Abstract

The growing threats posed by environmental and climate crises have recently become a significant force for the nations to engage investors as key players in pursuing sustainable growth. This involves integrating Environmental, Social, and Governance criterions into investment strategies. As sustainability and responsible practices gain prominence, Environmental, Social and Governance (ESG) investing is increasingly recognized as a transformative force on global financial markets. In India, ESG investing is gaining importance, fuelled by increasing regulatory demands, investor interest, and a growing recognition of responsible business practices. This research paper aims to thoroughly examine and critically assess the concept of ESG investing along with ESG in action. The study explores the evolution, recent regulations, strategies, challenges, and future prospects of ESG investing in India. Additionally, it seeks to address the pertinent question of whether ESG investments yield higher returns and investigates the correlation between strong ESG performance and stock price appreciation. The researchers have employed a doctrinal research methodology to carry out this study. Previous studies have produced mixed conclusions regarding the correlation between ESG investments and their financial returns. However, the authors of this research, after accounting for the country’s commitment and the companies’ dedication to sustainable growth, along with recent data supported by ongoing regulations such as mandatory CSR & BRSR and rising investor demand, have identified a positive relationship between ESG performance and financial outcomes. This correlation is demonstrated across various metrics including risk, stock returns, profitability, and long-term performance. However, despite these progressions, challenges remain, such as the necessity for stronger regulatory frameworks, uniform ESG measurement standards, and improved corporate transparency.

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