In its bid to strengthen environmental, social and corporate governance (ESG) practices among Indian mid-corporates, Chennai-based Vivriti Group companies - Vivriti Capital and Vivriti Asset Management (VAM) - have integrated a comprehensive ESG framework, exclusion list and rating mechanism in its lending and investment practices.

Vivriti Capital is a non-banking finance company (NBFC) and Vivriti Asset Management (VAM) is a home-grown fund manager focussed on providing credit to mid-market corporates. The two companies have committed over Rs 5,000 crore of debt financing to high-impact industries and low ESG risk sectors in FY23.

“This year, of all the money that we will invest, disburse or lend, at least Rs 5,000-6,000 crore will go towards high-impact industries, including agriculture, healthcare, clean energy, microfinance, affordable housing finance and education finance to name a few,” Vineet Sukumar, CEO, Vivriti Capital told BusinessLine.

"The principles of ESG have always been fundamental to what we do. But, so far we have not proactively measured, monitored and created a separate framework around it. We started doing that around 8-9 months back,” he added.

Vivriti has set up a two-member team that began focusing on ESG risks, specifically for each of the clients in its portfolio. Its ESG rating will go live in next 30 days, following which every portfolio company it onboards will have to go through a credit rating as well as an ESG rating. While the credit rating reports are generated on a quarterly basis, Vivriti plans to run the ESG ratings on an annual basis.

“Every single time we do a due diligence on a company, our team sends out a five-page report with observations on business, strategy, production, inventory, sales, process, team structure and governance. Now, we are planning to beef it up by adding commentaries on ESG risks, shortfalls on ESG compliance, inadequate policy, processes, etc. The detailed feedback goes to the promoter and CEO,” Sukumar said.

Over the next 6-12 months, Vivriti itself will seek an ESG rating of its own and it is also looking at registering with large global impact measurement organisations.

“ESG rating will have an impact on both access to funds and pricing because we expect to see pools of capital from international investors. We have already raised around $140-150 million of impact capital till date. Now, with a concerted effort towards measurement, monitoring and engagement with borrowers, this can become much bigger,” Sukumar said.

The asset management firm VAM is in advanced discussions with a few development financial institutions (DFIs) from Western Europe for a climate mitigation bond fund. The fund envisaged to be $100-150 million, is aimed at holding clean energy assets to the tune of 50 per cent, while the rest will be divided between Agri, WASH (water, sanitation and hygiene) and healthcare sectors.