Sustainable Investment in India 2009

This report has been prepared for IFC by TERI-Europe to (a) determine the current state of development of sustainable investment in India and (b) develop recommendations on future interventions by IFC and/or other actors to stimulate the market. TERI-Europe estimates that the total stock of investment in Indian equities where the investment strategy includes a strong focus on environmental, social and governance (ESG) considerations is approximately US$1 billion at the current time. This is almost entirely composed of investment by foreign institutional investors (FIIs).

Chapter 2 provides an overview of the main findings from TERI-Europe’s May 2007 report.

Chapter 3 then delivers a brief overview of India’s development profile, economy and stock markets, along with a summary of the key industries and companies that are traded on the stock market. More detailed information on these issues is provided in Appendix A.

Chapter 4 adds to the context for sustainable investment in India through a short discussion on ESG value drivers in India, including the National Action Plan on Climate Change. Chapter 5 sets out detailed information on current sustainable investment activity in India, beginning with the S&P ESG India Index and then dealing in turn with foreign institutional investors and different segments of the domestic investment community, including the Fortis Sustainable Development Fund.

Chapter 5 also includes information on India’s private equity market and related ESG trends.

The enabling environment for sustainable investment in India is analysed in Chapter 6, which focuses on ESG transparency and disclosure; the availability of research, indices and rating services; and key organisations that are likely to be relevant to any future work to develop sustainable investment in India. This includes information on an upcoming initiative by the National Stock Exchange of India (NSE), UNPRI and other partners that is likely to be one of the key developments in 2009 in this respect.

Finally, Chapter 7 provides a forward-looking discussion on the current status of sustainable investment in India and the prospects for future market development. Chapter 7 concludes with a number of recommendations that focus on strategies for making further progress in both the listed equity and private equity sectors.