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

The concept of ESG follows the principles of Satyam, Shivam, Sundaram – Mail Bonus

Over the past three decades, we have seen three major policies and themes shape the capital market and the world as a whole. It was the TMT theme in the nineties, then we had BRICS in the 20s and in the last decade we had FAANG. What happens next? I believe that the ESG has the potential to become a “defining theme” for the current decade.

Although it is something relatively new, we can say that it is not new, but a centuries-old custom, which accompanies a triangle of Indian values ​​- more commonly known as ”
Satyam, Shivam, “.
Satyam (truth) is an ethical aspect of business, a key ethic that needs to be fundamentally followed, whether in business or profession or whatever we do. It’s just like how we, as professional investment managers, always keep ethics at our core, from the business and onwards in our daily lives.

Shivam (welfare) is an economic goal of business that actually involves serving society as a whole. It’s just like in the investment class we are working for not only our management fee but also for the wider benefit of society, by helping our investors achieve their financial goals.

Sundaram (beauty) is the way we need to focus not on external beauty but on the aesthetic attitude for business, the purity of ideas and the ethics of behavior that is important to any company or profession.

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

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We must be aware that it is not just the big companies, but the capabilities of individuals, you and I are also contributing to carbon emissions in a very big way. How? At night, after coming home from work and settling into your comfortable corner for a fun Korean web series to relax, the streaming company must ensure quick access to the content that gets on your screen. For this to work, they must ensure that their large data centers continue at the highest possible speed. Various estimates indicate that by 2025, about 1/5 of the world’s electricity will go to data centers.

This leads to a demand for more electricity and energy from sustainable or renewable energy sources. As India and the rest of the world prepare for the COP27 summit in Egypt at the end of 2022, it is extremely important to aim for the goals of zero. But this will not be easy or cheap. There are various plans and there is a broad consensus that to achieve a “net zero” worldwide, investments of more than 5 trillion US dollars are needed.

With such large investments planned for the next two decades, policy makers as well as institutional investors will play a very important role. So, in my opinion, as financial experts, we need to significantly increase our contributions. Asset managers have increased their integration through the use of sustainable investment methods. Many leading asset managers, not just globally but even in India
(including DSPMF, the company I work for) have acceded to the United Nations Principles for Responsible Investment or more commonly referred to as UNPRI. Large asset owners, such as pension funds and wealth funds, now demand that their investments be in line with the ESG and sustainable development goals.

Increased awareness and knowledge are being disseminated to responsible institutions and colleges that have recently launched special MBA programs and certifications in ESG Investing to assist financial professionals in mastering environmental, social and managerial aspects of real investment. But still, such a large investment will not be easy.

One of the broader lessons learned from the last two years of living in a pandemic has taught us that things are never as good or as bad as they seem. The key is to look through it, focus on your ability to operate in a situation and grow. It was very gratifying to note that by 2021, India has already become one of the top 3 countries for investment and distribution opportunities in renewable energy according to the EY Renewable Energy Attractiveness Index. India’s position rose from 7 in 2020, mainly due to the initiative of solar energy, as the solar energy capacity in India rose to 39 GW and exceeded wind capacity for the first time! Now, following the 2022 budget, India has announced its green hydrogen policy, which could be crucial for sustainable energy.

We all have to work together, starting with small steps. Remember that our economy is a full subsidiary of the environment and all the best investment ideas would come to naught if we did not think about the environment.

(Author, Anil Ghelani is Vice President, Inactive Investment and Product Manager, DSP Investment Managers)

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