The Cabinet on Tuesday approved an environmental, social, and governance (ESG) policy to implement a governance framework for investments in the State.

The ESG policy has been formulated on the basis of the assessment that environmentally friendly and relatively low-polluting industries are suitable for the State’s industrial ecosystem.

In the global context of ESG becoming the central point of investment decisions, the aim is to make Kerala the leading State in the country for ESG-compliant investments.

According to a release from Industries Minister P. Rajeeve’s office, Kerala has now become the first State to implement a comprehensive ESG policy. The policy is being implemented to promote industries that are environmentally friendly, considerate of the community, and ensure transparent and value-based governance.

A campaign will be organised to create awareness among entrepreneurs and the public about ESG values. Extensive awareness programmes will be organised through school and university curriculum integration, training workshops, and seminars.

An ESG reporting system will be developed for Kerala, aligned with national (BRSR) and international standards (GRI, SASB, TCFD). Ratings and awards for ESG-compliant initiatives will be implemented. A digital e-portal will be developed. Kerala will be branded as an ESG State.

Tax exemptions, subsidies, loan concessions and start-up incubation support will be ensured to encourage the implementation of ESG principles. For ESG-compliant projects, 100% reimbursement of capital investment for five years will be provided, in addition to 10% subsidy (up to ₹50 lakh) will be provided for fixed capital investment.

The Kerala State Industrial Development Corporation (KSIDC) Limited will provide low-cost loans for machinery and technology. A margin of 20% will be provided in government procurement for local enterprises. Entrepreneurship support scheme, start-up incubation, market support, and ESG subsidies will be implemented for existing enterprises to switch to the ESG framework.

The policy aims to achieve complete renewable energy use by 2040 and carbon neutrality by 2050. Investments will be made in solar parks, floating solar, wind farms, hydroelectric plants, and biomass projects.

The policy also aims to increase the representation of women in the workforce, ensure diversity and inclusion, respect for human rights, uphold labour standards, ensure social welfare through CSR and welfare initiatives, ensure a firm stand against corruption, strengthen transparency and make ESG disclosures mandatory.

The KSIDC will act as the nodal agency for ESG adoption. The policy will be in effect for five years until 2030, Mr. Rajeeve said.