By supporting scalable and profitable business models, investors can play a central role in leading India to a sustainable fashion powerhouse and a global role model for ethical and environmentally conscious practices
Sustainable investment in India has grown significantly in recent years. Between 2016 and 2018, India's sustainable investment market grew by a whopping 34 percent to $11.6 billion, as reported by the Global Sustainable Investment Alliance. Additionally, a study by Benori Knowledge predicts that Indian private equity (PE) and venture capital (VC) firms will invest $125 billion in sustainable projects by 2026, with a 46 percent compound annual growth rate (CAGR).
2023 witnessed a rise in conscious consumerism, with sustainable alternatives gaining greater attention. Whether it was something as simple as an apparel choice or something as crucial as an investment consideration, sustainability became the key element influencing decisions.
This trend is projected to acquire greater traction as we approach a critical era defined by not only the battle against environmental change but also redefining humanity’s purpose and creativity in the age of AI.
The winds of change, particularly in the area of finance, are accelerating a transition defined by sustainability and responsible investing. Modern-day investors are increasingly seeking opportunities to match their portfolios with the global shift towards renewable and environmentally friendly sources.
Enter sustainable investment, a practice that implies capital investment in sustainable businesses that yield a respectable return so the funds can be reinvested and used for other ventures. This approach aims to create a positive impact on the planet and society while aligning with long-term economic sustainability.
Sustainable investments consider the broader implications of business activities, emphasising a balance between profit and positive societal and environmental outcomes. Through efficient business models and decision-making, investors are now laying open a playground for brands that echo similar sentiments, expanding the overall sustainability ecosystem, positioning themselves for long term financial successes in a rapidly changing environment, and setting long term trends.
Key sustainable investment trends that will redefine 2024
Creative, cultural and circular (3C) sectors
The handcrafted and artisanal industry lies at the forefront of the creative and cultural sectors.
With a wealth of traditional knowledge and a diverse range of talents, India enjoys a significant competitive advantage in this field. The industry produces livelihoods that provide dignity and respect in addition to supplementary income.
The handcrafted and craft industries have a significant yet natural influence on the Sustainable Development Goals (SDGs), which makes them a top target for sustainable investment.
Investments in the 3C industry will therefore undoubtedly increase in 2024 since it permits the preservation of traditional knowledge, skills, and culture. Moreover, owing to evolving preferences, significant growth opportunities are projected to arise in the 3C sector, producing value for entrepreneurs, investors, and craftspeople.
Circular economy investments
The circular economy offers an alternative to conventional linear models, placing a higher priority on a regenerative system and reducing resource depletion while encouraging recycling, ethical waste management, and sustainable growth.
Amidst the shift towards sophisticated environment-friendly materials and recycling technology, investors are primarily seeking possibilities to invest in businesses that implement circular business models that prioritise waste minimization, sustainable manufacturing methods, and effective resource management.
Sustainable fashion investment
Given our indigenous traditions and crafts, design, technology, and marketing acumen, India can emerge as a prominent source for ethical textiles and sustainable fashion. India is already the second largest textile producer globally, with 51 percent of the world’s organic cotton grown in India, a source of 95 percent of the world’s handmade textiles, and natural fibres that are 100 percent carbon neutral.
These also include indigenous cotton that requires less irrigation, no special fertiliser or insecticides, and only seasonal rains. India also has animal wool, biodegradable fabric from banana thread, hemp, bamboo, recycled PET bottles, and discarded plastic sheets. Plus, the country has an abundance of weavers and traditional weaving skills.
By supporting scalable and profitable business models, investors can play a central role in leading India to a sustainable fashion powerhouse and a global role model for ethical and environmentally conscious practices.
Renewable energy and clean technology
With the global focus on combating climate change, investments in solar, wind, and other renewable energy sources are projected to soar. There are multiple companies providing innovative solutions for energy efficiency, electric vehicles, and sustainable infrastructure.
Consequently, investors are increasingly prioritising investment in renewable energy projects and clean energy solutions in an effort to strike a balance between financial gains and beneficial environmental effects. Thus, as we progress towards 2024, businesses that leverage innovation for sustainability are likely to garner significant attention from environment-conscious investors.
Social impact and community development
The days when investors primarily considered the broader outlook of the business prior to investing are long behind. Modern-day investors increasingly look forward to companies that are cognizant of their actions and prioritise community development. This trend involves directing capital towards companies that prioritise fair labour practices, diversity, and community engagement.
As 2024 unfolds, contemporary investors will be increasingly seen supporting businesses that contribute positively to society, addressing issues such as income inequality, poverty, and social justice. This pattern is indicative of a larger movement in favour of a more comprehensive understanding of sustainability that takes social and environmental aspects into account.
Community-based tourism
The trend of supporting local businesses has been gaining traction for a while now. In this context, community-based tourism is becoming more and more popular, highlighting the significance of strengthening local economies.
And 2024 is expected to be no different. Investors will be seen investing in sustainable tourism initiatives that empower local communities and respect cultural integrity. This can involve supporting eco-friendly accommodations, responsible travel agencies, and community-based tourism projects that promote cultural exchange while minimising environmental impact.
Sustainable investing: Future ahead
The ever-changing financial landscape presents a multitude of opportunities for people looking to make wise investments. Thus, it is safe to assert that 2024 will be a turning point for sustainable investments, owing to a greater awareness of the interdependence of social, governance, and environmental characteristics.
The prospect for sustainable investments to yield favourable environmental outcomes and substantial financial gains appears encouraging, particularly as the global community embraces a more environmentally- conscious and socially equitable future.
(Vipul Jain is Co-founder of Hearth Ventures.)