Sustainable Investing with ESG Mutual Funds - An Emerging Trend

Management

Sustainable investing, also known as socially responsible investing, is the process of incorporating environmental, social, and governance (ESG) factors into investment decisions. Sustainable investing directs investment capital to companies that seek to act on combating climate change and environmental destruction while promoting corporate responsibility. Sustainable investing has gained significant momentum in recent years, with investors increasingly seeking to align their investments with their values and principles. One of the most popular strategies for sustainable investing is through environmental, social, and governance (ESG) mutual funds, which incorporate ESG factors into their investment decision-making process. It is not new and was gaining popularity even before covid-19, especially among the millennials who prefer to invest in alignment with personal values. Still, the pandemic accelerated it further with rising demand in almost all investor categories, forcing wealth management firms to build capabilities to cater to the increasing demand. To cater to this demand, many mutual funds in India have launched ESG mutual funds which have been appreciated by the government of India. This research paper explores the emerging trend of sustainable investing with ESG mutual funds, analyzing the current state of the market and the factors driving the growth of this investment strategy.

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