Controversial ESG Incidents: Our monitoring of controversies and our decision to not include stocks which have been flagged for severe controversies have led to exclusion of an Indian Automobile company from our ESG Fund, despite other favourable financial considerations for the company.

The stock has been excluded from the ESG themed fund.

Sectoral Exclusion: We do not invest in 5 sectors under our ESG Fund viz. Alcohol, Tobacco, Adult Entertainment, Gambling and Controversial Weapons. This sectoral exclusion has led to exclusion of a large Indian FMCG Conglomerate from the ESG based fund due to its Tobacco business despite its above average ESG scores. This approach signifies our view that despite having all favourable policies and initiatives in place, if the product portfolio of the company is controversial or socially unsustainable, then the stock will not be included in our ESG Fund.

 This sectoral exclusion has led to exclusion of a large Indian FMCG Conglomerate from the ESG based fund due to its Tobacco business despite its above average ESG scores.

Corporate Governance: All the factors of Corporate Governance are very stringently monitored within the organization. Board Composition, Board Diversity, Executive Remuneration, Audit and Tax Transparency and non-involvement in any fraudulent means or evasion of taxes  are some of the factors that we look at.

Impacts including Voting against companies for Compensation Resolutions where we feel that the CEO pay is unjustified and non-coherent with the internally determined factors. We also use the Corporate Governance factors to take voting decisions in Director Election Resolutions. 

We have recently placed a beverage company on Blacklist owing to its poor ESG performance and tax evasion probes on the company.