undertake operations that are beneficial for the environment. Investment banking firms also look at how these organisations treat their employees, if proper opportunities and a fair work-life balance is being provided and they are not being discriminated against. Maintaining proper ESG standards increases the reputation of the company and investors are motivated to invest in such companies.
The stance on ESG across the globe:
Socially responsible investing has a growing significance in the world market with over 1/3rd of the total USD 23 trillion assets under management are ESG compliant. Socially responsible investment banking includes blue bonds for oceanic development projects, green bonds for energy-efficient developmental projects, ESG themed exchange traded funds, and environmental impact bonds as well.
ESG funds in India have also seen a considerable growth of up to 32% in the recent years due to several factors – regulatory bodies making ESG compliance a norm, foreign investing, the increasing importance on sustainability and the fears of being shut down are just some of the reasons for this growth.
The future of ESG investing in India:
Investment banking companies in India are taking motivated steps to become ESG compliant since regulations have become more stringent with penalties being imposed on non-compliant companies. Being favourable about ESG funds in India helps companies gain a larger market share as non-compliant companies would struggle to cope with the regulations and they enhance the company’s credibility and reputation by manifolds thus attracting new investors while keeping the current ones.