Page 56 - Banking Finance September 2024

ARTICLE

The Rise of ESG

Investing: Global

Trends and

Opportunities in the

Indian Market

Environmental, Social, and Governance (ESG) investing has emerged as a transformative trend in
global financial markets. As the world grows more conscious of sustainability, investors are moving
away from traditional profit-driven strategies towards investments that align with broader social
and environmental values.

Introduction in ESG investments, with nearly half of all managed assets
Environmental, Social, and Governance (ESG) investing has being sustainable. North America, too, continues to grow,
emerged as a transformative trend in global financial with sustainable assets reaching $21.6 trillion in 2022,
markets. As the world grows more conscious of reflecting a 50% increase from 2020.
sustainability, investors are moving away from traditional
profit-driven strategies towards investments that align with The Role of Regulatory Frameworks Regulatory
broader social and environmental values. This shift has frameworks continue to play a pivotal role in boosting ESG
impacted global financial systems and is gaining traction investments globally. In the European Union, the
in emerging markets like India. With its expanding Sustainable Finance Disclosure Regulation (SFDR) has
economy and increased awareness of sustainability issues, evolved since 2021, requiring detailed disclosures on
India is poised to play a significant role in ESG investing. sustainability risks. The EU Taxonomy now covers more
This article explores global trends, ESG's growth in India, industries, guiding investors towards environmentally
and the challenges and opportunities ahead. sustainable activities. In the U.S., the Securities and
Exchange Commission (SEC) continues to enhance ESG
Global Trends in ESG Investing disclosures, with 2024 marking the full implementation of
its climate-related financial disclosure rules, further
Exponential Growth in ESG Assets As of 2023, the Global
encouraging transparency in corporate ESG practices.
Sustainable Investment Alliance (GSIA) reported that
global sustainable investment assets had grown to $42
ESG-Themed Mutual Funds Sustainable mutual funds have
trillion, accounting for approximately 38% of all
continued their upward trajectory, with global ESG-themed
professionally managed assets. This growth highlights the
mutual funds attracting $600 billion in net inflows in 2023,
increasing focus among investors on their investments'
an increase from $350 billion in 2020. Europe leads this
environmental and social impact. Europe remains a leader
50 | 2024 | SEPTEMBER | BANKING FINANCE