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

Over the past three decades, we have seen three major trends and themes shaping capital markets and the world at large. That was the TMT theme in the 1990s, then we had BRICS in the 2000s, and in the last decade we had FAANG. What will be next? I believe ESG has the potential to become the “defining theme” of the current decade.

Although it is something relatively new, on the one hand we can say that it is not new, but an age-old practice that respects the Indian Triad of Values ​​- commonly known as ”
Satyam, Shivam, “.
Satyam (truth) is an ethical component of business, a core ethic that should be adhered to at our core, whether in business or our profession or whatever we do. It’s the same way we as professional investment managers keep ethics at our core, starting with our business activities and continuing in our daily lives.

Shivam (welfare) is the economic goal of effective business including serving society at large. Just like in investing, we are working not only for the management fee but also for the wider good of society, by helping our investors achieve their financial goals. surname.

Sundaram (beautiful person) is the way that we need to focus not on the external beauty but on the aesthetic look in business, purity of ideas and ethics in behavior is important for any business or industry .

Following the announcements at the COP-26 meeting a few months ago, all major economies including Indiahas accelerated our move towards sustainable energy and reduced our carbon footprint.

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We need to be aware that not only large businesses, but as individuals, you and I are also contributing to carbon emissions in a huge way. How? In the evening, after you come home from work and sit in your comfortable corner to watch some fun Korean webseries to relax, the streaming company must ensure quick access to that content. to your screen. For this to work, they must ensure their large data centers are still operating at potentially high speeds. Various estimates suggest that by 2025, about a fifth of global electricity will be consumed by data centers.

This leads to the quest to find more electricity and energy from sustainable or renewable sources. As India and the rest of the world prepare for the COP27 meeting in Egypt at the end of 2022, there is great urgency to move towards net zero targets. But this will not be easy or cheap. Estimates vary, and a broad consensus is that achieving “net zero” globally will require investments of more than $5 trillion.

With such large investments estimated over the next two decades, policymakers as well as institutional investors will play a very important role. So, in my view, we as financial professionals will have to increase our contribution significantly. Asset managers have been increasing their integration using sustainable investment strategies. Many top asset managers not only globally but even in India
(including DSPMF, the company I work with) became a signatory Responsible Investment Principles of the United Nations or commonly known as UNPRI. Large asset holders such as Pension Funds & Sovereign Funds now require that their investments be ESG compliant and Sustainable development goals.

Awareness-raising and knowledge-raising is being spread by responsible academies and colleges, which recently launched special MBA and certificate ESG Investment programs to support Financial professionals with a firm grasp of the environmental, social and governance factors in real-world investing. However, such large investments will not be easy.

One of the broader lessons from two years of living during a pandemic has taught us that things are never as good or bad as they seem. The key is to look past that, focusing on your ability to run the situation and grow. It is a pleasure to note that in 2021, India has become one of the top 3 countries for Investment & Deployment opportunities in the Renewable Energy sector according to the EY Renewable Energy Attraction Index. India’s ranking is lifted from 7th place in 2020 mainly due to witnessed Solar initiatives Solar Capacity in India increased to 39 GW for the first time, surpassing wind capacity! Now after the 2022 budget, India has announced Green Hydrogen Policy could be a game changer in the field of sustainable energy.

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

(Author, Anil Ghelani as Senior Vice President, Head of Investment & Passive Products, DSP Investment Managers)

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