Environmental Social Governance (ESG) landscape in the Indian Context

Responsible Investing and Environmental Social Governance (ESG) is a global trend that has off late started to pick up the momentum in India. Unlike the developed world, ESG investment is still at a nascent stage in the Indian market. If one goes by the number of signatories to United Nations-supported Principles for Responsible Investment (UN PRI) as the proxy for the penetration of ESG investment in India, there are only two AMCs which are signatories to UN PRI namely SBI and Kotak Mutual Fund. In comparison, the developed world has hundreds of ESG funds in accordance with the principles of UN PRI. Indian market has slowly started to respond to the global trends as two ESG funds worth $1 billion each has been announced recently by Quantum Investors and Avendus.

Despite the increased environmental, social, and governance (ESG)-focused conversations and growing interest of various stakeholders towards responsible investing, there are quite a lot of challenges that hinder its overall progress and wide adoption in the developing market like India. Firstly, there is a lack of clarity and understanding among the investors and other stakeholders about the ESG terminology. Secondly, there is a lot of inconsistency in the ESG ratings due to the differences in data collection, analysis and rating methodology by the ESG rating firms. The lack of reliable and standardized metrics to adequately measure the ESG factors results into discrepancy among the comparability of different firms. Thirdly, the quality of ESG information should be adequate and to the point. Too much of the ESG related information leads to information overload and creates a bid data problem. Fourthly, the role of ESG in other investment markets such as private markets is a big concern due to the inadequate disclosures and lack of availability of data.

In developed world, both individual as well as institutional investors are very active as far as ESG and responsible investment is concerned. In order to satisfy the demands from investors, asset management companies are frequently factoring in new products. Moreover, the awareness amongst investors has been created by media, regulatory bodies and various institutions. However, if the same level of awareness has to be created in India then asset management companies themselves will have to take the lead. So the scenario is just the opposite of the developed world in a developing economy like India. Though the SBI Mutual Fund has initiated the process to make the investors aware about the merits of ESG investment, but media will have a major role to play in creating mass awareness amongst investors in India. In all, it is the collective responsibility of the Indian Institutional Investors like mutual funds, banks and insurance companies to take up a leading role in embracing the concept of ESG investment philosophy into their investment decisions.

‘Bottle a Plant’ campaign

An initiative to create a tiny school grown forest…

Children are the future of this planet and it is important to catch them young and inculcate the habit of valuing nature right at the beginning. This thought propelled me to initiate a unique 'Bottle a plant' campaign with an aim to mobilize the children as nature guardians to raise environmental consciousness.

Think of a typical school going children who usually carry a bag, Tiffin, and a water bottle. All of us carried the same at some point of time in our life too. But ever wondered what happens to the leftover water in the water bottles once the school gets over and the child returns to home?? I saw these often getting landed up into the wash basins or wasted conveniently anywhere else. Isn't it??  Now, Can this small yet substantial amount of water be utilized for some constructive use? 

I have an idea. A unique yet simple one!

It's about watering the plant with the leftover water by the school children to create a small patch of forest within the school premises itself with the advanced Miyawaki technique. A small patch of the area will be designated in the school premises and the children from each standard will regularly water the saplings from the leftover water in their water bottles every day after school time. Thus a tiny school grown forest in no time can be generated in the school premises itself.

Broadly speaking, this idea is directly linked to SDG 11 (Sustainable cities and communities) and SDG 13 (Climate Action). The successful implementation of the idea would reap multiple benefits such as improving the microclimate, generating carbon sinks, creating environmental awareness and improving the local biodiversity.

“We are talking a lot about rebuilding the roads, schools, industries, but rebuilding the environment is rarely discussed’’. ‘Bottle a Plant’ campaign is one such small initiative to rebuild the environment with the help of school children acting as nature guardians in creating a climate of change.

How can India pursue economic development while conserving nature?

I perceive development as the process of change, a change required for better living and existence. However, the change should be guided by the proper direction which involves all three aspects of triple bottom line i.e. social, environmental and economical.

In the present era, economic development is the agenda of almost all countries in the world and so it is of India. All are making a blind run behind the development and ignore the large-scale destruction of the environment. However, Bhutan remains an exception. I consider Bhutan as the most developed country which knows how to live in harmony with nature. Bhutan reinvented the term ‘economic development’ in its own ways and since 1971, Bhutan has been considering Gross National Happiness (GNH) as her indicator of progress. Rest of the countries should learn from this tiny, yet carbon-negative country.

India being a land of villages, the development that trickles down to the most needed and marginalized section of the society would find the real meaning of economic development. But in the process of development, often there happens some kind of trade-off between environment and development. So, economic development and conservation of the environment need to go hand-in-hand. For example, wood industries must have plans for plantation.

It is the sad reality that nature is the silent sufferer in the process of economic development. But interestingly, recently a micro-forest is being created in the heart of the city Raipur by demolishing 70 odd government buildings. Such kind of eco-development models is the need of the hour and if replicated across major cities of India could also act as a solution for the burning problem of air pollution.

At one place we are talking about bullet trains and on the other hand, we don't have a proper waste management system in older trains. The beautiful 1,15,000 Km railways track, one of the biggest in the world, is, unfortunately, getting surrounded by plastic waste and degrading the surrounding ecosystems. I feel that we need to address the existing issues beforehand rather than taking a step ahead in the process of development. If we don't manage that generated waste then nature would backfire in the long run and hamper the achieved level of development.

Recently, I visited Kanha National Park and liked how the revenue generated from wildlife tourism is being successfully diverted towards sustainable development and management of forests thereby ensuring both economic and environmental development. Such kind of inclusive models needs to be promoted at mega levels across the country.

Some of the solutions which came to my mind while thinking about this topic are:

•   Providing tax-free benefits to industries following sustainable practices. This would act as a kind of ‘Green Insurance’ to allure corporates to invest in eco-friendly practices and attain sustainable profitable business.
• Municipal corporations can also cut down the taxes for the households with sustainable practices such as rainwater harvesting, waste segregation, solar rooftops etc.
• Incentive-based plan to conserve forests with the help of farmers.
• Promotion of sustainable technologies and a sustainable lifestyle.
• Making environment and sustainability reporting mandatory for every company to reduce its environmental footprint.

Finally, to sum up it is important to realize that “We don’t have a society if we destroy the environment”. Thus, economic development can be sustained only when the environment is kept at the core of economic development.