Blitz Bureau
NEW DELHI: More than 90 per cent of Indian institutional investors now consider sustainability information essential in their due diligence process, a study by Deloitte and The Fletcher School at Tufts University said, adding as sustainability becomes more integral to investment management, trust in the ESG data used to inform these decisions is lacking, posing challenges in accessing trustworthy data.
“According to Indian investors, the inconsistency or incomparability of ESG rating data (73 per cent), cost constraints on integrating ESG data into investment decision models (71 per cent) and lack of measurable outcomes in corporate disclosures (70 per cent) reduce the trust factor of available sustainability data, inhibiting their ability to implement ESG investment strategies,” Deloitte said citing its study titled ‘Investor trust in sustainability data’.
The study further highlights that Indian investors are more likely to trust in-house proprietary data systems and audited (or assured) corporate disclosures for sustainability analysis. However, as compared with global investors, Indian investors are less likely to rely on external data sources and ratings.
Viral Thakker, Partner and Sustainability & Climate Leader, Deloitte South Asia, said, “While the focus on sustainable investing is commendable, the lack of access to trustworthy data remains a significant hurdle for Indian investors. There is a critical need for improved reporting standards to build investor confidence and facilitate informed decision-making.
“Organisations must strengthen sustainable governance capabilities, invest in high-quality measurement and reporting systems, and seek third-party assurance for their disclosures. By prioritising transparency and engagement, companies can align with investor expectations and contribute to social and environmental outcomes, fostering a sustainable future for all.”
Highlighting the growing trend of sustainable investing, the report states that about 78 per cent of Indian institutional investors invest up to 30 per cent of their funds to finance organisations that aim to achieve specific and measurable ESG objectives. About 1 per cent invest more than 60 per cent of their funds in organisations that meet definitive ESG objectives. About 41 per cent of Indian investors cite regulatory requirements as the top driver for incorporating sustainability factors into investment decisions, closely followed by the pursuit of improved social and environmental outcomes (36 per cent each). This contrasts with global benchmarks, where investors prioritise financial performance and risk diversification.
