Green Gains: Unravelling the Performance Dynamics of ESG Indices Against Nifty 50

Abstract

Environmental, Social, and Governance (ESG) investing has surged globally as investors increasingly prioritize responsible and sustainable investing criteria alongside traditional financial metrics. In India, this trend aligns with both a regulatory push for sustainable business practices and rising investor demand for funds meeting ESG standards. While the Nifty 50 index serves as a benchmark for Indian equity markets, it lacks ESG considerations, creating a gap for investors seeking financial performance alongside corporate responsibility. This paper examines the comparative performance of three ESG-focused indices - Nifty 100 ESG Index, Nifty100 Enhanced ESG Index  and Nifty 100 ESG Sector Leaders Index - against the Nifty 50, providing insights on performance, risk resilience, and sectoral dynamics. Using return analysis, beta values, and descriptive statistics, this study identifies trends underscoring ESG indices’ resilience during economic downturns Findings suggest that ESG indices offer competitive returns and lower volatility, making them viable options for risk-averse and socially conscious investors. These results contribute to the evolving discourse on ESG investments in emerging markets, highlighting their role in balancing financial returns with responsible investing principles.