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Sustainable and Responsible Investing (SRI) in India grows 130% in last 5 years

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Sustainability Outlook
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November 3, 2017

NSE, Mumbai

Sustainable and Responsible Investing (SRI) in India grows 130% in last 5 years

  • Present capital deployed with SRI strategies in India is ~$30 billion (₹1,962 billion), which is an almost 130% growth from $13 billion 5 years ago, with a CAGR of 19%
  • Capital allocation in Indian equities screened using SRI strategies holds the lion share of the total responsible asset allocation for the Indian market at about $25 billion (₹1,636 billion)

Drops before the rain? - India Sustainable and Responsible Investing Landscape 2017’ report, published by Oxfam India and cKinetics will be launched at a round-table at the National Stock Exchange in Mumbai tomorrow.

The report endeavors to capture the current landscape of Sustainable and Responsible Investment (SRI) in India and investor perceptions on the sustainable and responsible investing in India. SRI considers performance of a company with respect to its natural capital (E), its interaction with the society, consumers, employees (S) and measures policies and processes of the company and management of stakeholder interests (G) to make better informed decisions. Investors are incorporating ‘ESG’ information in their financial decision-making process to have a holistic view of the companies they intend to invest in.

24 Asset Management Companies and 145 funds were analysed, as a part of the research, to arrive at the current SRI asset allocation by global and Indian investors for the Indian market. Additionally, over 35 stakeholders driving SRI in India were interviewed to map the current landscape and opportunities for Sustainable and Responsible Investment in the country.

Globally, the assets deployed with SRI strategies stands at $22.89 trillion (₹1476 trillion), with ~$30 billion (₹1,962 billion) present capital being deployed with SRI strategies in India. Though this is a small percentage as compared to the global asset, it is encouraging that there has been an almost 130% growth in Indian SRI assets, from $13 billion 5 years ago. It is also remarkable that as Indian asset managers begin to adopt ESG strategies, the benefits of acting on ESG factors is becoming high for companies.

India’s enabling disclosure policy has created a framework for companies to engage in dialogue with their stakeholders, with sustainability reports considered as the most informative source of information to investors. It is also promising to note that 75% of the international investors were aware of the annual Business Responsibility Reports (BRR). The BRR is a standardized format that the Securities and Exchange Board of India (SEBI) has mandated for the top 500 listed companies in India.

“Investors investing in India acknowledge that financial returns at the cost of environmental and social damage is not in the interest of long-term value creation. The report highlights that investors investing in Indian companies are adopting environment, social and governance (ESG) much faster than Indian companies are. This report also makes it clear that Indian companies that truly adopt ESG factors in their normal course of business will have a better chance of raising funds from institutional investors. India already has a progressive frameworks such as the National Voluntary Guidelines (NVGs) and Business Responsibility Report (BRR). More quantifiable parameters, proper mechanisms and stricter implementation of these frameworks will increase its usability. This report is an important first step in understanding India’s SRI climate, and to build upon a much needed dialogue between the different stakeholders, including civil society,” said Nisha Agrawal, Chief Executive Officer, Oxfam India

The report also reveals that investors are seeking greater emphasis by Indian corporates on their ESG data, with 29% investors perceiving that Indian corporates do not consider ESG related challenges as strategic risks. Some of the key recommendations to strengthen India’s SRI investing are:

  • There is room for increasing usability of the BRR framework with quantifiable parameters;
  • Develop and strengthen mechanism for review and increasing accountability of companies;
  • There is room to develop the dialogue on SRI between all stakeholders;
  • Developing processes and frameworks that establish credibility of ESG information is vital;
  • Insurance companies and pension funds in India should engage in the SRI dialogue

“Sustainable and Responsible Investing in India is an idea whose time has come”, shared Pawan Mehra, Managing Director, cKinetics, “it is a global trend that has picked up momentum and India is likely to be the next frontier”

About Oxfam India

Oxfam India, which is leading the India Responsible Business Forum, works towards creating an equal, just and sustainable society by empowering the vulnerable and underprivileged. We work in partnership with NGOs at grassroot-level to address core causes of poverty and injustice.

Oxfam India’s focuses its work in some of the poorest states of India, which include -- Assam, Bihar, Chhattisgarh, Jharkhand, Odisha and Uttar Pradesh. Our humanitarian teams have responded to 18 natural disasters and conflict in the last 5 years, such as floods in Jammu & Kashmir, Uttarakhand, Odisha and Assam, and we provide long-term rehabilitation interventions.

About cKinetics

cKinetics is a mission driven Sustainability Insight, Innovation & Capital Advisory Firm, working with businesses, investors industry groups as well as thought leaders to continually generate market insights and catalyze change.

For further information, please contact:

Anushua Chowdhury