India Inc is scoring big on ESG; on par with global peers
1 min read 21 Mar 2023, 11:55 PM ISTInvestors are now ready to pay a premium for better-governed companies, the panellists concurred
PremiumMumbai: Corporate governance has now become mainstream, with both companies and investors realizing how important it is to score high on the ESG (environmental, social and governance) quotient. Panellists, Radhika Gupta, managing director and chief executive, Edelweiss AMC; Andrew Holland, CEO, Avendus Capital Public Markets Alternate Strategies; Hetal Dalal, president and chief operating officer, Institutional Investor Advisory Services (IiAS); Neha Grover, South Asia regional lead, private equity funds, IFC; and Yogesh Singh, partner, Trilegal discussed how India stacks up on corporate governance.
With around $3 trillion of funds waiting to be invested globally on better-governed opportunities, Holland at Avendus said that the filtering of opportunities the world over will be through the ESG lens. “Over time, investors will be ready to pay a premium for high ESG-scoring companies," he said. Dalal said that the governance standards of the top 100 companies, which account for around 70-75% of the total market capitalization, are improving. According to her, a stronger regulatory push and greater institutional investments are helping improve governance standards.
Investors have seen the impact of corporate governance failure on the market over time, and hence, they are now ready to pay a premium for better-governed companies than run the risk of investing in poorly managed cheaper assets, the panel concurred.
Today, raising money for companies with poor corporate governance metrics has become difficult, said Gupta at Edelweiss. Private investors, and especially the likes of IFC, the investment arm of the World Bank, are increasingly helping companies solve the environmental and social impact aspect of ESG. Grover at IFC said most industries, such as consumer, health, tech and manufacturing, have realized that not following ESG norms can lead to value erosion. Singh atTrilegal said India Inc. is now stepping up to fill in the board positions that are lying vacant and those that will be vacated next year, with the current crop of board members retiring this calendar year.
