- Date : 20/12/2022
- Read: 3 mins
A look at the relevance and importance of sustainability in future investment growth
Seven years ago, the United Nations General Assembly adopted the 17 Sustainable Development Goals for 2030. Among these goals was the goal of affordable and clean energy and a goal of climate action. While these goals have cascaded down to national governments and companies, investors too, are not left out. The concept of ESG investing is catching up, where ESG stands for environmental, social and governance. It essentially means socially responsible investing, where you balance the financial goals of your portfolio with the impact of the company on the environment, society and stakeholders. Does your investment portfolio rank high on ESG parameters? How can you achieve it?
Choosing the ESG IPOs
With sustainability high on the agenda, there is no shortage of renewable energy IPOs and other ESG-friendly stocks. One such example is solar IPOs and stocks of companies that are already engaged in it or similar businesses. Companies like Suzlon, Adani Green Energy, Orient Green Power, Inox Wind, and KPI Green Energy are examples of companies engaged in the production of renewable energy infrastructures.
Recently, the IPO of Inox Green Energy was launched – one of the best IPO to buy on sustainability parameters. IPO of NTPC Renewable Energy is expected in FY 2022-23, a company formed by NTPC in 2020. More and more energy companies are expected to open renewable energy divisions, some of which may end up raising funds through upcoming IPOs. As a socially responsible investor, these are the IPOs that you should keep on your radar.
Why It Can Be Profitable Too?
With the global focus on sustainability, there is an imminent possibility of an ecosystem getting built where companies, government policies, consumers and stakeholders prioritise the fruition of SDG goals. In such a scenario, investments in a solar IPO or a wind energy stock can reap multi-bagger returns in the years to come. When you are investing in these types of stocks, it’s a little bit like voting too. You are voting for sustainable growth potential over corporate greed, and eco-friendly businesses over exploitation of resources.
Companies that prioritise sustainability will help in reducing greenhouse gases, controlling climate change, and protecting natural habitats and ecosystems. These companies will face fewer business disruptions as they will build trust through their sustainable practices. This will make investments in these companies buoyant and deliver long-term wealth generation.
If you are planning to invest in IPOs of companies that have strong sustainability values, look for sectors like solar development, biomass, ocean energy, waste energy etc. And be ready with your demat account and familiarize yourself with the IPO application process as well.
Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.