In a bid to make Kerala, the destination for green entrepreneurs, the Kerala State Startup Mission (KSUM) has published the draft ESG Policy.

The draft published by the nodal agency of the government of Kerala for promoting entrepreneurship aims to cultivate a thriving ESG startup ecosystem in the State.

This policy aligns with the Kerala Technology Startup Policy by the Government of Kerala, and augments the value creation, incentives, and other supports being provided to the startup ecosystem.

“KSUM is publishing the Draft ESG Policy to take up comments from the public. Once the comments are received and reviewed, KSUM will finalize and publish the policy.”

The draft also aims at the creation of 2000 ESG-focused startups and to attract Rs. 1000 crore startup investments in the ESG sector in the next 5 years.

According to the draft published last year, the objective of the policy is to create an ESG-focused startup ecosystem aligned with UN SDGs, attract and drive ESG-focused investment, and also to promote an inclusive, green, circular economy.

Sustainable Development Goals

The Sustainable Development Goals (SDGs) were adopted by the United Nations in 2015 as a call to action for people worldwide to address five critical areas of importance by 2030 and the SDGs are a set of 17 goals.

As per analysts’ report, the value of environmental, social, and governance (ESG) investments witnessed a remarkable surge, growing from $3 billion to $8 billion, which resulted in its proportion of total PE-VC investments rising from 5% to 13% within just a year.

Over the past five years, India has experienced a substantial influx of ESG-aligned investments totaling nearly $19 billion.

KSUM classification

KSUM draft classifies an entity as an ESG-focused startup on the following principles, it should be approved by DPIIT, Startup India, and should be focusing on any of the UN Sustainable Development Goals. The entity should be working on innovation, development, or improvement of products processes or services in the ESG sector, among others.

Further, the draft states that the government will provide dedicated support through research and development (R&D) initiatives, by collaborating with ESG-focused partners or agencies. Technology and ESG domain experts will be identified as mentors for supporting innovation.

The state will create and aid in bringing green financing models like Innovation Grants, Loans and other Green Financing Incentives for startups operating in the sector.