Investors are Yet to Investing in Sustainable or ESG

Outflows of Rs 315 crore in 2021-22 has shown that investors are yet to warm up to the concept of sustainable investing with sustainable or ESG (environmental, social, and governance) funds in India.

Before, there has been an inpouring of around 4,884 crores in the FY 2020-2021. According to data collected by Morningstar India, before that, sustainable funds witnessed an intake of over Rs 2,000 crore.
After that, ESG contemplations will become an essential element of the prevalent investing framework for investment managers in the country, experts said.

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Most of the flows into sustainable funds to the date have arrived during the latest fund offer (NFO) period and with several ESG funds launches the FY2020-21 noticed consequential inflows, Director – Manager Research of Morningstar India, Kaustubh Belapurkar, said.

There has been a great exposure to renewable energy, low carbon, and green transport offered by sustainable funds. Under the thematic category, in the ESG space AMCs are launching equity schemes. The AMCs are also launching Exchange-Traded-Funds in the same space.

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Right now, in India, there are 12 mutual fund schemes that are having ESG with assets as their themes of around Rs. 12,000 crore.

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Anupama Das

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