esg: The concept of ESG follows the principles of Satyam, Shivam, Sundaram

Over the past three decades, we have witnessed three big trends and themes shaping capital markets and the world at large. It was TMT in the 1990s, then in the 2000s we had BRICS and in the last decade we had FAANG. What will happen next? I believe esg Has the potential to become the “defining theme” of the current decade.

Although this is something relatively new, on the one hand we can say that it is not new, but a centuries-old practice, following the trinity of Indian values ​​- commonly known as ”
Satyam, Shivam, ,
Satyam (Truth) The ethical component of business is the core ethics that basically needs to be followed, whether in business or profession or whatever we do. This is exactly how we as professional investment managers always keep ethics at our core, starting with business activities and continuing into our daily lives.

Shivam (welfare) Business has an economic objective which includes effectively serving the society at large. It is just like in the investment profession we are working not only for our management fee but also for the wider benefit of the society, thereby helping our investors to meet their financial goals.

Sundaram (beauty) It is the way in which we need to focus not on external beauty but on aesthetic approach to business, purity of thoughts and ethics in practice which is important for any business or profession.

After the announcements at the COP-26 meeting a few months back, all major economies including Indiahas increased its momentum to move towards sustainable energy and reduce our carbon footprint.

We need to be aware that it is not only big businesses, but in a personal capacity, you and I are also contributing to carbon emissions on a very large scale. How? In the evening, when you are back home from work and settle down in your cozy corner to unwind with some fun Korean webseries, the streaming provider has to ensure that the content reaches your screen quickly. Is. For this to work, they have to ensure that their large data centers operate at the highest possible speed. Various estimates suggest that by 2025, about 1/5 of the global electricity will be consumed by data centers.

This leads to the search for more electricity and energy from sustainable or renewable sources. As India and the rest of the world prepare for the COP27 meeting in Egypt in late 2022, there is a great urgency to move towards the goal of net zero. But it won’t be easy or cheap. There are various estimates and the broad consensus is that to reach “net zero” globally, investments of more than US$5 trillion would be needed.

With such a huge investment anticipated in the next 2 decades, the policy makers as well as the institutional investors will play a very important role. So in my view, we as finance professionals have to increase our contribution in a big way. Asset managers are increasing integration by using sustainable investment strategies. Many leading asset managers not only globally but also in India
(Including DSPMF, the firm I work with) has become a signatory to United Nations Principles of Responsible Investment Or more commonly known as UNPRI. Large asset owners such as pension funds and sovereign wealth funds now demand that their investments in ESG and sustainable development goals,

To spread awareness and knowledge enhancement by institutions and colleges responsible for assisting finance professionals to master environmental, social and governance factors in real-world investing, recently introduced specialized MBA programs and certifications in ESG investing. Used to be. But even then investing such a huge amount is not going to be easy.

One of the broader learnings from the past two years of living within the pandemic has taught us that things are never as good or bad as they seem. The main thing is to look at it, focus on your ability to work and grow in the situation. It is heartening to note that during 2021, India has already become one of the top 3 countries for investment and deployment opportunities in renewable energy as per the Renewable Energy Attractiveness Index. India’s rank rose from 7 in 2020, mainly due to initiatives on the solar front which saw solar energy For the first time in India, the wind capacity has exceeded the capacity of 39 GW. Now after Budget 2022, India announced it Green Hydrogen Policy Which can prove to be a game changer in sustainable energy.

We all have to work collectively, starting with small steps. Remember, our economy is a wholly owned subsidiary of the environment, and all the best investment ideas will go to waste if we don’t take care of the environment.

(Author, Anil Ghelani Senior Vice President, Head of Passive Investments and Products, DSP Investment Manager,