Kerala’s ambitious plan to get on the environmental, social, and governance (ESG) bandwagon and attract big investments will get a leg up when its panel of experts meets for the first time later this week to discuss the draft policy to be adopted that would make the state a responsible but high-growth investment destination.
The state government’s four-member ESG panel comprising C J George, managing director, Geojit Financial Services, Dinesh Nirmal, international business head of automation, of IBM, Akshay Mangla, associate professor of International Business at Saïd Business School and Research Fellow at Green Templeton College at the University of Oxford, and S Harikishore, MD of Kerala State Industrial Development Corporation (KSIDC) will join an online meeting from various parts of the globe on Friday. Since it’s the first meeting of the panel, Industries Minister P Rajeeve and Suman Billa, principal secretary (industries) will also join the discussions.
“Our ESG plan comes from the premise that there are three problems with Kerala. The high cost of land, high cost of labour, and the fragile environment, and therefore we need to look at industries that are not impacted by these three conditions,” Billa told TNIE, adding that the ESG framework which will be discussed on Friday would be brought under the industrial policy that the state government is adopting.
“We have identified 21 priority sectors, where the cost of land is marginal because these are high-tech industries. For us, blue-collar labour is very expensive but white-collar labour is much more advantageous than the rest of the country, especially the metro cities. And these are sectors which will not destroy the environment, So, the basic understanding is that people are our biggest assets,” he said.
Keralites hold major positions in several countries around the world and are well-known for their expertise. “The challenge is how do we retain the talent and train that talent. It’s the fundamental reorientation,” the principal secretary said.
Billa said the initial plan was to prepare the draft ESG framework in the next two months but the final draft may take longer. According to him, Kerala is not suited for industries such as chemical, metallurgy, etc., where other states can produce half the cost.
“Our focus has to be on high-tech and sunrise industries. Industries that are of not just tomorrow but the day after. We can take an early position in those industries, build up a critical mass and when these sectors take off we will be able to reap the benefits,” he explained. Graphene, micro-biology, synthetic biology, etc are some of the sectors that Kerala is betting on. “Our industrial policy says whatever we do, it has to fit into the framework of ESG,” he said.
Under the plan, every industry that comes into Kerala should fit within the framework of ESG. “This means, the companies have to be environmentally non-polluting, socially affirmative such as women’s participation in the workforce, gender equality, no child labour, and have good governance standards,” he said.
The policy would also incentive onboarding companies on ESG. Kerala, according to Billa, is the first and only state now, to adopt an ESG standard for investments. Kerala is the top-ranked state in India as per the Niti Aayog’s Sustainable Development Goal (SDG) India Index. “When we looked at various parameters including HDI (human development index), we found that Kerala is ranked on top. That was the trigger for us to use these parameters to attract investments into the state,” said another official. Globally, asset managers are expected to increase their ESG-related assets under management (AUM) to $ 33.9 trillion by 2026, from $18.4tn in 2021, according to PwC’s Asset and Wealth Management Revolution 2022 report.