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Time to consider triple bottom line of people, planet & profits: Navneet Munot, SBI MF

ET Now|
Oct 12, 2018, 04.09 PM IST
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Navneet Munot, CIO, SBI Mutual Fund, explains the concept of sustainable investing in an interview with Ajaya Sharma of ETNow on the sidelines of Cafemutual Confluence 2018 in Mumbai.

Edited excerpts:


What is this concept of sustainable investing?

Globally it is a big trend. The asset managers have to be compliant with ESG (Environmental, Social and Governance). How your investments are going to impact the environmental footprints, social impact and governance. But in India, it is the other way round. Over the last few years, we have been working hard because we strongly believe that these parameters are as important as the financial parameters we look at while investing.

If you look at the news flow over the last several months -- be it governance related issues of auditor resignations or what is happening with one of the copper plants, the ban on construction, BS-3 vehicles, the coal mining issues -- it clearly shows that these issues cannot be ignored by the investors.

At least half a dozen companies eroded half of their market cap in the last couple of weeks purely because the needle on governance started pointing towards them. Do you think that companies that take care of the environment over the longer term, are likely to generate better returns and hence attract better funds from you community?

It works both ways. Those who are not paying attention to the environment and to the local community they will pay a big price. What we saw in coal mining reallocation was that on the positive side, those who are very particular about these issues would be a better wealth creator going forward. I strongly believe that pure focus on a single bottom line, which is profit alone, is not good. You have to see the triple bottom line, people, planet and profits.


You are making a case that high quality companies should n ot only aim at profitability but take care of the environment and high governance will start commanding premium within the sectors than others?

On governance, over the last few years, we saw clearly that the market is paying a premium for companies where the governance is perceived to be better and those who are not good, have seen the valuation gap increasing. Paying as much attention to environment and social issues is equally important because we will increasingly have greater regulatory and judicial overreach if the business community does not take care of those issues.
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