Mumbai, 22nd September 2022: Students of NMIMS Navi Mumbai Campus prepared a white paper on the increasing importance of ESG investing and its role in the investment decision of institutional and retail investors. The white paper, titled “Emerging Landscape of IPOs focused on ESG,” was compiled and submitted by students of BSc. Economics Finance.
According to the white paper, Fund managers across Global Institutional Brokerages, Banks and Sovereign Pension funds are assessing companies based on adherence to ESG norms. Over 80% of institutional investors have made it mandatory to include ESG in their future decisions. Investors are looking to invest responsibly and seek ESG compliance reports from companies to assess their long-term options on various parameters.
The study accentuates that ESG plays a pivotal role in the financial and fundamental credit analysis of a particular company. These factors measure the ethical standards and sustainability of investments in a particular company. Many investors evaluate companies based on ESG criteria while making their selections. Hence, this is a concept that is very important to companies. There is an increasing expectation that companies will adopt environmentally, socially, and economically sustainable business activities.
The project also covered an extensive study of documents such as the Draft red herring prospectus (DRHP) of recently filed and approved IPOs. The white paper put the spotlight on the upcoming FabIndia IPO and cites it as a great example for the Indian corporate industry. Terming it India’s first ESG-focused IPO the report highlights several inclusive policies and sustainable practices of the company. The study finds that FabIndia enables and uplifts artisans, investors, and employees leveraging environmentally responsible and ethical practices.
The white paper states that FabIndia has preserved traditional knowledge and utilised it to develop its products. The meticulousness and attention to detail witnessed in the handicraft products make FabIndia a responsible producer and supporter of rural communities. The company has improved its quality and capacity by directly sourcing from farmers and artisans. Hence, it also works toward helping women artisans find job opportunities close to their homes which helps them reach a large demographic across the entire country.
FabIndia’s unique business model covers several ESG parameters and best practices which are done for the first time in India. The umbrella-category store brand has been practicing ESG for the last sixty years of its inception by focusing on developing sustainable, authentic, and Indian traditional lifestyle products. FabIndia has created a differentiated supply-side community by engaging a network of artisans and farmers across India.
With modernisation growing rapidly, in the last decade, FabIndia has moved a step further by not only adopting modernisation but also acclimatizing its traditional roots to this change.
Congratulating students for the successful completion of the white paper Dr. Parthasarathi Mukherjee, Director of NMIMS Navi Mumbai Campus said, “Our students have done extensive research on a very relevant and future-facing topic of ESG Investing. Investors across the globe are aware of the financial consequences of sustainability-related risks and opportunities and factor the same in their investment decisions. This factor has led to increased investor interest and demand for ESG reporting, ESG ratings, and ESG-related products. We encourage our students to cover emerging trends as it brings them closer to the industry’s best practices.”
The white paper mentions that ESG attracts talent, reduces costs, facilitates top-line growth in the long run, and creates a sense of trust amongst consumers. It identifies a global trend where companies have become sensitive to ESG to achieve a competitive advantage, minimise regulatory interventions, reduce operational costs, and boost top-line growth.
Ms. Rakhi Raturi, Assistant Professor, NMIMS Navi Mumbai Campus, was the project’s mentor and guide students studying BSc. Economics Finance, namely Pavitra Kanakia, Vidit Vaswani, Janhavi Gangawane, and Aryan Khatri on the project.