Brief:

SRI stands for Socially Responsible Investing. It's an investment strategy that considers both financial return and the social and environmental impact of the companies you invest in. Investors who choose SRI are looking to align their financial goals with positive social and environmental change.

Components:

SRI involves investing in companies that consider environmental, social, and governance factors alongside financial performance. Here's a closer look at each factor:

Environmental: Focuses on a company's impact on the environment, including pollution levels, resource management, and climate change strategies.

Social: Considers a company's labor practices, diversity and inclusion policies, community engagement, and its impact on society as a whole.

Governance: Looks at a company's leadership structure, transparency, executive compensation, and risk management practices.

Rise of SRIs in India:

According to the Association of Mutual Funds in India (AMFI), assets under management (AUM) for ESG/SRI themed mutual funds in India grew from ₹5,510 Crore (US$7.2 billion approx.) in March 2019 to ₹26,000 Crore (US$34.2 billion approx.) in December 2023. This represents a nearly 4.7x increase in just under 5 years.

Industry Growth Estimates: Industry reports project that SRI AUM in India could reach ₹1.3 lakh Crore (US$171 billion approx.) by 2025, indicating a potential further 5x growth in the next two years.

Several industry surveys indicate a growing interest in SRI among Indian investors. A 2022 survey by EY showed that 88% of Indian institutional investors consider ESG factors in their investment decisions.

The Indian government is promoting sustainable practices and encouraging the growth of green infrastructure, creating a supportive environment for SRI.

Real-Life Examples of SRI Funds in India:

Quantum India ESG Equity Fund: This fund by Quantum Mutual Fund invests in companies with strong ESG practices across various sectors.

SBI Magnum Equity ESG Fund: This fund by SBI Mutual Fund focuses on companies with good environmental stewardship, social responsibility, and sound corporate governance.

ICICI Prudential ESG Equity Fund: This fund by ICICI Prudential Mutual Fund invests in companies with strong ESG practices across market capitalizations.

Global SRI Market:

Growth in AUM: According to the Global Sustainable Investment Alliance (GSIA), global Sustainable Assets Under Management (AUM) reached a record high of $38.2 trillion USD in 2022. This represents a 34% increase from 2020.

Investor Demographics: A 2022 US SIF Foundation Report revealed that millennials now represent the largest generation of sustainable investors globally.

DISCLAIMER: This blog is solely for educational purposes and not to offer any investment advice. Please do your own research or consult a financial advisor before making any investment decisions.