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Do you think Environmental, Social, and Governance (ESG) can lead to shifts in environmental, economic, and social systems of the country? Critically Examine.

Topic: Important aspects of governance, transparency and accountability, e-governance applications, models, successes, limitations, and potential;

3. Do you think Environmental, Social, and Governance (ESG) can lead to shifts in environmental, economic, and social systems of the country? Critically Examine. (250 words)

Difficulty level: Tough

Reference: Live Mint 

Why the question:

A current fad that has struck the fancy of asset managers and regulators is environmental, social and governance (ESG) investing. Whether this will endure to become a staple in inancial markets or go the way of bell bottoms and floral shirts is something that time will tell, but, given the fact that ESG funds hold $2.7 trillion globally and about ₹12,500 crore in India, a dispassionate analysis of the theory and empirics around ESG investing is in order.

Key Demand of the question:

To write about ESG, its benefits and its potential to bring about changes.

Directive word: 

Critically examine – When asked to ‘Examine’, we have to look into the topic (content words) in detail, inspect it, investigate it and establish the key facts and issues related to the topic in question. While doing so we should explain why these facts and issues are important and their implications. When ‘critically’ is suffixed or prefixed to a directive, one needs to look at the good and bad of the topic and give a fair judgment.

Structure of the answer:

Introduction: 

Begin by defining ESG

Body:

First, write about the various features of ESG and the benefits associated with it.

Next, write about the readiness of India to adopt ESG – mention areas which it can and mention areas which it cannot. Also mention how India can adopt ESG and still achieve its developmental objectives.

Next, write about the shortcomings of ESG and its limitations.

Conclusion:

Conclude with a way forward.