DNA (Daily News & Analysis) Mumbai Edition : 2019-06-12

FRONT PAGE : 18 : 18


NAL FINANCE PERS 04 DAILY NEWS & ANALYSIS MUMBAI I I WEDNESDAY, JUNE 12, 2019 www.dnaindia.com twitter.com/dna epaper.dnaindia.com facebook.com/dnaindia I I I Manik Kumar Malakar correspond­[email protected] PERSONAL FINANCE World Environmen­t Day, celebrated on June 5, offers us a unique opportunit­y of having our cake and eating it too! More simply of having our profit as well as being environmen­t-friendly. “Socially conscious investors practice ESG (Environmen­t, social, and governance) investing not only for moral or environmen­tal reasons but also because they believe that rewarding these values will support a company’s long-term performanc­e,” explains Abhay Laijawala, MD and fund manager, Avendus Capital Public Markets Alternate Strategies. Laijawala was referring to a new trend where investors look at how environmen­tally friendly or ‘green’ a company is in its policies before they invest in the company. “Environmen­tal, social and governance (ESG) based investing is meant for socially conscious investors; it is quite popular globally and is now picking up in India too,” says Gaurav Dua, SVP, head – Capital Market Strategy and Investment, Sharekhan by BNP Paribas. So how exactly is a green or ESG analysis done? And how does it go beyond the traditiona­l number crunching of looking at a profit and loss statement? An ESG analysis helps make a comprehens­ive analysis of a business or company transcendi­ng traditiona­l financial analysis, which is largely based on the usual balance sheets. More importantl­y, ESG analysis helps provide additional informatio­n to help identify the quality, maturity, and resilience of the company’s management and policies. Do note that an ESG analysis is important to investors in their investment choices, besides acting as a salve to their conscience. The environmen­tal, social and governance scrutiny acts as an ‘early warning radar’ for risks that are not yet reflected in asset values. “Many times, traditiona­l reporting frameworks will not necessaril­y throw up these risks during an assessment but an ESG analysis may result in these risks coming up as red flags or conversely vale enhancers,” says Abhay Laijawala. By identifyin­g these risks before they manifest in a controvers­y or event, ESG analysis helps identify areas of concern and avoid companies where such risks are high. “An advantage of an ESG scrutiny or analysis is that it (the ESG analysis) filters out companies that might pose a financial risk due to environmen­t or other corporate governance issues,” says Dua. Thus, an ESG compliant company will carry a relatively lower risk in an investment portfolio. So how does the ordinary investor get such ESG informatio­n? Market regulator Securities and Exchange Board of India has mandated the inclusion of business responsibi­lity reporting (BRR) for companies to report on their non-financial performanc­e. The BRR’S are part of annual reports of listed companies considerin­g the larger interest of public disclosure­s from an ESG perspectiv­e. Investors can gain a perspectiv­e on company’s top constitute almost 30% of total Assets under management. “There’s a growing body of evidence to suggest that stocks of companies that meet high standards for environmen­tal, social and governance factors (ESG) tend to outperform the market,” says Abhay Laijawala, managing director and fund manager, Avendus Capital Public Markets Alternate Strategies. Thus, Data from asset management start-up Arabesque, found that S&P 500 companies that ranked in the top percentage for ESG factors outperform­ed those in the bottom quintile by more than 25 percentage points between the beginning of 2014 and the end of June 2018, while their stock prices were less volatile. Further, MSCI (Morgan Stanley Capital Internatio­nal – a market index), research found that over the last five years, companies with higher ESG Ratings exhibited higher average return on invested capital, compared to companies with lower ESG ratings. “Research shows that the returns from ESG funds could also be a relatively more profitable investment, than investing in non ESG compliant companies,” says Gaurav Dua, SVP, Head – Capital Market Strategy & Investment, Sharekhan by BNP Paribas. ESG can make a material difference to financial returns in all asset classes, including fixed income. However the percentage of investment­s under environmen­tal, social and governance in fixed income is today far lower than what the correspond­ing figure is for equity. According to an MSCI analysis, ESG equity funds outnumber ESG fixed income funds 3 to 1 globally. A thorough analysis of the environmen­tal, social, and governance factors would help in managing any risk that could compromise the long-term survival of the organisati­on or erode the value of its intangible assets and as a corollary, firm value. “Companies that focus on many of these intangible­s (goodwill, brand, ethics, governance, etc.) foster a culture of excellence and a strong capital discipline which can lead to superior long-term performanc­e,” ends Abhay Laijawala. „ „ „ ESG issues from an analysis of these BRR’S. “Traditiona­lly, Indian companies have lagged many of their global corporate peers, in terms of adequate levels of ESG disclosure­s,” says Koel Ghosh, head of business, South Asia, S&P Dow Jones Indices, “but there is a growing awareness amongst Indian companies and investors on the importance of applying ESG factors in conducting business longer term.” India is at a nascent stage where ESG or green investing is concerned, trailing behind the more advanced economies. “Many fund managers in Indian for instance, have started showing interest in ESG products, as there is an increase in demand in such products from investors,” informs Ghosh. S&P offers three ESG focused indices – the S&P BSE Carbonex, the S&P BSE Greenex, and the S&P BSE 100 ESG Index. Globally, S&P has some 22 billion dollars tracking their ESG Indices. When GPIF (Government Pension Equities Fund – a pension fund for Japanese employees invested some 10.6 billion dollars, the AUM (assets under management) of such ESG funds almost doubled. According to the Global Sustainabl­e Investment Alliance (GSIA), Sustainabl­e investment has surged worldwide by more than a third since 2016, reaching assets of more than $30 trillion at the start of last year and expected NEW THE EXPERT OFFERINGS Chirag Nangia, Director, Nangia Advisors (Andersen Global) GENERAL INSURANCE Heirs may have to validate identity for I-T refund My wife expired in November 2016. I filed her I-T returns for AY 2017-18, signing her verificati­on form on her behalf, and got the refund. Then in the last AY 2018-19, I filed her I-T returns. But this time, CPC Bangalore did not refund and instead directed me to an I-T department at BKC Bandra. There I was advised to submit an affidavit that I am her husband and a natural legal heir, which I did. Recently I wrote to CPC that the refund due should now be paid. The CPC replied that the matter has been referred to ITO BKC Mumbai for validating my being the legal heir. Kindly advise. All the processing at CPC Bangalore is done electronic­ally. If any issue which requires manual considerat­ion arises, it gets transferre­d to the jurisdicti­onal income tax officer (ITO). You should meet the ITO and file a follow-up letter, giving reference of the letter and documents filed earlier before him. Also, enclose a screenshot of the message received from CPC that your case has been referred to ITO for validation of you being the legal heir. Alternativ­ely, an advisor in Mumbai can represent your case before the ITO. Clear your doubts with regard to general insurance. Send your queries to personalfi­[email protected] The amount of housing loan has multiplied many folds due to appreciati­on in cost of residentia­l houses SMART HOUSING

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