In this article, we will discuss Significance of ESG Funds. So, let’s get started.
As ESG funds gain momentum in India, companies will be forced to improve governance and ethical practices, and act with greater social and environmental responsibility.
As the policy framework changes, companies that do not alter business models or become more environmentally sustainable, could have their revenue and profits impacted in the long term.
Globally, many pension funds and sovereign wealth funds do not invest in companies that are seen as polluting or socially not responsible.
Alongside the greater attention on issues such as climate risk, emissions, supply chains, labour rights, anti-corruption, etc., certain concerns have been flagged as well.
Greenwashing is one of the top concerns among global institutional investors.
Greenwashing is considered an unsubstantiated claim to deceive consumers into believing that a company’s products are environmentally friendly.
Investment experts have also pointed to the tendency of fund managers to overweight certain stocks and companies in a situation where most large investment-friendly companies have fallen short of the qualitative and quantitative parameters used for ESG investing.