ESG Wealth Adviser Says Being Good Is Also Giving Higher Returns
(Bloomberg) -- Investing in companies with a higher environmental, social and governance score is generating better returns compared to peers, according to an Indian wealth adviser, debunking the notion that there’s a trade off between profit and sustainability goals.
“Everyone always thinks that if you are investing through ESG, you are compromising your returns” but the data proves otherwise in the long term, Soumya Rajan, founder and chief executive officer of Waterfield Advisors Pvt. said in a Bloomberg Television interview Monday. Since its inception in 2007, MSCI India ESG Leaders Index has jumped 400 basis points more than the broader MSCI India index, according to Rajan.
Rajan’s comments come as Indian policymakers, regulators as well as companies are doubling down on their green energy efforts. India’s Prime Minister Narendra Modi has pledged to make India net-zero by 2070, conglomerates helmed by its two richest men -- Mukesh Ambani and Gautam Adani -- are aiming to get there much sooner and even the local markets regulator in May asked the country’s top 1,000 listed firms to report on their sustainability performance.
Rajan, who used to lead the private banking division at Standard Chartered Plc, started her wealth advisory in 2011 to pivot Indian businesses toward investing in companies with high ESG ratings. With about 80 clients across Indian business families, Rajan’s firm now manages about $4 billion in assets and has a proprietary rating system to score local firms on ESG parameters.
“The big shift we are now going to see is how asset-owners are really pushing the agenda and envelope” in ensuring that the investments are in companies focusing on sustainability, she said. “ESG has now become a board-driven agenda.”
While Waterfield hasn’t found a lot of companies that score high on the ESG parameters, Rajan is confident that more candidates will emerge soon. Given the commitments made by the country in recent COP26, she said it was clear that “India is taking this very seriously.”
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