MUMBAI (India CSR): As climate change increasingly impacts cities, farms, and global supply chains, sustainability has become a strategic imperative for businesses worldwide. Rising operational costs, environmental risks, and tightening regulations mean companies can no longer view sustainability as optional. In response to this structural shift, Baroda BNP Paribas Mutual Fund has launched the Baroda BNP Paribas ESG Best-in-Class Strategy Fund, enabling investors to align long-term wealth creation, while getting exposure to companies with strong ESG performance.
ESG adoption accelerates across India Inc.
The integration of ESG principles in India has grown rapidly. As per SEBI data of 2025, India’s top 1000 listed companies published sustainability reports, due to regulatory requirement, compared to just 100 companies a decade ago. By the end of FY 2025-26, SEBI’s Business Responsibility and Sustainability Reporting (BRSR) Core requirementswill extend to top 500 companies, requiring assessment or assurance on key sustainability disclosures.
Beyond compliance, companies are embedding ESG frameworks to:
- Mitigate environmental and regulatory risks
- Build resilience and foster innovation
- Enhance brand reputation and stakeholder trust
- Attract long-term domestic and global capital
A large and growing ESG opportunity
Globally, ESG-aligned opportunities are expanding at scale. Annual clean energy investments globally reached USD 2.3 trillion in 2025^ while circular economy is expected to be worth USD 4.5 trillion by 2030^. With 68% of the world’s population projected to live in urban areas by 2050^, demand for green infrastructure and sustainable housing is set to rise sharply.
In India, the government’s 2070 net-zero commitment, including the National Green Hydrogen Mission, is expected to catalyse nearly INR 8 lakh crore of investments^^. India has moved into implementation phase for the carbon credit trading scheme, with a full-fledged implementation in 2026^^ across nine sectors, further accelerating green transition.
Why ESG investing is gaining momentum
ESG investing explicitly incorporates environmental, social, and governance factors into investment decisions.
Historical data supports this approach. Over the past decade, the Nifty 100 ESG Total Return Index has annually outperformed the Nifty 100 TRI in seven of the last ten years, and across 1, 3, 7 and 10 year trailing returns as on 31 January 2026*. Research by Baroda BNP Paribas MF also shows that ESG indices have delivered higher rolling returns with lower volatility, with the volatility of the benchmark Nifty 100 ESG Index lower than the Nifty 100 Index for ~85% of the market days over the past two years.
“Investors in India are increasingly welcoming thematic strategies, particularly those rooted in sustainability, as we have seen over the last few years. The growing appetite for ESG aligned solutions reflects a broader shift toward long‑term, purpose driven investing. This trend underscores how investors are not only seeking competitive returns but also looking to participate in themes that shape a more resilient future,” said Sanjay Grover, CEO, Baroda BNP Paribas Asset Management (India).
Investment approach and fund features
To help investors capitalise on this megatrend, the Baroda BNP Paribas ESG Best-in-Class Strategy Fund, benchmarked to the Nifty 100 ESG Index, will invest in sustainably managed companies offering quality fundamentals and potential strong and compelling long-term performance. The investment approach will combine ESG ratings (provided by an external SEBI registered ESG Ratings Provider) with in-depth fundamental analysis and ESG research to identify high-quality investment opportunities.
“Using a four-step process we will narrow the list of stocks from 5000 listed ones to just 50. We have seen companies that have integrated the ESG pillars in their management practices and framework deliver consistently across market and economic cycles. This scheme will invest in Indian companies that score higher on ESG ratings than their sector peers. We aim to seamlessly integrate ESG principles into our investment process to identify future-ready companies. Firms with strong ESG practices are typically better equipped to withstand today’s volatile and complex business environment. Hence the Scheme provides investors with an opportunity to invest in companies, which focus on long term stability along with sustainability” said Jitendra Sriram, Senior Fund Manager – Equity, Baroda BNP Paribas Asset Management (India).
During the NFO period, investors can participate with a minimum lump sum of Rs 1,000, or via a monthly SIP of Rs 500 or quarterly SIP of Rs 1,500, enabling broad access to a strategy designed to create wealth while increasing allocation to companies with strong ESG performance.
(India CSR)
