In recent years, stock market investing has seen a great shift. Investors and traders want more than just the returns. They are looking for sustainable investments to make a real difference. This is where ESG (Environmental, Social, and Governance) investing in India has made its mark.
With the increasing impacts of climate change and a global call for sustainable development, India is at a turning point. And the data speaks for itself — there are more than 11 sustainable ESG funds in India today.
ESG investing is the future of responsible investing
This blog will break down the ESG full form and investment opportunities that make ESG investing in India a powerful tool.
What is ESG Investing?
ESG investing involves allocating funds to companies that follow ethical and responsible practices in three key areas:
- Environmental: How companies handle waste, energy use, and environmental impact.
- Social: How they manage relationships with employees, suppliers, and communities.
- Governance: How companies are managed, including executive pay, audits, and shareholder rights.
ESG full form is Environmental, Social, and Governance investing.
Here are some recent growing trends of ESG investing in India:
- Growth of ESG Funds in India: From ₹2,747.36 crore in 2020 to ₹9,753 crore in 2024.
- SEBI BRSR Coverage: Top 1,000 listed companies by 2027.
- Future Projections: ESG investments could make up 34% of total domestic AUM by 2051.
Know the 7 benefits of investing in ESG funds!
Why ESG Investing is Gaining Popularity
India’s push towards ESG (Environmental, Social, and Governance) funds is motivated by a few key factors:
- Climate Change & Sustainability
Investors are increasingly looking to support initiatives that contribute to a sustainable future. These include renewable energy, electric vehicles, and green technologies.
- Regulatory Reforms
The Securities and Exchange Board of India (SEBI) has introduced the Business Responsibility and Sustainability Reporting (BRSR) mandates. This means it is mandatory for top Indian companies to disclose their sustainability practices.
- Government Policies
India’s commitment to achieving Net Zero emissions by 2070 has sparked significant capital flows into ESG-friendly projects. This initiative is projected to require over $10 trillion in green investments. This is further fueling the growth of ESG investing in India.
Types of ESG Investments
Here are some ways to invest in ESG:
- ESG Stocks in India: You can directly invest in companies that have strong ESG ratings.
- ESG Mutual Funds: These are managed funds that provide a diversified portfolio of companies meeting ESG criteria.
- ESG ETFs: Exchange-traded funds focus on ethical sectors and typically exclude industries like tobacco, weapons, and adult entertainment.
Invest in mutual fund and ETFs with zero brokerage!
- ESG Index Funds: These funds track specific ESG indices, such as the Nifty 100 ESG Index and S&P BSE 100 ESG Index. This allows investors to benchmark their ESG investments.
| Investment Type | What it Offers |
| ESG-Compliant Stocks | Direct ethical investments in individual companies. |
| ESG Funds | Diversified portfolio managed by experts. |
| ESG ETFs | Easy-to-trade funds with an ethical focus. |
| ESG Index Funds | Track the performance of ESG indices for benchmarking. |
ESG Companies in India- 2024
Here are some of the top-performing ESG (Environmental, Social, and Governance) companies in India:
| Company Name | Stock Price (₹) |
| Infosys Limited | 1,876 |
| Lupin Limited | 2,186.35 |
| Nestlé India Limited | 2,670.00 |
| Hindalco Industries Limited | 756.95 |
| DLF Limited | 906.35 |
| ICICI Lombard General Insurance | 2,163.60 |
| HCL Technologies Limited | 1,795 |
| Vakrangee Limited | 35.66 |
| Aditya Birla Fashion and Retail | 363.85 |
| Zensar Technologies Limited | 672.60 |
| The Federal Bank Limited | 195.55 |
| Hindustan Unilever Limited | 2,958 |
| Vesuvius India Limited | 5,401.20 |
These companies are leading the way in adopting ESG principles.
The Future of ESG Investing in India
The future of ESG investing in India looks bright. India is expected to witness massive growth. ESG investments could represent 34% of India’s total assets under management (AUM) by 2051. India’s goal to reach net-zero emissions by 2070, along with new rules from SEBI on sustainability reporting, will also boost ESG investments. As more companies adopt ESG practices, responsible investing will likely grow, benefiting both investors and the environment.
Conclusion
ESG investing is more than just a trend; it represents a fundamental shift in how investments are viewed in India. With growing regulatory support, investor interest, and corporate responsibility, ESG investments are expected to shape India’s economic future.
FAQs| ESG Investing in India
ESG stands for Environmental, Social, and Governance, referring to the three key factors considered when assessing the sustainability and ethical impact of an investment.
Investing in ESG allows us to align our investments with our values, promoting positive environmental and social change while seeking financial returns.
Yes, a high ESG score indicates that a company or investment performs well in terms of environmental, social, and governance factors.
ESG funds can be a good investment choice as they prioritize companies with strong ESG practices. They can provide better long-term returns.
Yes, CSR (Corporate Social Responsibility) primarily focuses on a company’s voluntary initiatives. On the other hand, ESG focuses on environmental impact, social responsibility, and governance practices.
The future of ESG investing in India looks promising, driven by increasing awareness and regulatory support for sustainable practices.
Yes, India has several ESG indices, including the Nifty 100 ESG Index and the S&P BSE 100 ESG Index.
Source: MarketScreener
______________________________________________________________________________________
Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.