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Does Green Investing Generate Return Over Conventional Funds? A Comparative Portfolio Analysis with Indian Stock Market

In: Economic, Environmental and Health Consequences of Conservation Capital

Author

Listed:
  • Debabrata Mukhopadhyay

    (West Bengal State University)

Abstract

The present study attempts to understand the current scenario of sustainable and green investing vis-a-vis traditional investing in an emerging economy like India. For this purpose, we measure long-term return on both these types of investments. Sustainable investing usually includes areas such as fossil fuel-based power generation and `sport and infrastructure where alternatives exist that are more sustainable in their long-term environmental and social impact. This study considers daily level return based on closing prices data for BSE 100 vis-a-vis BSE 100 ESG and its constituents along with NIFTY 50 vis-a-vis NIFTY 100 ESG considering the standard modern portfolio analysis based on compounded annual growth rate, i.e., CAGR and time-varying risk, namely ARCH-M framework for the period October 26, 2017, to December 31, 2020, daily level data. Our results show that the CAGR for the ESG index is much higher compared to traditional funds for both the normal and turbulent years. Volatilities are also much lower with sustainable funds. This study thus demonstrates that green investing at the corporate level outperforms conventional indices and thus advocates for proper policy modeling toward sustainable investment.

Suggested Citation

  • Debabrata Mukhopadhyay, 2023. "Does Green Investing Generate Return Over Conventional Funds? A Comparative Portfolio Analysis with Indian Stock Market," Springer Books, in: Ramesh Chandra Das (ed.), Economic, Environmental and Health Consequences of Conservation Capital, chapter 0, pages 85-96, Springer.
    • Handle: RePEc:spr:sprchp:978-981-99-4137-7_7
    DOI: 10.1007/978-981-99-4137-7_7
    as

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