Best ESG Stocks in India 

In today’s world, investing is not just about “How much return can I earn”, but also about “How those returns are earned”. ESG or Environmental, Social, Governance focused companies are those that prioritize sustainability, social responsibility, and ethical governance practices. Choosing ESG stocks in India is no longer a trend, but a necessity and hence, investors are now focusing on ESG stocks in India. 

In this blog, we will explore some of the best ESG stocks in India, their benefits, challenges, and how you can get started.

What are ESG Stocks?

The value of a company isn’t solely determined by its earnings, but also by how those earnings are generated. ESG stocks are those stocks associated with companies that prioritize environmental sustainability, social responsibility, and strong governance practices. Let us understand each aspect of ESG.

1. Environmental : Companies that focus on minimizing pollution, increasing the use of renewable energy, and utilizing natural resources efficiently. For example, firms that generate power from solar or wind energy fall into this category.

2. Social : This aspect reflects how a company treats its employees and customers. This includes equal opportunities, employee safety, women’s empowerment, and social work.

3. Governance : This dimension highlights a company’s leadership, accountability, and transparency. Businesses with strong governance practices provide honest reporting, comply with regulations, and prioritize the interests of their shareholders.

Market Information of Best ESG Stocks in India

Company	Current Market Price (in ₹)	Market Capitalisation (in ₹ crore)	52-Week High (in ₹)	52-Week Low (in ₹)
HDFC Bank Ltd	954	14,65,377	1,019	806
Tata Consultancy Services Ltd	2,905	10,51,000	4,495	2,891
Hindustan Unilever Ltd	2,525	5,93,225	2,971	2,136
Wipro Ltd	241	2,52,447	325	225
Maruti Suzuki India Ltd	15,983	5,02,497	16,438	10,725
Mahindra & Mahindra Ltd	3,421	4,25,449	3,724	2,360
Tata Steel Ltd	170	2,11,658	174	123
Adani Green Energy Ltd	1,024	1,66,121	1,930	758
Havells India Ltd	1,506	94,417	2,065	1,360
Lupin Ltd	1,925	87,919	2,403	1,774

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Overview of the Best ESG stocks in India

A brief overview of the Best ESG Stocks in India is given below:

1. HDFC Bank Ltd

HDFC Bank was founded in 1994 and is today the country’s largest private bank. Its merger with HDFC Ltd in 2023 further strengthened it. The bank is recognized for its digital services and customer-centric approach.

In terms of ESG, HDFC Bank has integrated sustainability into its operations. The bank considers the environmental and social impact of large loans before approving them. Paperless processes, energy savings, and digital banking are part of its environmental efforts. Meanwhile, expanding banking access to rural areas and transparent governance demonstrate its social and administrative responsibility.

Know the Returns: 

1Y Return	3Y Return	5Y Return
18.00%	33.55%	71.78%

2. Tata Consultancy Services Ltd (TCS)

TCS was founded in 1968 and today is one of the largest Tata Group companies. TCS is a trusted name for clients worldwide in the field of IT and digital solutions.

TCS has always been at the forefront of ESG. The company has built digital tools that help other companies improve their ESG reporting. It also continuously invests in social programs such as education and digital skilling. Women’s empowerment and community development are also priorities. In terms of governance, TCS emphasizes transparency and accountability, making it a trusted ESG company.

Know the Returns: 

1Y Return	3Y Return	5Y Return
-30.70%	-4.79%	8.26%

3. Hindustan Unilever Ltd (HUL)

HUL was founded in 1933 and today is one of India’s largest FMCG companies. Its products are present in every household in some form or another, be it soap, shampoo, or food products. For a long time, the company has been working to understand the changing needs of consumers. HUL is very active in ESG initiatives. The company has placed a strong emphasis on reducing plastic waste, saving water, and sustainable sourcing. Additionally, social programs such as rural development and women’s empowerment are its hallmarks. Transparent policies and strong governance systems make it a trusted ESG company.

Know the Returns: 

1Y Return	3Y Return	5Y Return
-10.89%	-5.45%	19.63%

4. Wipro Ltd

Wipro was founded in 1945 and initially began as a vegetable oil manufacturer. It later entered the IT sector and today is one of the world’s leading technology services companies. Wipro’s services and innovations have a significant impact in many countries, including India. Wipro has always been committed to ESG initiatives. The company has worked to make its campuses and data centers energy-efficient and has increased the use of renewable energy. As part of its social responsibility initiatives, it runs education and health projects, and promotes diversity and inclusivity in the workplace. Transparent reporting and responsible governance policies establish Wipro as a strong ESG stock.

Know the Returns: 

1Y Return	3Y Return	5Y Return
-10.04%	18.24%	44.47%

5. Maruti Suzuki India Ltd

Maruti Suzuki was founded in 1981 and is today India’s largest car manufacturer. Its vehicles have long been a favorite of middle-class families and have long been a fixture on Indian roads. Affordable prices, reliable quality, and an easy service network make it unique. From an ESG perspective, Maruti Suzuki is constantly taking new steps. The company is developing engines with improved fuel efficiency and working on hybrid and electric vehicles. Energy savings and pollution reduction measures are being implemented at its plants. Social initiatives such as road safety and driver training programs further establish it as a responsible ESG company.

Know the Returns: 

1Y Return	3Y Return	5Y Return
26.40%	83.31%	133.54%

6. Mahindra & Mahindra Ltd

Mahindra & Mahindra, founded in 1945, is a well-known name in automobiles, agricultural equipment, and many other sectors. Its dominance in tractors and SUVs extends not only to India but also to many countries. M&M has always been known for innovation and reliable products. Mahindra & Mahindra is a leading ESG player. The company has made significant investments in electric vehicles and is considered one of India’s leading companies in the EV segment. It is also working to introduce sustainable technology into agricultural equipment. Socially, it focuses on rural development, women’s empowerment, and education projects. Transparency in governance and clear policies make it a strong ESG stock.

Know the Returns: 

1Y Return	3Y Return	5Y Return
14.22%	173.71%	465.50%

7. Tata Steel Ltd

Founded in 1907, Tata Steel is one of India’s oldest and most trusted steel companies. It has a presence not only in India but also in several countries in Asia and Europe. Its robust steel products and long-standing reliability have earned it global recognition.

Tata Steel continues to progress in ESG initiatives. The company has transitioned to green steel production and is adopting new technologies to reduce carbon emissions. It also pays special attention to worker safety and community development. Transparent governance policies and honest reporting make Tata Steel a strong ESG company.

Know the Returns: 

1Y Return	3Y Return	5Y Return
1.90%	66.80%	339.58%

8. Adani Green Energy Ltd

Adani Green Energy was founded in 2015 and is one of India’s largest renewable energy companies. Its focus is on solar and wind energy, and the company is implementing large-scale green energy projects across the country. Its goal is to meet India’s growing electricity needs in an environmentally friendly manner. From an ESG perspective, Adani Green Energy operates entirely on sustainable energy. This contributes to saving millions of tons of carbon emissions and furthering the clean energy mission. Local employment and development projects are also part of its social efforts. In terms of governance, the company’s emphasis on transparency and compliance makes it one of India’s leading ESG stocks.

Know the Returns: 

1Y Return	3Y Return	5Y Return
-41.26%	-51.07%	41.36%

9. Havells India Ltd

Havells was founded in 1958 and is today a well-known electrical goods company in India. Its products include fans, cables, switches, lighting, and kitchen appliances. Havells is considered a trusted brand, and its products can be found in almost every home and office. Havells plays an active role in ESG. The company has taken steps to make its manufacturing plants energy-efficient and reduce carbon emissions. LED lighting and environmentally friendly products reflect its green approach. Additionally, it contributes to society through education and health projects. Transparent governance policies make Havells a strong ESG company.

Know the Returns: 

1Y Return	3Y Return	5Y Return
-23.18%	10.43%	121.85%

10. Lupin Ltd

Lupin was founded in 1968 and is considered one of India’s leading pharmaceutical companies. The company manufactures generic medicines, biotechnology products, and active pharmaceutical ingredients, which are used not only in India but worldwide. From an ESG perspective, Lupin prioritizes health and ensures access to its medicines in remote areas. Environmentally, it focuses on reducing water and energy consumption at its plants. Socially responsible, Lupin runs healthcare programs and community initiatives. Transparency in governance and strict compliance make this company a responsible ESG stock.

Know the Returns: 

1Y Return	3Y Return	5Y Return
-11.75%	160.42%	85.54%

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Key Performance Indicators (KPIs)

The key performance metrics of the Best ESG Stocks in India are mentioned below:

Company	Operating Margin (%)	Net Profit Margin (%)	ROE (%)	ROCE (%)
HDFC Bank Ltd	25.58	21.83	13.56	2.62
Tata Consultancy Services Ltd	25.89	19.11	51.24	62.01
Hindustan Unilever Ltd	22.99	16.91	21.55	22.91
Wipro Ltd	21.26	14.80	15.94	19.03
Maruti Suzuki India Ltd	12.79	9.32	15.06	19.29
Mahindra & Mahindra Ltd	16.77	7.89	16.78	14.21
Tata Steel Ltd	7.51	1.36	3.75	8.49
Adani Green Energy Ltd	67.68	13.88	13.47	8.02
Havells India Ltd	9.33	6.75	17.68	22.51
Lupin Ltd	18.97	14.55	19.07	21.29

Why ESG Investment Matters in India 

Investors are increasingly preferring companies that focus on ESG because:

• Net-Zero Targets : India has set a target to achieve net-zero emissions by 2070 and its impact is clearly visible. Companies are now focusing on green energy, electric vehicles, and sustainable projects. This means that businesses with environmentally friendly models could reap significant benefits in the coming years.

• SEBI Reporting Initiatives : SEBI has made it mandatory for large companies to provide ESG-related information. Investors can now easily see which companies are reducing carbon, saving water, or adopting appropriate employee policies. This has also increased investment confidence.

• Growing ESG Funds: The size of ESG funds in India has grown significantly, rising from about ₹2,700 crore in 2020 to nearly ₹9,700 crore by 2024. This rapid increase reflects a shift in investor mindset, with many now seeking responsible profits rather than just profits.

• Changing Mindset : For millennials and Gen Z, investing is not just about financial returns; it is also about creating a meaningful impact. This shift in priorities is driving the growing popularity of ESG investing among young investors in India.

• Long-Term Benefits : Companies that focus on ESG generally remain strong even during market downturns. They manage risk better and avoid controversies, thus gaining greater investor trust.

What to consider before choosing the right ESG stocks

When making ESG investments, it’s not always wise to base your decision solely on a company’s name or brand. It’s important to understand key factors before making an investment decision. 

• ESG Scores and Ratings : Many agencies release ESG scores for companies. These scores indicate how a company performs on environmental, social, and governance standards. This provides an initial indication for investors.
• Transparency and Disclosure : What and how a company discloses in its reports is crucial. Companies that provide clear and honest information are more trustworthy.
• Industry-Specific ESG Risks : Each sector faces its own unique ESG challenges. For example, reducing carbon emissions is a major challenge for energy companies, while data privacy and employee well-being are crucial for IT companies.
• Business Model Sustainability : Companies with sustainable business models are more sustainable in the long term. It’s important to assess whether a company’s business will align with ESG goals in the coming years.
• Understanding Report Reading : In India, SEBI has mandated BRSR (Business Responsibility and Sustainability Reporting). Carefully reading and understanding these reports helps investors make better decisions.

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Risks & Challenges in ESG Stocks

ESG investing is a hot topic these days, but it also faces some challenges and criticisms. Investors can make better decisions if they understand these aspects and proceed with their goals.

• The Risk of Greenwashing : Companies often exaggerate their ESG efforts, while in reality, little is being done on the ground. This is called greenwashing.
• Lack of Standardization : There is no uniform standard for measuring ESG in India yet. Different ratings from different agencies can make comparisons difficult for investors.
• The Challenge of Short-Term Performance : ESG adoption in some sectors increases initial costs. As a result, returns may be lower than expected in the short term.
• Balancing Profit and Responsibility : Sometimes, companies find it difficult to balance ESG values ​​and profits. In such situations, investors may also face a dilemma.
• Long-Term Perspective : ESG investing provides long-term stability and reliability rather than quick returns. Its real impact is visible over time, when the company achieves sustainable growth.

Conclusion

ESG investing is no longer just a trend; it represents a new direction in the world of finance. Investors in India are increasingly recognizing that while generating profits is important, fulfilling their responsibilities toward the environment and society is equally vital. Selecting the right ESG stocks can not only provide stable long-term returns but also contribute to building a more sustainable future. ESG investing in India is poised to become mainstream in the coming years. It is advised to consult a financial advisor before making any investment decisions.

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