Press Releases

  • Report on Sustainable Investment in India Reveals New Opportunities to Boost its Competitive Edge in Global Markets

    25 May 2007

    The rapidly growing importance of sustainable investment presents India Inc. with a set of new risks and opportunities, according to a landmark report from TERI Europe, the European affiliate of Delhi-based, The Energy and Resources Institute (TERI).

    Across the globe, there is growing recognition that environmental, social and governance (ESG) factors have the power both to create and destroy shareholder value. Over USD3.7 trillion is already managed in strategies that integrate ESG elements to generate sustainable returns. With challenges such as water scarcity, human resource management, climate change and community relations rising up the agenda, funds managed on a sustainable basis are projected to grow significantly in the years ahead.

    In the first report of its kind, Sustainable Investment in India (SI2) finds that:

    • Major foreign institutional investors (FII) are already incorporating ESG factors into their investment decisions.
    • Indian companies, such as Cipla, ICICI, Infosys, and Suzlon, are among those included in global sustainability funds.
    • But Indian companies are generally not well-represented in the portfolios of international sustainability funds, and some have been actively excluded.
    • India lags behind other emerging markets (such as Brazil and South Africa) in terms of its preparedness to attract inward sustainable investment and develop domestic markets.
    • New initiatives by CRISIL and others demonstrate that the momentum for change is starting to intensify.

    Dr Ritu Kumar, Director of TERI Europe, and one of the reports co-authors explains, "India risks missing out on the huge potential that sustainable investment represents". To realise its potential, the report makes six major recommendations:

    • Create a national focal point;
    • Raise awareness among corporate leaders and financial analysts;
    • Improve corporate disclosure;
    • Survey attitudes of retail investors in India;
    • Develop the Indian evidence base; and
    • Reach out to international investors.

    International sustainable investment expert from Delsus, Dan Siddy, who co-authored the report, adds: "India has the capability to close the gap on sustainable investment - and in doing so, it could boost its competitive edge in global markets".

    Endorsements for the report include:
    "Given that the global enthusiasm for India is all about expectations over decades, not merely days, months or currently even years, SRI is apposite in this country even for investors not primarily interested in political, social or environmental matters. The TERI report provides the welcome empirical foundation for this argument..."

    Nandan Maluste, Senior Vice President, Kotak Mahindra Capital, India

    "Engagement in Asia has its own unique characteristics. For many of the best companies in Asia, a holistic, 'triple-bottom-line' approach has always been an integral part of business, long before 'CSR' and the glossy sustainability reports became de rigour in developed markets. The modest, socially aware approach of many of India's leading business groups is a case in point. One of our favourite Indian companies Cipla actually made a point this year of ensuring its annual report contained no pictures at all, a very different approach from the global trend towards tourist brochures masquerading as sustainability reports".

    David Gait, Portfolio Manager, Global Emerging Markets Asia, First State Investments, UK.

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