The Rise of “Green Investments” and ESG Funds in India

What are Green Investments?

To put it simply, green investing is when you put your capital into projects, companies, or instruments that benefit the environment. Typically, these investment plans focus on areas like sustainable agriculture, renewable energy, energy-efficient infrastructure, etc.

For example, if you're investing in shares of a company that is building solar power plants, then you're making a green investment.

These green investments are part of the larger umbrella term ‘green finance’ that includes bonds, loans, subsidies, and other instruments.

What are ESG Funds?

ESG funds can be simply understood as mutual fund schemes. The capital here is allocated to companies that showcase strong environmental, social, and governance standards. This means these companies aren't chosen simply based on profit, but also on their sustainability.

Here is what is considered under ESG assessment:

• E or Environmental:
  Factors like waste management, carbon emissions, pollution control, etc, are assessed.
• S or Social:
  Social factors like the rights of the employees, labour practices, and more are taken into consideration.
• G or Governance:
  Factors like transparency, board structure, etc, are considered.

Why Do They Matter?

Here is why green investing and ESG funds matter and why you should care.

India's Commitment to Net Zero by 2070

India has planned to achieve net-zero emissions by 2070. To ensure this, around $10 trillion of investment will be needed in green investment across infrastructure, energy, and other sectors. The same has influenced the movement of global capital in this direction.

The government has also introduced several incentives for green investments, like production-linked incentives or PLI for EVs, renewables, and more.

Sustainable Investing by Gen Z and Millennials

Green investing offers sustainable benefits, it's trendy, and long-term. The same has made them an attractive opportunity for Gen Z and millennial investors who prioritise green investing, like ESG funds, for socially responsible investment that is on par with their values, too.

ESG Funds: The Current Scenario

In the current scenario and time, ESG investing is on the rise with a belief that companies with better environmental, social, and governance standards are likely to showcase better resilience and benefits in the long term. This, in turn, has led several institutional investors, pension funds and more to add ESG mandates in their investment strategies.

Also, the Securities and Exchange Board of India (SEBI) has asked for ESG disclosure norms with a BSSR report for the top 1000 listed companies. This helps investors have a clearer vision about the sustainability practices of the corporation, helping them make better, informed investing choices.

Here are some numbers speaking:

• The assets under management of ESG funds have grown fourfold in just 6 years. It increased to about ₹11,000 crore in 2025 from ₹2703 crore in 2019.
• Major fund houses are also launching or expanding their ESG instruments.
• Active ESG funds have shown great performance in NIFTY50 over three years, showcasing a balanced approach of sustainable investing plus returns.
• Around 60% of Indian investors find ESG products better for risk-adjusted benefits.

Benefits of Green Investing

Here are some compelling benefits that have probably led to the growth of green investing and ESG funds in India.

Wealth Creation, But Responsible

With green investing, ESG funds allow individuals to make profits without compromising environmental standards.

Balanced Approach

With climate change being a major concern, governments and institutions are now adding new rules and penalties for businesses that fail to comply with climate regulations. In that case, ESG investing reduces your risk exposure by investing in companies that follow a balanced, sustainable approach. These can be viewed as a safety net against the policy shifts, ensuring a portfolio that is future-proof in the current changing landscape.

Long-term Benefits

As mentioned, ESG investing is also gaining momentum with the belief that companies that follow ESG standards offer better management and results. This helps restore the trust and confidence of investors in the long term.

ESG investing can help investors benefit from stable returns and better protection against market fluctuations.

Factors to Consider for ESG Investing

Here is how to start your ESG investing journey. Consider reading these factors to be kept in mind while finalising your investment choices.

Layout Your Goals

Similar to any other investment, start your green investing journey by having a clear set of goals. Consider what you're looking for, for instance, it can be cutting carbon emissions. Also, look more into the return rate you're expecting, risk appetite, exposure, etc.

Explore the Instruments

Consider checking the instruments you may invest in. Now, before you do that, understand the different funds, the ESG strategy, and how it works. You may also check across different sectors or stocks.

A Reliable Platform is Important

Consider starting your journey with a reliable platform that offers clear information and comparisons. With Jio Insurance Broking, you can easily compare different investment plans, their benefits, features, and much more to see what best aligns with your goals.

Read Reviews

You may also make fund comparisons based on ESG reports or rating agencies. Also, consider checking the past performance of these funds. However, it's important to understand that these in no way guarantee future results but give you a rough idea of their performance statistics.

Final Word

Investment plans with a focus on green investments, or ESG funds, aren't simply about a financial trend. Instead, they also showcase social responsibility. The growth and rise in their demand showcase the need for a more sustainable and equitable future.

Though several gaps still remain, ESG funds and green investing are popular choices who want to balance social responsibility with growth opportunities.