The Nifty100 ESG Index, which mostly outperforms the benchmarks, is struggling to find its footing in 2022 as surging energy prices and raising interest rates made investors to balk at green stocks. What makes more unfavourable for ESG performance is the continued weakness at the information-technology counters.
To be sure, IT stocks boast of 21 percent weight on the ESG Index compared to a combined weight of 27 percent by RIL HDFC Bank and ICICI Bank on the Nifty50. While Reliance Industries enjoys the highest weight of 10.8 percent on the Nifty50, the largest private lender, HDFC Bank has another 8.3 percent weight on the index. In contrast, Infosys and TCS together have an aggregate weight of 11.6 percent on Nifty ESG Index.
The Nifty100 ESG Index — a gauge designed to reflect the performance of stocks based on Environmental, Social and Governance (ESG) score — has lost 5.4 percent of its value year-to-date compared to 1.2 percent drop clocked by the benchmark Nifty50. The ESG Index had been an outperformer since its inception, barring 2019.
While ITC, ICICI Bank, M&M, SBI and Axis Bank boosted gains in the benchmark, IT players like Tata Consultancy Services, Infosys, HCL Technologies, Tech Mahindra and Wipro have lost anywhere between 17 percent to 42 percent so far in 2022. The combined market cap erosion of top five IT stocks so far this year stood at Rs 7.7 lakh crore.
| Green turns red in 2022 | ||
| Year | NIFTY100 ESG (%) | Nifty50 (%) |
| 2012 | 33.4 | 27.7 |
| 2013 | 9.1 | 6.8 |
| 2014 | 31.9 | 31.4 |
| 2015 | -2.2 | -4.1 |
| 2016 | 3.2 | 3.0 |
| 2017 | 31.6 | 28.6 |
| 2018 | 4.0 | 3.2 |
| 2019 | 11.0 | 12.0 |
| 2020 | 21.6 | 14.9 |
| 2021 | 30.7 | 24.1 |
| 2022* | -5.4 | -1.2 |
In fact, flows into sustainable funds dried up across the globe amid concerns over global recession, inflationary pressures, rising interest rates, and the conflict in Ukraine. The total flows into global sustainable funds declined 62 percent sequentially to $32.6 billion at the end of June 2022. “The slump of net new money into sustainable fund was felt in all regions. Some parts of the world even experienced outflows. US-domiciled sustainable funds bled $1.6 billion, their first quarter of outflows in more than five years,” observed Morningstar in its July report.
Source: BloombergEven ESG ETF in India witnessed an outflows of $6.6 million in the first half of 2022 against an inflows of $10.2 million recorded during the same period last year. Globally, the net flows into ESG ETFs slowed down in 2022. According to Bloomberg, Net inflows in APAC region through July 2022 stood at $17.5 billion, down significantly from $70.9 billion in 2021.
Source: BloombergCheck out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!
Lok Sabha Election 2024: Phase 5 voting concludes with over 57% voter turnout, experts weigh in on key battles
May 20, 2024 11:07 PM
BJP holds meeting in Delhi as polling underway for 5th phase
May 20, 2024 4:21 PM
UP Police arrests man after viral videos shows him voting multiple times
May 20, 2024 2:18 PM