The Growing Popularity of ESG Funds in India

ESG funds in India is a rapidly growing concept. But what is it about them that is garnering so much attention from investors and investment banks worldwide? This is a concept which almost every fund and asset manager is talking about and advising their client on the same. These are nothing like the CSR or the hedge funds and are more about internal investment from the company. It is a theory and a concept widely spread in developed markets. ESG stands for Environmental Social Governance are three pillar that determine the sustainability and ethical impact of a particular investment in a company. 

The ESG funds is what actually determines that sustainability of any company’s project and it automatically eliminates those companies from the list that who have poor records in terms of controlling pollution from their premise, do not have a good score on ethical human practices and also the ones that do not adhere with the rules and regulations laid down by the particular government of the country. It is all about how much care a company is taking of the environmental, social and governance factors when making any kind of profitable investment for the business.

There is a rise in popularity of ESG funds in India among the investors who want to make an impression of contributing in lowering the global warming and pollution, have an impact in contributing to the human development especially within their firm, and are not indulged in any kind of malpractices when it comes to sticking to rules and regulations set by the governing body. these type of funds in a way help to keep the functioning of various large sized companies in check and encourage other HNIs and firms in making a good and positive impact on those firms. The result will surely be worth for the world and a whole.

What Is A Fund Manager’s Duty?

Fund management is a very important financial aspect.be it in business or as personal investment, managing funds is more or less like an art that not everybody can master. Hence, you take help from outside. This outside help could be an asset management firm, or wealth management firm that studies the profile of the client thoroughly and guides them in investing the money into proper assets. They also help their clients in managing these funds. Fund management is basically overseeing and regulating the cash flow of the said party.

A typical fund managers duty is not just to guide the investors on investment of funds but it is also to make sure that the investor abides by the rules and laws laid down in case of investment. The rules that we are talking about, whether it be about long short fund, mutual fund or anything else, are set by SEBI (the Securities and Exchange Board of India). The fund manager also needs to be careful about the funds that have been invested in by the investor. They need to protect the investor’s money.

So, in case there is some kind of threat to the property or the fund that the investor has invested in then the manager should advice the investor to immediately withdraw their money or the asset and play safe. They need to constantly oversee the growth and transition of the fund. How well the fund performs depends on factors such as inflation, interest rates and so on. To decide what kind of investment is suitable for a particular investor, the fund manager needs to analyse and study the on going and past trends, in order to be able to gage whether a particular fund is risky to invest in or whether the risk is going to be worth the investment with good returns. 

The History of ESG Funds

ESG funds in India is a comparatively new concept. In this article, we shall discuss about ESG funds and its applicability in your business. Investing in ESG funds is also known as responsible investing. If we are to look closely, ESG funds or the responsible investing actually dates back to the time since investment concept actually came into the picture, in the 18th century. Back then, there were clear guidelines about the rules and the kind of investment that were to be done in a company or a business. Back then, the responsible or social investment also included investment in a wide range of religious groups. However, the more formal form of investment banking and responsible investment came into the picture only in the 1960s, when the mutual industry was spreading quite fast across the world. This started gaining pace when questions about public welfare, civil right movement and social issues of the present times started to gain light. However, it wasn’t until around the 1970s, that pressure had started to build on the corporates by the stake holder to invest in the betterment of the society and for the world. Today, if you consult any asset management companies in India, they are sure to enlighten you about the importance of responsible investing and what positive effects it can have on the business. For example, in the 70s and 80s fund managers were advised to not invest in any company of South Africa as a show of condemn regarding the apartheidism that South Africa was going through back then. Also, a lot of light was thrown since the late 80s on the importance of sustainable growth in business, keeping in mind the threat of climate change and environmental factors that effect all of us in some way or the other. 

The Role of Asset Management in Business Growth

One of the smartest decisions that you can take for your business as an entrepreneur is of investing the money and profits that you earn smartly. If yours is a business that has started to make enough money to pay all dues of the employees, suppliers and are still left with some amount of money, then just investing in some asset isn’t going to make any difference. You must take decisions for investing the money smartly. Which is why, consulting asset management firms for the same is advisable. With an asset management firm, you get all the adequate guidance towards smart investing. An asset manager will thoroughly go through your entire financial portfolio and then discuss with you all the possibilities of making your investment profitable. The goal of an asset manager is to help you gain your financial goals and give you exceptional results in the same. The assets type that you can invest in could be property, real estate, long only funds, mutual funds, shares, stocks, bonds and so on. Investing smartly means investing the capital you have in more than one of these. It could be risk putting all your money in just one of the assets. For an entrepreneur, it is necessary to have a good back up of money and capital plus assets. We never know how the market could turn around and we might require money for the same. Sometimes, capital is also required to expand the business. Asset management firms make sure that you have a diversified portfolio, with least risk and more profits. Once the investment is done, asset managers keep a close watch on the unfolding of the assets into something more fruitful. In case of any kind of risks that comes up, asset managers must be informed and cautious enough to take the decision of pulling back the investment in a particular asset.