Page 49 - Banking Finance August 2022

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increasingly showing their interest in assessing the impact Majority of the top 250 companies of the world are reporting
of ESG on investment and its contents are finding larger their ESG performance as per different standards and
place in the investment decision making curriculum, yet the reporting frameworks but these WEF metrics are clear and
ESG metrics or factors are still evolving. The relevant ESG concise, built on current standards and frameworks, provide
parameters are contribution of the company to society and consistency and comparability and can be a guiding tool to
environment, protection of human capital, policies and achieve "Sustainable Development Goals (SDG)" of the UN
practices towards workforce. Other inputs considered are launched in 2015. They focus on activities of the company and
resilience, biodiversity, occupational health, and safety are to be included in mainstream annual reports.
standards. United Nations released a set of guidelines known
as "Principles of Responsible Investments" in 2006 which Stakeholder Capitalism, which is based on sustainability,
propagates incorporation of ESG factors into business policy wellbeing of all stakeholders, clean investing, and green
and procedures. investing, is going to be the future and new normal. It does
not reject the traditional concept, rather it supplements it
Several institutions/agencies like Sustainability Accounting with additional considerations while assessing any company/
Standards Board (SASB), Global Reporting Initiatives (GRI), business. Though ESG puts equal emphasis on environmental,
Task Force on Climate Related Financial Disclosure (TCFD), social, governance and financial issues but the possibility of
International Sustainability Standard Board (ISSB) etc. are one overshadowing the other remains a valid concern.
working to identify the common parameters and their
materiality to ESG. The G7 countries have taken a step Therefore, all four individually and their aggregation both
ahead by supporting the call for making climate related are important. Again, it is not necessary for a company to
financial risks disclosures compulsory in line with the THFD assign equal priority to all ESG factors as priorities will be
and ISSB. The effort is being made to make the quality of decided by the prevailing circumstances and materiality of
ESG reporting comparable to that of financial reporting. ESG factors to the company but a transition towards more
ESG driven activities to build organisational adaptive
The World Economic Forum (WEF), in September 2020, has capacities and resilience is required.
issued "Stakeholder Capitalism metrics" which stands on four
pillars and contains 21 core metrics. The four pillars are Converging to a common set of metrics for assessment and
1. Principle of Governance reporting remains a challenge. A set of common and
standardised ESG Key Performance Indicators needs to be
2. Planet
identified which can be used across the organisation for a
3. People
more holistic approach to valuing the success or otherwise
4. Prosperity of the business.

IDFC Mutual Fund launches IDFC Mid Cap Fund
IDFC Mutual Fund has launched IDFC Midcap Fund, an open-ended equity scheme investing predominantly in equi-
ties and equity-linked securities in the midcap segment.
According to the release, the key differentiator of IDFC Midcap Fund is that it will follow a 5 Filter Framework for
the selection of stocks, helping build a high- quality, growth-orientated portfolio. This investment framework selects
companies based on five fundamental parameters including Governance/Sustainability, Capital Efficiency, Competi-
tive Edge, Scalability, and Acceptable Risk/Reward.
Governance/Sustainability involves selecting companies based on factors such as strong governance, capital allocation
track record, and a sustainable business model, enabling the fund manager to take a long-term view of the business.
Capital Efficiency provides a structural opportunity for a business to earn an optimal return on the invested capital,
which is key to creating value for shareholders. Companies with a Competitive Edge in the industry could develop a
strong franchise network, resulting in a value proposition for customers through cost/product differentiation.

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