Will ESG fund scoring be a win-win for all ?

From 1 April 2022, SEBI has mandated the top 1000 companies by market capitalisation to include their business responsibility and sustainability measures in their annual report. The SEBI rule will help more companies adopt ESG and disclose the same in their annual report. If ESG scoring is adopted for mutual fund schemes, it will make fund managers invest more in ESG-compliant companies. ESG scoring for mutual fund schemes will widen the choice for investors for selecting schemes with a higher ESG score. It will fulfil the Government's objective of promoting ESG. ESG fund scoring will thus be a win-win for all stakeholders.

ESG investments vs non ESG investments: A quick comparison for you to decide what you should opt for

Q: What is ESG investing?

1. Environmental (E) It measures how the companies are protecting or conserving the environment rather than damaging it. It involves reducing the carbon footprint, planting more trees rather than cutting them, minimising pollution, conserving water by recycling it, disposing of waste in an environmentally friendly manner, etc. 2. Social (S) It measures how companies contribute to the development of their employees and society. It involves ensuring gender diversity among the workforce, providing equal opportunities to differently-abled people, pay parity among genders, a low gap between the compensation of the CXOs and lowest level employees, having zero tolerance towards racism, casteism, etc. 3. Governance (G) This measures how companies follow the rules and regulations, ethics, code of conduct, whether there is a strong whistleblower policy, whether all complaints are investigated fairly, etc.

Date : 27/09/2022
Read: 6 mins

India currently has only 10 ESG funds. If we apply ESG scoring to all mutual fund schemes of all AMCs, it will widen the scheme selection choice for investors. Can ESG scoring be a win-win for all?

In recent times, we have seen the adverse impact of climate change. Seasonal patterns have changed. Summers are much hotter than before. The monsoon has become increasingly unpredictable, and rainfall distribution across the world has become uneven. Many people have noted these adverse climate changes, and hence they now prefer to invest in ESG-compliant companies and ESG mutual funds. In this article, we will look at the performance of ESG mutual funds and understand whether you should prefer non-ESG funds over ESG funds. What is ESG investing? ESG investing involves investing in companies and mutual fund schemes compliant with the ESG theme. ESG stands for: Environmental (E): It measures how the companies are protecting or conserving the environment rather than damaging it...

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