ANALYSIS OF HISTORICAL TREND AND DETERMINANTS OF ESG INDEX PERFORMANCE IN INDIA

Abstract

The present study examines the historical growth rate in the ESG index and the determinants affecting the performance for the period April 2011 to December 2021. Based on the results of historical trend analysis the present study reports that there is a statistically significant and positive growth trend in the Nifty 100 ESG index over the study period. In long run, investment based on ESG parameters adds to the investor's wealth. Also, return on the ESG index and market index are highly positively correlated and the return on the ESG index is positive during the period of high market volatility and rising fear in the market. The study reports a statistically significant negative impact of broad market valuation on ESG index return. ESG index tends to perfor m better during the economic and financial crisis as these are viewed as safer investments. Further, this paper emphasizes the need for a reform that gives equal weightage to all aspects of ESG in the disclosure norms with special attention to the social factors which is the most neglected factor.