Complete Guide to BSE 100 ESG Index: Selection Criteria to Investment Process

Sustainable Investment has picked up in India with the growing concern over environmental and social as well as governance issues. With the Net Zero target set by the government, sustainable investment has also become crucial now. However, since this concept is new thus having a solid benchmark is crucial for analyzing stocks to invest in your sustainable investment journey, isn’t it? One such benchmark is the S&P BSE 100 ESG index which offers the sampling of top companies following ESG guidelines while keeping the risk and return ratio like BSE 100. 

This article will revolve around the S&P BSE 100 ESG Index. We will be discussing its constituents, selection criteria, investment process, returns, risks, and many other details, which are necessary to be analyzed before making investment decisions. 

BSE 100 ESG Index – Overview & Constituents 

S&P BSE 100 ESG index was started on 26 October 2017 which mainly encapsulates the top 54 stocks of such companies that adheres to the ESG norms and work towards sustainable investments. Apart from doing so, this index also maintains a return or performance similar to BSE 100 and manages its risk factors similarly as well.  

The constituents of the BSE 100 ESG index are as follows – (As of 27 December 2024)

Apollo Hospitals Enterprise Ltd	Idfc First Bank Limited	Grasim Industries Ltd.
Ashok Leyland Ltd.	Indian Hotels Co.Ltd.	Havells India Ltd.
Asian Paints Ltd.	Indian Oil Corporation Ltd.	Hdfc Bank Ltd.
Axis Bank Ltd.	Indusind Bank Ltd.	Hdfc Life Insurance Company Ltd.
Bajaj Finserv Ltd.	Infosys Ltd.	Hero Motocorp Ltd.
Bharat Petroleum Corp. Ltd.	Interglobe Aviation Limited	Hindalco Industries Ltd.
Bharti Airtel Ltd.	Jsw Steel Ltd.	Hindustan Unilever Ltd.
Britannia Industries Ltd.	Kotak Mahindra Bank Ltd.	Icici Bank Ltd.
Cipla Ltd.	Lupin Ltd.	Apollo Hospitals Enterprise Ltd
Colgate-Palmolive (India) Ltd.	Mahindra & Mahindra Ltd.	Tata Motors Ltd.
Cummins India Ltd.	Marico Ltd.	Tata Steel Ltd.
Dabur India Ltd.	Maruti Suzuki India Ltd.	Tech Mahindra Ltd.
Dlf Ltd.	P.I.Industries Ltd.	Titan Company Limited
Dr.Reddys Laboratories Ltd.	Power Grid Corp. of India	Ultratech Cement Ltd.
Eicher Motors Ltd.	Reliance Industries Ltd.	United Spirits Ltd.
Federal Bank Ltd.	State Bank Of India	Vedanta Limited
Gail (India) Ltd.	Sun Pharmaceutical Industries	Wipro Ltd.
Godrej Consumer Products Ltd.	Tata Consumer Products Limited	Yes Bank Ltd.

The top ten stocks by weightage – 

1. HDFC Bank Ltd.: 15.06%
2. ICICI Bank Ltd.: 10.05%
3. Reliance Industries Ltd.: 9.18%
4. Infosys Ltd.: 7.71%
5. Bharti Airtel Ltd.: 4.63%
6. State Bank of India: 3.52%
7. Axis Bank Ltd.: 3.5%
8. Mahindra & Mahindra Ltd.: 3.2%
9. Kotak Mahindra Bank Ltd.:2.8%
10. Hindustan Unilever Ltd.: 2.25%

The top sectors by weightage – 

1. Consumer Discretionary: 20.37%
2. Financial Services: 20.37%
3. Fast Moving Consumer Goods: 14.82%
4. Commodities: 12.96%
5. Healthcare: 9.26%

Selection Criteria

The selection criteria for BSE 100 ESG Index Stocks are as follows – 

• In the preceding six months of the stock selection day, the non-trading days must not exceed five days. 
• Now stocks satisfying the first criteria are ranked on the basis of average daily float-adjusted market capitalisation. 
• The stock should also have derivative linkage. However, if the derivative linkage criteria are not met, then the next stock is evaluated as per the ranking. 

Factors Affecting S&P BSE 100 ESG Index

The following factors affect the S&P BSE 100 ESG index the most – 

• Environmental concerns: The growing global warming, an increasing number of cyclones, an increasing carbon footprint, and all other environmental issues, along with social stigmas, and governance issues affect this index the most. 
• Earnings reports: Then the earnings report of the constituting stocks, annual reports, and quarterly reports affect the index movement. If the reports are as per anticipation, or positive, it can take the index higher and vice versa. 
• Corporate announcements: Similar to earnings reports, corporate announcements can affect the index. If the constituting companies announce something big and significant or any regulatory bodies snap any charges on them, which is of a huge amount or so, the prices of the stocks will move up and down, and thus the index will be affected.  
• ESG policies: Now coming to another crucial factor, which can affect this index significantly, are any policies, and norms suggested by the government related to ESG. As the policies will affect the companies, the index will also be affected. 

BSE 100 Index Calculation Method

For the calculation of the BSE 100 ESG index value, the following formula is used – 

Index Value = (Current Market Capitalization/ Base Market Capitalization) * Base Index Value)

Here for the market capitalization, the float-adjusted market cap weighted method is used where the market capitalization is considered based on the float-adjusted value. Once the market capitalization of each of the constituents is determined, they are summed up and used as the current market capitalization. Then the same is divided by the base market capitalization and multiplied by a base index value. 

Performance and Returns

BSE 100 ESG Index has offered consistently higher returns over the years. Here is a snapshot of the same – 

Total Returns

YTD: 14.05%

3 month: – 3.26%

1 month: 0.59%

Annualised Total Returns

1 Year:  22.45%

3 Years: 13.60%

5 Years: 17.63%

10 Years: 13.22%

Enjoy investing in the top ESG stocks from the BSE 100 ESG Universe with the best Trading app!

Risk and Volatility

The annualized risk of BSE 100 ESG is as follows for Total returns – 

1 Year:  12.65%

3 Years: 12.80%

5 Years: 19.32%

10 Years: 16.72%

Annualized risk-adjusted returns 

1 Year:  1.77%

3 Years: 1.05%

5 Years: 0.91%

10 Years: 0.79%

How to Invest in the BSE 100 ESG INDEX?

You can invest in the BSE 100 ESG index using ETFs, or index funds, or you can trade them on the trading platform. You can also trade BSE 100 ESG futures and BSE 100 ESG options in the F&O section of Shoonya’s app. To do so, you have to add the index to your watchlist following these steps – 

• Open the Shoonya app.
• Head to the “Watchlist” tab located at the bottom of your screen.
• In the search bar, type “BSE 100 ESG IN” and add it to the watch list, and then you will be able to see the indices.
• Once you find your desired index, click on the add option given on the right side.
• Now you can see the index on the watchlist. 

Conclusion

Investing for a sustainable future is the need of the hour. With every passing day, environmental concerns are increasing, and if we do not act now, nothing can change for the better. As investors, you can be a part of this change from the core and that is by investing in such companies, that are consciously making efforts to reduce their carbon footprint, working for the social upliftment, and working on their governance to bring the best out of their people. The BSE 100 ESG index offers one of the best grounds to start your sustainable investment today. 

FAQs|S&P BSE 100 ESG

Source: BSESensex

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Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.