Responsible Investment In India – Panel Discussion At IRBF 2017

Responsible Investment In India – Panel Discussion At IRBF 2017

“In April 2016, pension funds managed by Norges Bank sold off their equity investments in 7 Indian coal companies worth Rs 700 crore. They wanted to be clean” said Neha Kumar, Session Chair and Senior Adviser, GIZ in her opening remarks during the last panel discussion at IRBF 2017.

Pointing at the lack of responsible business policies, she said,“The discussion about responsible business is driven by incidents rather than a routine process”.

The topic of discussion was the state of responsible investments in India. The panel consisted of leading investors, regulators and influencers, who shared their opinions on the growing potential of responsible investments.

SUSTAINABILITY IS A PRIORITY FOR GLOBAL INVESTORS

Navneet Munot, Chief Investment Officer, SBI Mutual Fund explained the relationship between global investors and Indian companies. He said, “Global investors are asking companies important questions whereas domestic companies only focus on the shareholders…domestic investors think short-term.”

“If a business is not good for the long term, our returns will not come back. We need to look at companies holistically”,  said Mr. Munot .

Robert Dornau, Sr. Manager Sustainability Services at RobecoSAM shared how his investment company focuses only on sustainability investing. He said, “ RobecoSAM collaborates with Dow Jones to look at companies with a focus on corporate sustainability.”  There are currently 10 Indian companies which meet the sustainability parameters set by RobecoSAM.

Mr. Dornau also shared that there is an increased interest by Indian companies to participate in the survey done by RobecoSAM.

Drawing the link between sustainability and financial growth, he said, “We need to link sustainability to a business case. For example, YES bank works on climate change initiatives and it raised USD 5 billion for renewable financing.”

“If you have an entity that puts all its money into renewables and raises money for it and brings the cost down, that’s impact”, commented Mr. Munot.

INVESTORS NEED STANDARDIZED DATA

Sutapa Banerjee, former CEO Private Banking, ABN AMRO Bank and Ambit emphasized on the need to have a standard process for investing into responsible businesses.

Other panelists said the non-standardised sustainability data of companies is a problem. Mr. Munot said, “Data and information will remain an issue.”

Agreeing that there is a need for better data visualisation, Mr. Kharkar said “We need to compare the best and the worst corporate disclosures. Disclosures are done in the form of thick reports and nobody reads them…It’s very difficult for a normal stakeholder and sophisticated investors to analyse a company’s data.”

Supporting Mr. Kharkar’s perspective, Mr. Munot said, “The stock exchanges can make or display data but asset managers need to make sense of data.”

INVESTORS REJECT UNETHICAL COMPANIES

The panelists also agreed that investors, consumers and employees are rejecting irresponsible businesses.  “Millennials will not join companies which are damaging the environment”, said Mr. Munot.

Ms. Kumar talked about how investors avoid some sectors. She said, “For example, Norges doesn’t touch coal anymore. “

Mr. Dornau shared how Coca Cola never paid taxes in Vietnam and the Vietnamese said ‘no, thank you’ to them.  He also mentioned the boycott of Starbucks in the UK for not paying taxes.

GENDER EQUALITY AFFECTS INVESTMENT

Investors are also making sure that companies address the issue of gender inequality in their day to day functioning.

“RobeccoSAM focuses on gender equality in boards. We demand a detailed disclosure of the board’s constitution. To check gender pay gap, we also ask for bonus disclosure to make sure there is no glass ceiling”, said Mr. Dornau.

Ms. Banerjee made a positive note about the inclusion of women in boardrooms. She said, “As far as having women on boards is concerned, a lot has happened in the last 3 years from a regulatory perspective.”

REGULATORS, DISCLOSURES & COMPLIANCE

Avinash Kharkar, Head Listing Compliance, National Stock Exchange expressed his views on the part played by regulatory bodies. He said, “In 2014, there was a disclosure based regime. NSE and BSE gave out guidelines about disclosures. The role of the stock exchange is to ensure adequacy and accuracy of information.”

Mr. Kharkar also admitted that NSE is currently not taking any action against companies which do not comply. Hopeful about the future, he said, “Things will improve. Corporates need more time… (they need) 2 to 3 years for compliance.”

 

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