Is this the right time to invest in ESG funds? Here’s what experts say

Despite growing awareness of sustainable investing, market experts say that there are several challenges such as compliance costs and market alignment, particularly for smaller businesses, though they believe that ESG funds in India hold immense potential.

Despite the potential, ESG funds in India face several challenges. One is the high cost of compliance with ESG standards, which can be particularly burdensome for micro, small, and medium enterprises (MSMEs) who are unable to balance the cost of sustainability with profitability.

While Environment, Social and Governance (ESG) as an investment theme is huge globally, the popularity of ESG funds in India is still evolving amidst a host of challenges even as such mutual fund schemes continue to underperform other categories of funds.

According to data from Value Research, Thematic-ESG funds have delivered a one-year return of nearly 40 percent percent, slightly below other categories like MidCap and SmallCap.

Source: moneycontrol.com