Acuité, a neighborhood rating company launched a threat evaluation framework on social affect funding, which ought to assist buyers/lenders to judge creditworthiness of any mission that’s compliant with sure international commonplace when it comes to environmental, social and company governance or ECG.
The product is christened as ESG Risk AI, which is able to assess a company’s ESG efficiency and assign a rating, the company mentioned in a launch.
“With a total asset under management (AUM) of over $40 trillion invested globally using some form of ESG compliance and India’s increasing integration with global markets our ESG Ratings will help investors incorporate ESG factors in their investment decisions,” mentioned Sankar Chakraborti, Group CEO, Acuité.
In India, solely 7% of home AUM is invested in ESG funds at current and our internal estimates present this can develop to 30% in a decade.
In this, round 75% of FII funds can be primarily based on ESG themes. These figures clearly spotlight the rising significance of Environmental, Social and Governance elements in funding selections.
ESG Risk AI will present ESG scores of the highest 1000 Indian listed firms, by evaluating their efficiency on Environment, Social, and Governance parameters in addition to their reporting transparency. Its evaluation method consists of identification of related dangers, estimation of materiality and polarity of the dangers, and analysis of threat administration framework.
S.S. Mundra, Chairman, Acuité Ratings & Research mentioned, “Indian financial system can be going through super challenges over the following 10 years on surroundings, social and governance fronts. But it’s going to additionally present India with an awesome alternative to be a task mannequin in sustainable growth.
A sturdy ESG rating framework will assist in creating financial incentives for adoption of ESG finest practices by company India,” he mentioned.