ESG Fund Assets Set To Surge 30% Annually For A Decade in India

ESG investing, focusing on environmental, social, and governance factors, is expected to see significant growth in India. Avendus Capital predicts that ESG fund assets could increase by 30% annually for the next 5-10 years.

This growth may result in ESG funds representing a third of the total assets under management in India by 2051. Avendus Capital also noted that ESG-focused companies are outperforming their non-ESG counterparts, and they expect more ESG investments to flow into India. ESG-focused equity funds in India have grown from $330 million in 2019 to $1.3 billion by June 2023.

Gaurav Sood who heads equity capital market at Avendus Capital, said “Companies with higher ESG scores find it easier to raise funds at lower interest rates. Cheaper capital leads to higher operating margins and shareholder returns.”

The Nifty 100 ESG index has been doing better than Nifty 100 recently. In the past six months, Nifty 100 ESG gave a return of 17.71% while Nifty 100 returned 15.20%.

Avendus suggests that as India shifts towards clean energy, many Indian companies may become ESG assets, creating significant economic opportunities.