The Kerala state cabinet has approved a pioneering environmental, social, and governance (ESG) policy aimed at attracting responsible global capital and fostering environmentally sustainable industrial development.
The policy is specifically designed to promote industries that are low in pollution and align with the state’s fragile ecosystem and high population density. By formalizing the ESG framework, Kerala seeks to position itself as a leading destination for ESG-compliant investments in the country.
“Kerala has now become the first State to implement a comprehensive ESG policy,” said P. Rajeev, Industries Minister, Kerala, highlighting the state’s focus on responsible industry and responsible investment.
The policy will be in effect for five years (until 2030), with the Kerala State Industrial Development Corporation (KSIDC) designated as the nodal agency for its implementation.
Financial incentives and targets:
The comprehensive policy outlines significant financial and developmental incentives to encourage businesses to adopt ESG principles. For new ESG-compliant projects, the state will offer:
100% reimbursement of capital investment for a period of five years.
An additional 10% subsidy on fixed capital investment, capped at ₹50 lakh.
Provision of low-cost loans for machinery and technology through KSIDC.
A 20% margin preference in government procurement for local ESG-compliant enterprises.
In addition to investment promotion, the policy sets ambitious sustainability goals, including achieving complete renewable energy use by 2040 and reaching carbon neutrality by 2050.
Furthermore, the policy mandates an ESG reporting system aligned with national (BRSR) and international standards (GRI, SASB) and aims to increase the representation of women in the workforce.
