Nudging for Sustainable and Responsible Behaviour: Analysing ESG Mutual Fund Investments in India

‘Prithvi shanti’, meaning ‘let the forces of nature be in balance’, is an ancient Indian wisdom, coming from the Upanishads. Ever since the Rio de Janeiro conference took place in 1992 in Brazil, the world has improved compared to what it would have been without this conference. This nudging for sustainable and responsible behaviour has continued since then, but the question remains as to how effective it has been. The effectiveness of nudging to perform sustainable behaviour can be assessed in several ways, including global investment in environmental sustainability, improvements in environmental, social, and governance (ESG) metrics, and a reduction in environmental degradation. Presently, it has evolved into a full-fledged ESG sector, encompassing compliance and investment This paper attempts to trace the evolution of the ESG framework in India. Further, it seeks to analyse the performance of the Nifty 100 Index with the Nifty 100 ESG Index and ranks the ESG mutual funds in India based on their last 3 years’ performance. The tendency to invest in sustainable and responsible investments is rising, albeit slowly. A comparison of the broad market index, Nifty 100, with the Nifty 100 ESG shows that the latter has outperformed.