SBI Mutual Fund claims to become the first fund house in India to implement the environmental, social & governance (ESG) framework. In fact, the fund house has repositioned SBI Magnum Equity Fund as SBI Magnum Equity ESG Fund with effect from May 16, 2018.
ESG framework is an approach to investment where environmental, social & governance (ESG) factors, in combination with financial considerations; guide the selection of portfolio and management of investments.
The total AAUM of SBI Magnum Equity ESG Fund was at Rs.2,116 crore as on May 31, 2018.
In a press release, Anuradha Rao, Managing Director & CEO said, ‘’ESG compliance marries true values of our company keeping in mind the benefits to all its stakeholders. Hence, we decided to integrate this framework into our investment decision-making process a few years ago. It was a challenge to implement the framework in India due to the lack of available data and disclosures to facilitate the evaluation of companies on ESG parameters. We are happy that our commitment made this possible’’
Explaining the ESG framework of the SBI Magnum Equity ESG Fund, Navneet Munot, ED & CIO said, “Investment managers owe a fiduciary duty. First to investors and then to the larger community they operate in, which can probably be best served by not trying to maximise short term profitability but by creating an environment, which ensures optimum long term returns and growth. We have a comprehensive check list of over 50 parameters from across the governance, environmental & social aspects of a particular company’s management of its affairs, with the emphasis being in that sequence.’’
D.P Singh, ED & CMO said ‘’Our ‘ESG Framework helps us delve into a company’s management practices, culture and risk profile and helps us to question the management if the board’s decisions are harmful to the long-term shareholder. ESG themed portfolios are built for retail investors by avoiding investment in a list of restricted business segments’’
The fund objective is to provide long-term growth in capital through an active management of investments in a diversified basket of companies following environmental, social and governance (ESG) criteria.
It will be a thematic ESG fund, with large cap bias and benchmarking itself with Nifty ESG Index.
Ruchit Mehta is the Fund Manager for SBI Magnum Equity ESG Fund.
