AN EMPIRICAL STUDY ON SOCIALLY RESPONSIBLE INVESTING (SRI) IN THE INDIAN STOCK MARKET

Abstract

Ethical Investing, also known as Green Investing has been an upcoming avenue for socially responsible investors in the last few years. Greater attention is being paid to the overall environmental performance of the underlying operations. This has led to mushrooming of several mutual funds, portfolios, indices that accommodate environment-friendly considerations while selecting stocks. This paper seeks to examine the relative performance of green stocks portfolio and non-green stocks. The study period spans from 1st April 2001 to 31st march 2019 and is further divided into three sub periods – before financial crisis (2003 – 2007), during financial crisis (2007 – 2009), and after financial crisis (2009 – 2019). Green stocks portfolio provided an average monthly return of 0.36% as compared to -0.91% on market portfolio during the recent financial crisis. A series of statistical tests have confirmed that green stocks portfolio performs better on several measures of risk and return. This trend is particularly relevant during times of crisis. This lends support to the case of green investing in Indian stock market. These findings have important inferences for companies, regulators, policy makers and investors community It corroborates prevailing evidence that green stocks can be used to build up defensive and better performing portfolios by socially responsible investors in India.