Till date, monetary returns have been expected from any investments made in the business area. The inception of application of CSR and Sustainability in the business has changed the perspective. The world has certainly evolved with the presence of the concept. The advent of investor’s impetus on social well-being of the company before investment has been growing with times and has caught the fire in the emerging markets too.
In 1995, the introduction of Alternative Investment Market (AIM) at London Stock Exchange (LSE) was an acceptance by the financial world of the need for companies offering social impact returns. The companies listed on AIM are smaller, less financially viable and more social impact oriented. The companies listed are of high risk nature and thus attracts institutional investors, philanthropists and high net worth individuals. In the past 2 decades, the tangent has expanded with every stakeholder and especially investors concerned about environment, social, governance (ESG) and sustainability quotient of companies they would endow their trust in.
The induction of AIM was followed by several sustainability indices such as RobecoSam in 1995, Global Impact Investment Network (GIIN) launched Impact Reporting and Investment Standards (IRIS) in 1999, Dow Jones Sustainability Index (DJSI) in 1999, Reputex in 1999, FTSE4Good in 2001. The sustainability indices listed above, comprise of criteria’s on ESG/Sustainability and related indicators as per the relevance of the respective industry and country.
The International as well the Indian investors are preferring the companies listed on the above indices thus giving CSR/Sustainability a business angle and ensuring corporates are proactive in the space. The Indian companies listed on DJSI Emerging markets are Mahindra & Mahindra, Tata Communications, Yes Bank, and Wipro. Looking at the pace of global movement, India will be more agile in coming times.
The adoption of CSR and sustainability practices in business has brought about a transformative shift in perspective. Companies are now more mindful of their impact on society and the environment, and are actively seeking ways to create long-term value for all stakeholders while also driving business success.
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