Funding A Sustainable Future

Funds now make it possible to invest in companies with sound environment, social and governance practices

- Monica Bathija

This April, Quantum Advisors and Quantum Mutual Fund sold all the shares of a major engineering and construction company from their portfolios. The reason? Governance issues and “the indifference that the company has shown for willingness to adopt due process”.

“We asked what risk assessment and analysis they had done for the Mumbai Coastal Road project. The Brihanmumbai Municipal Corporation consultants had said in their report that there was an environmental risk. But the company had done no independent risk assessment,” says Ajit Dayal, who founded Quantum Advisors in 1990. In Brazil, he says, mining giant Vale announced in March that one of its dams was going to collapse, after which it helped evacuate people. This came after another Vale-operated dam collapsed in January, killing 300 people and contaminating rivers. Vale faces about $7 billion in fines and lost 20 percent in market cap in the days after. “If Mumbai gets flooded, or if there is damage, will the company be liable? Ultimately, it would be the shareholders who would have to pay. The CEOs and top management may have retired by then and taken their bonuses and encashed their ESOPs so they will have no personal risk. So we sold our shares,” says Dayal.