Proceedings of the 2nd Economics & Finance Conference, Vienna

EMERGING ROLE OF ENVIRONMENTAL, SOCIAL AND GOVERNANCE FACTORS IN CORPORATE FINANCE AND INVESTMENT: INDIAN SCENARIO SO FAR AS COMPARED TO SOME OF THE DEVELOPED ECONOMIES

RIA SINHA, MANIPADMA DATTA

Abstract:

Environmental, Social and Governance (ESG) challenges have changed the world of business and investment altogether. The business enterprises the world over have already started to recognize this fact and experimenting in several ways to explore newer business opportunities hidden therein. As a result, sustainability as a concept has gained much importance to business and investment houses nowadays. Several studies and research surveys have been conducted in developed markets relating to the awareness of ESG factors in financial investments. The motivation behind the surveys has been to ascertain the level of ESG consciousness among the asset managers and to find out the relevant gaps in understanding the materiality of ESG factors for the purpose. This paper is an attempt to study the state of ESG Investment in developing economies vis-à-vis the developed ones with a special reference to Indian Financial Sector. The responses of 22 asset managers, i.e. 18 mutual fund managers and 4 Private Equity Managers from a pilot survey conducted in Mumbai, India, have been analyzed. Corporate Governance factors have clearly gained an edge over Environment and Social factors among asset managers surveyed. This study is intended to be carried out on a larger scale to ascertain the level of ESG consciousness among asset managers in their investment decisions. These surveys will undoubtedly highlight the changing investment scenario in India, thereby highlighting the emerging role of ESG factors in corporate finance and Investment in the country.

Keywords: Environment, Social, Corporate Governance, Corporate Finance, Investment, Asset Management

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