ESG Funds aggregate AUM jumped to Rs.123.2 billion in Nov’21; reflecting 4.7 times growth over a two-year period: Motilal Oswal
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According to Sustainability report from Motilal Oswal Financial Services Limited (MOFSL), ESG funds saw high inflows, with aggregate AUM increasing to Rs.123.2 billion in November 2021 from Rs.26.3 billion in November 2019, a 4.7x increase in only two years. MOFSL published its first report on ESG (Sustainability- Expanding Horizons) in June 2017 and witnessed a significant emerging trend, back then has gained remarkable acceptance amongst investors in the past 5 years and is now evolving as a megatrend in investing. The size of ESG investments in India from a global sustainability AUM perspective is currently negligible, but it has been growing significantly. However, COVID-19 has boosted the demand for sustainable investing. Since January 2020, 7 out of 10 ESG funds in India have been launched.
The aggregate AUM in ESG funds in India as of 30th November 2021 was just ~0.3% of the MF industry AUM whereasCanada is the market with the highest proportion of sustainable investment assets at 62%, followed by Europe (42%), Australasia (38%), the United States (33%) and Japan (24%). Asia (ex Japan) has less than 1% share in the sustainable asset pool.
India is trailing with regard to sustainability performance and ranks 120th out of 165 countries in terms of total progress towards achieving all Sustainable Development Goals (SDGs), as per the United Nations Sustainable Development Report 2021. Recently with India committing to a 2070 deadline to achieve net-zero emissions, the progress towards sustainability should gather pace in the coming years.
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