The start of a new decade has brought with it a lot of changes; some a lot more profound than others. Environmental, Social and Governance (ESG) goals has become a defining parameter through which the younger generation of investors are basing their judgements. The ESG practices of a company has become the new yardstick on which its valuation is based, with investors more likely to invest in ventures that are ESG-friendly.
Indian business giants are toeing the line, announcing new commitments and renewing old ones when it comes to ESG. Reliance Industries Ltd.’s recent announcement to go green is a perfect example. The Mukesh Ambani-led company revealed its ambitious plans to invest Rs 75,000 crore in renewable energy (RE), which will boost its ESG ratings and valuation. Established players like Tata, Adani and Siemens are also keeping close tabs on their ESG practices in order to stay competitive.
Speaking at the India Global Forum 2021, Gautam Adani, Chairman of the Adani Group, stressed on the need to accelerate ESG transformation in India. India is currently on track to meet its COP 21 goals, a full eight years ahead of schedule. This was highlighted by Adani as he called for sensible development where the well-being of the developed nations does not come at the expense of the developing ones.
Interestingly, the Adani Group is a major stakeholder in India’s renewable energy (RE) sector. The company has grown to become the largest solar company in the world and is a force to reckon with. Adani Green Energy Ltd., the RE wing of the group, registered an increase of more than 600 times in its value and was one of the top performing stocks in the market. In fact, the group’s target of acquiring 25GW of renewable energy capacity by 2025 has been achieved four years ahead of schedule. Thus, focusing on ESG has paid off for Adani. Siemens is another player that has done well when it comes to ESG.
Siemens Gamesa has played a critical role in the global green energy transition. The turbine manufacturer has a significant presence in India where it commands a lion’s share of the market. Its kitty is filled with successful projects that have shaped India’s wind power sector. As a result of contracts with players like ReNew Power and Adani, Siemens has been able to cement its place as the go-to expert when it comes to wind projects. As a matter of fact, its successful operations in India as well as abroad has resulted it being awarded with top ESG ratings by S&P.
ESG-first approach along with ESG investments are here to stay for the foreseeable future. This will ensure that sustainable development takes precedence over all others when it comes to conducting business.