Before picking a stock, investors usually look at how the business is growing, the quality of the management and its execution capabilities as well as the probability of getting good returns as a minority shareholder. But in the last few years a new trend has emerged wherein investors also study the company’s non-financial performance under environmental, social and governance norms, also known as ESG. Ask anyone why an FMCG stock like ITC is still trading at a PE multiple of less than 22 and the discussion would lead to how institutions are avoiding the stock for its tobacco business.
In today’s special podcast with independent market expert Rajiv Nagpal, we discuss whether you too should start considering ESG norms while picking a stock.
Welcome to the show Mr Nagpal.
1) Do you think ESG investing is just a fad or a structural theme that is going to stick around for several years, if not decades?
2) If smart money is moving towards ESG, shouldn’t retail investors too start taking it seriously? Should ESG score be a part of the checklist before buying a stock for the long term?
3) Isn’t ESG investing still a niche in India? How much importance do you think domestic institutional investors are giving to such norms?
4) Let’s also talk about returns. If a stock is rated very high on ESG and the business is also growing well, is it likely to outperform?
Thank you Mr Nagpal. That’s all in today’s special podcast. But do keep checking this space for more such interesting content. Good bye!