Nowadays, sustainability through ESG funds investment is gaining interest in the Indian business and market. COVID-19 pandemic has given a new platform to investors and companies to look forward and incorporate ESG principles. The investors are on a search for ESG investment option and the companies are trying to become an ESG compliant.

In 2019, SEBI ordered the top 1000 listed companies to generate an annual business responsibility report (BRR). This drew the attention of company disclosures on this front and also made the investors aware. The asset managers are also incorporating ESG inputs in their portfolio. The investors should incorporate ESG in all portfolio constructions and not restrict to only ESG-themed ones. Thus, making ESG principles an inclusion criteria for all companies.

Diversification, liquidity and regular monitoring of the businesses should also stick to sustainable investing. The sustainable practices by the businesses across sectors can offer investment options to construct a diversified ESG portfolio.

With the changing social and environmental scenarios due to the pandemic as well as the onset of climate change, there’s now an increasing number of companies showing ESG disclosures in financial reports that represent their compliance with ESG and sustainability standards. It is important for the investors to analyse all the three variables E, S and G and should look into the company’s future. An extensive analysis and evaluation of the relevant business metrics should be done. ESG related risks such as the worst environmental disaster should also be taken into consideration.

Nitin Sharma also talks about the evidence that companies which focuses on sustainability provides a better long-term sustainable investment returns even in volatile times. The investors should not be concerned about the corporates focusing on social and economic issues that they are ignoring their profit. Rather they should encourage this as it will lead to ESG rating bias.