Published Online:January 2025
Product Name:The IUP Journal of Accounting Research & Audit Practices
Product Type:Article
Product Code:IJARAP190125
DOI:10.71329/IUPJARAP/2025.24.1.362-371
Author Name:Ankur Jain and Archana Rathore
Availability:YES
Subject/Domain:Finance
Download Format:PDF
Pages:362-371
The paper evaluates environmental, social and governance (ESG) mutual funds in India in terms of their ESG scores, comparing them with their benchmark ESG Index and the largest nonESG equity mutual fund managed by the same Asset Management Company (AMC) or fund house. The study found that in 80% of the cases, ESG mutual funds exhibited higher cumulative ESG scores when compared with their nonESG counterparts managed by the same fund house. However, a significant number (40%) of ESG mutual funds did not outperform their benchmark ESG index in terms of their comparable ESG scores. While the overall trend is in a positive direction, the findings prompt a revisit of the efficacy of ESG investment strategies employed by these fund houses. The internal comparison of ESG scores within fund houses suggests a conscious effort to integrate ESG considerations into investment decisions. However, the inability to consistently meet the ESG scores of the benchmark ESG Index serves as a call to action for fund managers to gain a more comprehensive understanding of the complexities of ESG investing and to closely align with published benchmarks to ensure genuine progress towards sustainable investment practices. The study also encourages investors to adopt a more discerning approach while assessing the suitability of ESG mutual funds and consider factors beyond benchmark comparisons to make informed investment decisions in line with their sustainability goals.
In recent times, there has been a notable shift in investment practices, marked by the increasing integration of environmental, social and governance (ESG) considerations in the investment decision-making processes.