ESG Investing To Gain Momentum In 2022!

ESG investing is gathering strength globally. With the advent of Covid, the socially and environmentally conscious investors are willing to happily reallocate their investment monies to help the cause of making this planet a more livable place. Yogesh Supekar delves on the concept of ESG investing and highlights various opportunities for the investors willing to benefit from the emerging ESG investing trend.

- Yogesh Supekar

The ESG investing is not new to the investment world. However, the emergence of ESG investing trend may be new for the equity markets. Indeed, the market size for ESG companies is growing rapidly in India and globally. Before we delve deep into ESG investing trend and preference by investors, it is important to understand ESG investing first.

What is ESG investing?

ESG stands for Environmental, Social and Governance. ESG Investing (also known as “socially responsible investing, “impact investing” and “sustainable investing) refers to investing which prioritizes optimal environmental, social, and governance (ESG) factors or outcomes. ESG investing is widely seen as a way of investing “sustainably”—where investments are made with consideration for the environmental and human wellbeing, as well as the economy. It is based on the assumption that the financial performance of organizations is indirectly affected by environmental and social factors.

As ESG investing accelerates in demand, several key trends are emerging - from climate change to social unrest. The coronavirus pandemic, in particular, has intensified debate on the interconnectedness of sustainability and the financial system.

There is rising recognition of Environment Social and Governance (ESG) investing in developing economies, especially in times of increasing global uncertainties owing to the Covid-19 pandemic. Companies with strong ESG credentials are seen to be performing well financially as compared to their competitors.