Mukesh Ambani-owned Reliance Retail is said to have decided to ditch its non-vegetarian chicken restaurant business, apparently because many of his staunch investors dislike the idea on religious or ethical grounds. Many Jains and Gujaratis have serious reservations about Reliance's chicken business because they are strict vegetarians.
However, Ambani won't the the first businessman to decide to exit a business on investor pressure, and on ethical grounds, for religion-influenced investing has been an important trend for quite some time now.
While Muslims have their Shariah-compliant funds and avoid investing in anything that uses pig-meat, Jains and Hindus have taken to creating Dharmic funds that avoid investing in alcohol, sugar and leather. In the west there are companies and funds that label themselves as Christian retailers - and the trend began sometime in the late 1990s.
Reliance Industries, chairman and managing director, Mukesh Ambani. AFP
the last decade, Hindu, Jain and Buddhist Dharmic funds also made a start, and Dow Jones even developed an index for Dharmic Funds, which invest in good governance and green companies.
In short, Ambani's exit from the chicken business is one of a piece with this global trend - even though his exit may have something to do with investor pressure.
The move is part of a growing global trend of ethical investing where in faith-based mutual funds typically screen out stocks of companies that violate the tenets of a given religion or religious denomination. The concept entails investing in companies without compromising on values.
In some cases, a combination of negative screens are used to eliminate arms manufacturers and other frowned-upon activities along with positive screens (to favour businesses with a good record on corporate social responsibility or that are involved in low-carbon industries, etc.
Socially responsible investment has been creating waves in the sea of global investment for the last two decades and has emerged as a specific investment class with several global investment banks creating special teams to work on this. A number of indices and exchange traded funds (ETFs) based on the socially responsible investment theme have been launched in recent years. An effort is made to promote and support companies who practice environmental stewardship, social justice, social development, human rights, gender equality, good corporate governance and diversity among others.
And now it seems cause-driven investment is gaining momentum in India too.
For instance, the Islamic Shariah prohibits profit-making from interest. Shariah-compliant funds cannot invest in equities of companies that are into gambling, lottery/contests, animal produce, liquor, tobacco, entertainment-like films, or in hotels, banks and financial institutions. Such lines of business are considered 'haram'. This is why all Shariah-complaint funds (ethical funds) do not invest in them.
In India, there are a few such schemes in the BNP Paribas Sustainable Development Fund, the Taurus Ethical Fund, the Tata Ethical Fund and the Shariah BeES that practice socially responsible investing in one form or the other. A couple of years ago the S&P ESG India was launched which provides investors exposure to 50 of the best performing stocks in the Indian equity market as measured by environmental, social, and governance parameters. In 2007, the ABN Amro Sustainable Development Fund was launched for investing in companies with good environment, social and governance values but the response to it was quite lukewarm.
For ethical investing to really take off in India, one needs greater transparency in social, environmental and governance factors. Currently, it is difficult for socially responsible investors to put a significant part of their investment in a developing markets like India due to lack of information.
Disclosure: The Reliance Group has funded the promoter of Network18, which publishes Firstpost
via Business - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNFmrriFPokzkNb6g5wrJahrcU1ZlA&url=http://www.firstpost.com/business/mukesh-ambani-chickens-out-and-its-part-of-a-longer-term-trend-1288677.html
Put the internet to work for you.
No comments:
Post a Comment