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Press Release

ESG investment & sustainable finance critical to reach the target of $5 trillion economy: Corporate Affairs Secretary, GoI

Mar 09, 2022

NEW DELHI, 09 March 2022: Mr Rajesh Verma, Secretary, Ministry of Corporate Affairs, Govt of India today asserted that ESG investment and sustainable finance will play a critical role in making the nation reach the target of $5 trillion economy.

Addressing the 'ESG Summit - Financing India's Sustainable Growth' organized by FICCI, Mr Verma said, "For India to achieve a $5 trillion economy by 2025, aligning its growth process with sustainable development goals by2030 and achieving net-zero emission by 2070, ESG investment and sustainable finance will play a critical role."

Mr Verma further stated that said that the Ministry of Corporate Affairs has been taking a number of initiatives towards responsible business conduct. He added that the government has issued National Voluntary Guidelines on social environmental and economic responsibility of businesses along with a National Guidelines on Responsible Business Conduct (NGRBC).

The Secretary also highlighted that COVID-19 has reaffirmed that businesses must be inclusive and sustainable and has provided us with an opportunity to revisit our relationship with nature. "Companies are not only required to grow in an inclusive and sustainable manner but also need to address the concerns of different stakeholders and changing business philosophies," said Mr Verma.

"Several initiatives have been taken by the Government of India towards responsible ESG. There has been increased recognition that ESG issues can put the performance of the company. India has been at the forefront in recognizing the importance of responsible business practices," he added. 

He highlighted that India is a part of several bilateral and global sustainable finance initiatives. "To streamline and focus initiatives of sustainable finance, the government is also taking steps to bring about more clarity in the regulatory landscape on sustainable finance in the country," emphasized Mr Verma.

Mr Sanjiv Mehta, President, FICCI said that the focus of the businesses is as much as on the environment as on embracing inclusivity, promoting societal and stakeholder value. "As world leaders commit to net zero greenhouse gas emission and improve the ESG governance over the next decade India too has set sustainability targets and we are committed to reduce the emission intensity of India's GDP by 33 to 35% by 2030," he added.

This, he said, would require huge funding, which could go up as much as $10 trillion over the next few decades.  This does call for new ways to finance ESG initiatives.

"The recent pandemic has only amplified the goal for embracing ESG principles making it an imperative for all to follow. Investors too are increasingly diverting the companies which seem as being sustainable and responsible. Cooperates with higher ESG ratings are also showing superior financial and non-financial performance," said Mr Mehta. He added that the brands with a purpose are growing faster than other brands.

Dr Mukund Govind Rajan, Chairman, FICCI Environment Committee and Chairman, E-Cube Investment Advisors Pvt. Ltd. said, "Diverse stakeholders around the world are driving the ESG agenda. The growing momentum in ESG investing will ensure greater resource use efficiency. Indian companies are also increasingly embracing the ESG agenda as there is a growing realisation that business as usual will no longer work. We need to move towards an Indian sustainable finance taxonomy to provide a holistic ecosystem for both domestic and foreign investors."

Mr Amitabh Chaudhry, Chairman, FICCI Banking Committee and MD & CEO, Axis Bank said, "India would require a staggering amount of investments to meet the net zero target. The banks need to balance this climate transition and the existing carbon intensive sectors, while being mindful of the existing challenges. This is important to make our economy more resilient and futureproof and to pursue our aspiration of achieving greater social equity and inclusivity."

Highlighting the role of FICCI ESG Task Force, its Chair Mr Krishan Dhawan said, "The task force has taken many initiatives to underscore that adoption of ESG principles is a business imperative and not just a reporting requirement."

Mr Dev Bajpai, Co-Chair, FICCI ESG Task Force and Executive Director- Legal and Corporate Affairs and Company Secretary, Hindustan Unilever Ltd said, "Stakeholder value creation models will have to be woven into and will be an integral part of the long-term business strategies."

Mr Kunal Gupta, Partner, Trilegal commented, "We are witnessing a major shift in the ESG narrative, from being a compliance risk to becoming a key factor driving investment and boardroom decisions." On the occasion, FICCI-Trilegal White Paper was also released. "The joint report, ESG - into the mainstream aims to highlight some key topics on ESG and sustainable finance," Mr Gupta further added.

FICCI's Handbook on ESG Best Practices of FMCG Sector was also released during the event.

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