Dr. B.R.

Ambedkar National Law

University, Sonepat

ESG
INVESTING
Is it the future of a sustainable
investing?

SEMINAR BRIEF

Prepared and presented by:

Neha Dahiya
Surbhi Jindal
Sushant Saini
Tejaswini Upadhyay
FACULTY COORDINATOR:
DR. VIDHI M. CHADDA
 Dr. B.R. Ambedkar National Law
University, Sonepat

BACKGROUND
Global sustainability is one of the prime concerns worldwide. There have been many initiatives
taken up by the smallest NGOs to the organizations as big as United nations to combat the issues
relating to global sustainability.

ESG investing is one such initiative taken up by the corporations to give back to the society. ESG
investing stands for Environmental, Social and Governance investing. In recent years ESG
investing has emerged as a formidable force reshaping the landscape of financial markets. With
emphasis on ESG investing there has been a paradigm shift in investment strategy from
traditional financial returns to focus on broader impact of investments on the environment,
society and corporate governance practices. The investment approach goes beyond traditional
financial metrics to evaluate companies based on their performance in three key areas:
· Environmental impact
· Social responsibility
· Corporate governance practices

To understand the concept of ESG investing its crucial to delve into its historical roots. The
origins of ESG investing can be traced back to several decades, which gained momentum
recently in 20th century as concerns grew regarding the environmental and social impacts of
corporate activities. Initial proponents of ESG investing advocated for socially responsible
investing for aligning investment decisions with moral and ethical practices, avoiding companies
involved in environmental degradation.

The trigger behind ESG investing was the series of corporate scandals and environment disasters
such as Exxon Valdez oil spill in 1989 that underscored the importance of responsible business
practices. ESG investing boomed after the signing of Kyoto Protocol in 1997 and the introduction
of the Principles of Responsible Investment in 2006 by the United Nations. PRI provided a
framework for incorporating ESG considerations into investment practices.
 Dr. B.R. Ambedkar National Law
University, Sonepat
ESG investing has gained prominence for several reasons:

Risk management: Companies with strong ESG practices are often better equipped to identify and
mitigate risks related to environmental, social and governance issues. By integrating ESG criteria
into investment decisions, investors can potentially reduce exposure to risk and enhance portfolio
resilience.
Long-Term Performance: Numerous studies have shown a positive correlation between strong ESG
performance and financial returns over the long term. Companies that prioritize sustainability and
responsible governance tend of outperform their peers in terms of profitability, stock price
performance, and overall financial stability.
Stakeholder Value: ESG investing acknowledges the interconnectedness between businesses and
their stakeholders, including shareholders, employees, customers, communities, and the
environment. By considering the interests of all stakeholders, ESG investing promotes sustainable
READINGS
value creation and fosters trust and credibility in companies.
Regulatory framework and Market Trends: Regulatory initiatives and market trends are increasingly
emphasizing ESG considerations. Governments, regulatory bodies, and industry associations are
implementing policies and standards that require greater transparency and disclosure of ESG-
related information. Additionally, consumer preferences, investor demand, and shareholder
activism are driving companies to adopt more sustainable and responsible business practices.

Reputation and Brand Value: Companies with strong ESG credentials often enjoy enhanced
reputation and brand value. By demonstrating a commitment to environmental stewardship, social
responsibility, and ethical governance, companies can attract investors, customers, and talent,
thereby strengthening their competitive advantage and market positioning.

ESG investing represents a holistic approach to investment management that integrates

environmental, social and governance considerations into the decision-making process. With its
historical roots in ethical investing and its growing importance in today’s global economy. ESG
investing offers investors the opportunity to align their financial objectives with broader societal
and environmental goals. As awareness of ESG issues continues to grow and regulatory and market
pressure increase, ESG investing is poised to play an increasingly influential role in shaping the
future of finance and sustainability.
 Dr. B.R. Ambedkar National Law
University, Sonepat

ISSUES

1. How wide is the amplitude of ESG Investing?

2. What is the relationship between ESG Investing and financial profits?
3. What are the ESG initiatives, and legal and institutional framework of ESG Investing in India?
4. How successful has ESG Investing been in achieving its main objectives?

READINGS
1. G. Friede, T. B. (2015 ). ESG and financial performace: aggregated evidence from more than 2000 empirical studies .
Journal of Sustainable Finance & Investment.
2. Guide to ESG in India – Features | Principles | Reporting Requirements. (2024, March 6). Retrieved May 12, 2024, from
Taxmann: https://www.taxmann.com/post/blog/guide-to-esg-in-
india#:~:text=1.-,ESG%20Evolution%20in%20India,what%20constituted%20ethical%20business%20behaviour
3. King, K. P. (2022 , August 1 ). ESG Investing Isn’t Designed to Save the Planet. Retrieved May 12, 2024 , from Harvard
Business Review: https://hbr.org/2022/08/esg-investing-isnt-designed-to-save-the-planet
4. Laker, B. (2023, August 4). Greenwashing Unmasked: A Critical Examination Of ESG Ratings And Actual Environmental
Footprint. Retrieved May 10, 2024, from Forbes:
https://www.forbes.com/sites/benjaminlaker/2023/08/04/navigating-the-mirage-unraveling-the-disconnect-between-
esg-ratings-and-real-environmental-impact/?sh=1207120b1f8b
5. Sarangi, G. K. (2021). Resurgence of ESG Investments in India: Towards a Sustainable Economy . Asian Development
Bank Institute .
6. Tensie Whelan, U. A. (2022 ). Does sustainability generate better financial performance? Review, meta-analysis and
propositions . Journal of Sustainable Finance & Investment .
7. What is ESG Investing? (n.d.). Retrieved May 12, 2024 , from ADEC ESG :
https://www.adecesg.com/resources/faq/what-is-esg-investing/