(Bloomberg) — Equity investment based on environmental, social and governance practices is gradually gaining traction in India, helped by the strategy’s relatively strong performance during the pandemic.
Since the country’s first ESG fund launched in 2018, three more have entered the field, with the category now making up 0.6% of total equity assets under management, data compiled by Bloomberg and from the Association of Mutual Funds in India show. The appeal is financial as well as socially minded, with the best performing of the new entrants recently climbing back into the green for the year, outperforming nearly 80% of its peer group. The Nifty 100 ESG Index is down 2.8% versus an 8.1% drop in the NSE Nifty 50 Index.
The global push into sustainable investing has gathered pace this year as governments channel virus-related recovery funds into health and environmental projects. Fund industry ESG AUM now exceeds $1 trillion, and 56% of sustainable funds outperformed their peers in the second quarter, according to a report from UBS Group AG citing Morningstar Inc. data.
“Stronger companies that have solid principles around ESG have been able to weather the storm well,” said Jinesh Gopani, head of equities at Axis Asset Management Co, which launched its first ESG fund in February. “They both fell less and bounced back first.”
ESG strategies are still less established in emerging markets than in the U.S., where they account for 1.4% of assets under management, according to data compiled by Bloomberg. But the category’s effectiveness through the pandemic-triggered global selloff and subsequent recovery is seen drawing more investors looking for resilience against future upheavals.
Most of India’s new sustainable funds use in-house and third-party research to assign scores to companies for various ESG metrics to short-list a pool of stocks eligible for investment. Reliable data can be hard to come by in developing markets, but that may start to change as ESG funds become more common.
ESG Pressure
“More asset managers are making ESG research a core part of their investment research,” said Ruchit Mehta, who manges the SBI Magnum Equity ESG fund, India’s oldest and largest fund in the group with about 27.5 billion rupees ($367 million) in assets. “There’s a rising appreciation among investors, as more and more companies face issues beyond the traditional balance sheet, growth and governance challenges.”
India’s market regulator requires firms to disclose their ESG policies in a standardized format. Corporations have begun to take this a step further, voluntarily disclosing more than the minimum due to pressure from investors and growing institutional appetite for sustainable options, according to Aditi Chandani, an analyst at Stakeholders Empowerment Services, a Mumbai-based research and advisory firm.
“Three years ago it would have been peripheral,” Chandani said. “Now investors are seeking more comprehensive disclosures, what targets companies are setting and how their performance compares to peers.”
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
