Financial Competitiveness of ESG Investments: A Comparative Study of Portfolios across Indian and Global Markets

ESG Investing, Sustainable Investing, Portfolio Management, Risk-Return, Financial Performance, Asset Allocation, Traditional Portfolios, ESG Factors, Mutual Funds

In 2004, the World Bank and United Nations have promulgated the ESG investing framework which has a primary focus of considering sustainability practices in financial analysis. As a result of this, the regulatory bodies across the world have instructed their industries to integrate the ESG practices in their business. The investors in securities market attracted to the ESG  initiatives taken by the industries and they made their investment decision by considering the ESG factors. This has motivated many researchers to find out the nexus between ESG factors and the performance of the portfolios. In the same way, a comparative analysis between ESG and traditional funds of India, US, UK, Australia and Sweden have performed in this study. The researchers considered a sample of 30 ESG thematic and traditional  funds  for a five year period. Performance of ESG and traditional funds assessed through return & risk metrics and risk adjusted measures. It is identified that the ESG funds have a high downside risk protection ability  than the traditional funds. The ESG funds from the UK and Australia have exhibited a strong performance than the traditional funds. In the US, the traditional funds have dominated the ESG funds in terms of performance metrics. The ESG funds from India and Sweden, with a mixed results, depicts that the ESG investing is in the nascent stage.