By 2024, almost 40% of Indian digital infrastructure bids will require vendors to present their environmental initiatives and progress, according to market research and analysis firm IDC. IDC India Research Director for Enterprise Solutions and ICT Practices Sharath Srinivasamurthy stated ESG (environment, social, and governance) is rapidly becoming a focus for Indian organisations expanding beyond reporting obligations during the launching of the ‘IDC 2022 Future Scape’ report.
“By 2024, 40 per cent of Indian digital infrastructure RFPs (request for proposals) will require vendors to prove progress on ESG/ sustainability initiatives with data, as CIOs rely on infrastructure vendors to help meet ESG goals,” the report said. The forecast is based on several conversations IDC has had with both IT buyers and vendors between now and 2021.
Growth in India’s IT Spending
According to the report, by 2024, digital-first businesses will have shifted 50% of all technology and services spending to as-a-service and outcomes-centric models, enabling compassionate customer experiences and resilient operational models. India’s total IT investment is expected to rise to $76 billion in 2022, up from $70 billion in 2021, according to IDC.
India’s IT spending is expected to expand at a compound annual growth rate (CAGR) of 10.9 per cent over the next five years (2020-25) to USD 96 billion by 2025, and USD 89 billion by 2024, according to the firm. According to the IDC 2022 Future Scape research, by 2024, 30% of cloud users will have established a dedicated FinOps (a developing cloud financial management discipline and cultural practise) role to automate policy-driven observability and optimisation of cloud resources to maximise value.
According to the survey, by 2024, 35% of businesses would devote half of their security budgets to cross-technology ecosystems and platforms geared for rapid consumption, as well as unified security capabilities to support agile innovation. According to the report, central bank digital currency rollouts are picking up steam, with more than 15% of tier-1 corporate banks offering integrated solutions to unlock liquidity from both traditional and digital assets by 2025.
India’s Performance in ESG Funds
In the recent several years, the Indian investment management market has seen the creation of nine ESG-focused funds. According to a recent study conducted by CFA Society India and CFA Institute on Indian ESG funds, ESG integration methods are still in their infancy, and there is significant variation across ESG funds in terms of investment approaches, ESG scoring system, and outcomes. As of November 2021, the number of stocks in these funds ranged from 23 to 54, and many of them owned a considerable amount of their assets outside their benchmark universe. They also have variable levels of exposure to carbon-intensive industries like oil and gas, with some funds outperforming their benchmark.
Education for Growth
Focused investor education is required to generate and sustain the growth of ESG investing. When offering ESG goods, investment advisors should work with investors to determine their ESG and financial preferences. When investing in such products, investors should do their own research and comprehend the investment objectives and features.