As companies and investors continue to increasingly prioritize investment decision-making that not only benefits the shareholders, but also other stakeholders like employees, creditors, government, consumers, society, environment, and so on, new concepts like ESG investing are gaining popularity. ESG investing means making an investment decision based not only on traditional financial parameters but also on certain material non-financial ones like the Environmental (Energy, Climate, Pollution, Waste) Social (Human Rights, Labor, Health, Safety, Welfare), and Governance parameters (Management, Compliance, Transparency, Diversity, Stakeholder Rights) which brings us to the keyword ESG. In a simple way, companies that incorporate ESG factors are less risky and more likely to succeed and survive in the long run and global companies are working on it.
In the financial year 2022-23, Indian companies are expected to voluntarily disclose Environmental, Social, and Governance (ESG) performance in their annual reports. Such ESG reporting will be compulsory for 1000 listed companies based on market capitalisation from FY 2023-24 onward. Despite the ESG conversations being topical in India, are they making it to universal adoption? Or restricted adoption? Doing depends upon you and me. Do you care for your local people, colleagues, family members, and humanity per se? Society at large is taken care of. Do you care for the Environment by not throwing waste randomly, not polluting, and treating every day as Earth Day? Do you use renewable energy, and plant trees? The environment is taken care of. Do companies disclose everything to employees, customers, shareholders, and all stakeholders? Governance is taken care of.
Do you agree?