A Comparative Study of ESG and Non-ESG Mutual Funds Based on Performance and Risk Metrics

Environmental, Social, and Governance (ESG) investing has gained considerable traction globally, with Indian investors increasingly exploring sustainable investment alternatives. Despite this growing interest, empirical evidence comparing the performance of ESG and non-ESG mutual funds in India remains limited. This study examines the comparative performance of ESG and non-ESG mutual funds in India over the period January 2022 to March 2025. Using secondary data obtained from the Association of Mutual Funds in India (AMFI) and the National Stock Exchange (NSE), six ESG funds were paired with comparable non-ESG funds from the same Asset Management Companies (AMCs) based on Assets Under Management (AUM). Fund performance was evaluated using annualized returns, standard deviation, beta, Sharpe Ratio, Treynor Ratio, and Jensen’s Alpha. The results indicate that ESG funds deliver performance comparable to traditional funds, with relatively stable risk-adjusted returns. The findings suggest that ESG mutual funds can serve as a viable and sustainable investment alternative for Indian investors without significantly compromising financial performance.