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Indian IT, BFSI sectors lead on ESG parameters; metals, cement lag: report

Three out of the bottom five ESG scorers are for metals & mining companies (Vedanta, NMDC and Coal India). ONGC, UPL and DLF also lied within the bottom 10, according to Edelweiss' ESG Scorecard & Ratings for India’s top 100 companies.Premium
Three out of the bottom five ESG scorers are for metals & mining companies (Vedanta, NMDC and Coal India). ONGC, UPL and DLF also lied within the bottom 10, according to Edelweiss' ESG Scorecard & Ratings for India’s top 100 companies.

  • Indian IT or IT-enabled service (ITES) companies ranked the highest on environmental, social and governance (ESG) parameters among all the sectors with an average rating of 90 (out of 100), with particularly high scores on governance, according to a report by Edelweiss Securities Ltd

MUMBAI: Indian information technology (IT) or information technology-enabled service (ITES) companies ranked the highest on environmental, social and governance (ESG) parameters among all the sectors with an average rating of 90 (out of 100), with particularly high scores on governance, according to a report by Edelweiss Securities Ltd.

Launching ESG Scorecard & Ratings for India’s top 100 companies (aligned to NSE 100), Edelweiss said that company-wise, the top four were all IT firms — HCL Technologies, TCS, Tech Mahindra and Wipro — followed by Bajaj Finance, Infosys, ICICI Lombard, InfoEdge and then the HDFC twins.

In terms of laggards, metals & mining (63), cement (68) and oil & gas (70) score the lowest, especially due to low scores of 14-17 (out of 33) on environment. “While we note high level of disclosures on ESG aspects in company filings and strong ESG initiatives, the inherent environment-damaging nature of these sectors outweighs the positives, making them laggards in our framework," the report said.

Three out of the bottom five ESG scorers are for metals & mining companies (Vedanta, NMDC and Coal India). ONGC, UPL and DLF also appeared among the bottom 10.

Edelweiss ESG Scorecard & Ratings assess every company on 40 metrics and arrive at a score out of 100 (nearly 33% each for E, S & G).

Edelweiss ESG Scorecard & Ratings
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Edelweiss ESG Scorecard & Ratings

Driven by increased investor interest in ESG issues, sustainable funds have gained a lot of traction in India over the last one year. From three ESG schemes at the end of financial year 2020, today we have around eight-nine such schemes.

Edelweiss ESG Scorecard & Ratings
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Edelweiss ESG Scorecard & Ratings

Following IT/ITES, banking, financial services and insurance (BFSI) (82) and consumer (78) had one of the best scores among all the sectors on ESG parameters.

In terms of environment rating, as the only pure-play renewable within NSE 100, Adani Green led the universe on rating. “Not surprisingly, the stocks at the bottom are Coal India, NMDC, ONGC and NTPC due to their inherent environment harming sectors," the report said.

On the social parameter, all the top-five leading companies were from the BFSI sector, starting with ICICI Lombard, then Bandhan, followed by Bajaj Finance, Kotak Bank and ICICI Prudential Life.

Lastly, IT/BFSI led the way with TCS, Wipro, Tech M, followed by Bajaj Finance and HDFC Bank ranking highest on the governance parameter.

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