Everything you need to know about ESG investing

In this scenario, investors too are realizing the risks posed by factors such as climate change, poor corporate governance, and so on.

May 28, 2021 01:05 IST India Infoline News Service

With rising awareness around environment protection, several stakeholder groups such as consumers, regulators, corporates and societies are adopting sustainable practices. The pandemic has further enhanced the focus on ESG. The term ESG stands for Environmental, Social and Governance.

In this scenario, investors too are realizing the risks posed by factors such as climate change, poor corporate governance, and so on.

ESG investing is also known as:

• Sustainable investing
• Socially Responsible Investing (SRI)
• Impact investing and so on

ESG investing assesses the sustainability and societal impact of an investment in a company or a business.

The purpose of ESG investing is the same as traditional investing – to generate alpha or positive returns by investing in good companies.

Inflows into ESG investments: Global
$ billion 2019 2020
63.34 168.74
Source: EPFR

Inflows into ESG funds: India
₹ crore FY20 FY21
2,094 3,686
Source: Morningstar

Watch this video to know more.

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