ESG Investing in India: Mutual Funds, Scores, and Indices

Introduction

In recent times, ESG has played a crucial role in shaping corporate and investor behavior. For instance, when the UK’s Financial Conduct Authority tightened sustainable fund norms, several asset managers restructured their portfolios to meet higher ESG standards, reflecting how regulation now drives capital allocation.

Similarly, companies like Adani Group faced scrutiny after governance and environmental concerns, prompting investors to reassess exposure to firms with weak ESG compliance.

On the other hand, global funds such as BlackRock and Schroders continue to expand their ESG-focused mandates, signaling strong investor confidence in sustainable strategies.

These developments highlight a clear trend — investors today increasingly prefer companies and funds that integrate ESG principles, viewing them as more resilient, transparent, and aligned with long-term value creation.

In this blog, we’ll explore key ESG indices like the Nifty100 ESG and S&P BSE 100 ESG, which track companies leading in responsible and ethical practices, different ESG mutual funds available in India, and the role of CRISIL ESG scores in evaluating companies’ sustainability performance.

ESG Score

ESG stands for Environmental, Social, and Governance—three key areas that evaluate a company's impact and practices beyond financial performance:

• Environmental: Assesses a company's impact on the natural environment, including resource usage, emissions, and waste management.

• Social: Evaluates how a company manages relationships with employees, suppliers, customers, and communities, covering aspects like labour practices and community engagement.

• Governance: Looks at the leadership structure, executive pay, audits, internal controls, and shareholder rights to ensure accountability and transparency.

CRISIL assigns ESG ratings on a scale of 0 to 100, with 100 being the highest score. The ratings are categorized into five buckets:

• 0–40: Weak

• 41–50: Below Average

• 51–60: Adequate

• 61–70: Strong

• 71–100: Leadership

To determine the overall ESG rating, CRISIL evaluates a company's performance in each ESG pillar—Environmental (E), Social (S), and Governance (G)—using a weighted scoring system:

E (Environmental): 35%

S (Social): 25%

G (Governance): 40%

These individual scores are combined to reflect the company's overall ESG performance.

Methodology and Data Sources

CRISIL's ESG ratings are based on over 500 key performance indicators across approximately 65 sectors. The assessment utilizes publicly available information, including:

• Company disclosures (e.g., annual reports, sustainability reports)

• Exchange filings

• Investor presentations

• Sustainability reports

• Data from industry associations, regulators, and government agencies

This data is analysed both quantitatively and qualitatively to evaluate a company's exposure to ESG risks and its ability to manage these risks over the medium term.

You can check the CRISIL ESG score of individual companies at the ESG Ratings list

Let’s understand the ESG indices in India, which track companies demonstrating strong Environmental, Social, and Governance (ESG) practices. The following information is extracted from the NSE (National Stock Exchange) website.

1. Nifty100 ESG Index

• Designed to reflect the performance of companies that are part of the Nifty 100, based on their ESG scores.

• Excludes companies involved in tobacco, alcohol, gambling, or controversial weapons.

• The index has a base date of April 1, 2011, and a base value of 1000.

  
  

2. Nifty100 Enhanced ESG Index

• Built on the same universe as the Nifty100 ESG Index but applies stricter criteria.

• Excludes companies with ESG scores below 60 (graded B-, C+, C, or D) or controversy scores below 70.

• Focuses on companies with stronger ESG credentials, providing a more sustainability-driven portfolio.

3. Nifty100 ESG Sector Leaders Index

• Tracks the performance of sector-wise ESG leaders within the Nifty 100.

• Excludes companies with ESG scores below 60, controversy scores below 70, or those engaged in tobacco, alcohol, weapons, gambling, or nuclear power.

ESG Mutual Fund Investing in India and their performance

1. ABSL ESG Integration Strategy Fund (Inception: December 2020)

Since its inception in December 2020, the ABSL ESG Integration Strategy Fund has delivered a return of 14.55%, slightly below its benchmark Nifty 100 ESG, which returned 14.94%.

2. Axis ESG Integration Strategy Fund (Inception: February 2020)

Launched in February 2020, the Axis ESG Integration Strategy Fund has posted a 15.91% return since inception, almost mirroring its benchmark’s 16.03% return.

3. ICICI Prudential ESG Exclusionary Strategy Fund (Inception: October 2020)

Since its launch in October 2020, the ICICI Prudential ESG Exclusionary Strategy Fund has achieved a return of 19.33%, outperforming the benchmark’s 17.49%. This indicates strong stock-picking ability and effective implementation of its exclusionary strategy. The fund’s ability to beat the benchmark highlights its focus on quality and governance-driven companies that have benefited from structural market trends.

4. Invesco India ESG Integration Strategy Fund (Inception: March 2021)

The Invesco India ESG Integration Strategy Fund, introduced in March 2021, has generated 14.79% returns since inception compared to the benchmark’s 14.19%.

5. Kotak ESG Exclusionary Strategy Fund (Inception: December 2020)

Launched in December 2020, the Kotak ESG Exclusionary Strategy Fund has recorded a 13.94% return versus the benchmark’s 15.50%.

6. Quant ESG Integration Strategy Fund (Inception: October 2020)

The Quant ESG Integration Strategy Fund, which began in October 2020, is the standout performer among peers. It has delivered an impressive 29.08% return, significantly higher than its benchmark’s 17.39%. This remarkable outperformance indicates aggressive and dynamic management, possibly benefiting from tactical sector rotation and quick adaptation to market shifts.

7. Quantum ESG Best-in-Class Strategy Fund (Inception: June 2019)

Since its inception in June 2019, the Quantum ESG Best-in-Class Strategy Fund has generated 16.00% returns compared to the benchmark’s 15.83%.

8. SBI ESG Exclusionary Strategy Fund (Inception: January 2013)

Being the oldest ESG fund in the list, launched in January 2013, the SBI ESG Exclusionary Strategy Fund has delivered 14.19% returns since inception versus the benchmark’s 14.50%. Its performance remains closely aligned with the index, showing maturity and stability over time.

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Conclusion

ESG investing in India is gaining momentum as investors increasingly prefer companies and funds that integrate Environmental, Social, and Governance principles. Regulatory developments and growing awareness around sustainability are pushing companies to adopt stronger ESG practices, making transparency and risk management key drivers of long-term value. Guidance from an experienced Investment Advisor can help investors navigate these evolving opportunities effectively.

CRISIL ESG scores, along with indices like Nifty100 ESG and Nifty100 Enhanced ESG, provide benchmarks for identifying companies that lead in responsible practices. These tools help investors evaluate firms’ sustainability performance and align portfolios with ethical and resilient businesses.

ESG mutual funds in India generally mirror or outperform their benchmarks, highlighting that investing responsibly does not mean compromising on returns. From stable long-term performers like SBI ESG Exclusionary Strategy to high-growth funds like Quant ESG Integration, the ESG investment landscape demonstrates that sustainability and financial performance can go hand in hand.

FAQs

When did ESG start in India?

Formal ESG reporting in India began with voluntary Ministry of Corporate Affairs guidelines in 2009. SEBI later made disclosures mandatory for the top 100 listed firms in 2012 and expanded it to the top 1,000 through the BRSR framework from FY 2022–23.

What are the risks of ESG investing?

Risks include greenwashing, inconsistent reporting standards, and sector concentration in ESG-focused portfolios. Smaller firms may face higher compliance costs, while fund performance can fluctuate when markets shift away from sustainability-linked sectors.

Who checks India’s ESG reporting?

SEBI oversees ESG disclosures through the BRSR framework. The Companies Act and Ministry of Corporate Affairs provide supporting governance, while regulators like IRDAI and PFRDA monitor sector-specific ESG standards and reporting practices.

What is the size of the ESG market in India?

India’s ESG market stood at around USD 1.22 billion in 2024 and is expected to grow beyond USD 4.1 billion by 2030. ESG mutual funds together manage over ₹1,000 crore in assets.

Are there any ESG ETFs?

Yes. The Nippon India Nifty 100 ESG ETF and Mirae Asset ESG ETF both track ESG-compliant companies listed in India, offering investors diversified and transparent access to sustainable equity portfolios.