Journal of Commerce and Accounting Research

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Combining ESG Risk Ratings and Fundamentals of Companies for Better Investing


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1 Shri Ramdeobaba College of Engineering and Management, Nagpur, Maharashtra, India
     

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The environment has a major impact on not just the planet, but also on the people and the economy; nations around the world are now becoming increasingly aware of it. Investors, both retail and institutional, are interested in investing in companies that are ethical in their work and have societal concerns. Apart from just looking at the fundamentals, investors are now also looking at the impact that the company is making on the society and environment because of their business activities. This paper aims at understanding the fundamental analysis, by including ESG as one of the parameters for investment. This study focuses on 54 product companies for which the ESG risk rating data is available publically on the Sustainanalytics website. A total of 12 fundamental ratios have been identified for the study, based on their relevance and available data. The period of study is from 2011 to 2020. The objective of the study is to ascertain whether the ESG ratings influence the financial performance of the company. The study concludes that there is no correlation between the financial performance and ESG ratings.

Keywords

ESG, Risk Rating, Nifty, Regression, Investment
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  • Combining ESG Risk Ratings and Fundamentals of Companies for Better Investing

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Authors

Hussain Sunelwala
Shri Ramdeobaba College of Engineering and Management, Nagpur, Maharashtra, India
Vishal Mehta
Shri Ramdeobaba College of Engineering and Management, Nagpur, Maharashtra, India
Vandana Gandhi
Shri Ramdeobaba College of Engineering and Management, Nagpur, Maharashtra, India
Prashant Chhajer
Shri Ramdeobaba College of Engineering and Management, Nagpur, Maharashtra, India

Abstract


The environment has a major impact on not just the planet, but also on the people and the economy; nations around the world are now becoming increasingly aware of it. Investors, both retail and institutional, are interested in investing in companies that are ethical in their work and have societal concerns. Apart from just looking at the fundamentals, investors are now also looking at the impact that the company is making on the society and environment because of their business activities. This paper aims at understanding the fundamental analysis, by including ESG as one of the parameters for investment. This study focuses on 54 product companies for which the ESG risk rating data is available publically on the Sustainanalytics website. A total of 12 fundamental ratios have been identified for the study, based on their relevance and available data. The period of study is from 2011 to 2020. The objective of the study is to ascertain whether the ESG ratings influence the financial performance of the company. The study concludes that there is no correlation between the financial performance and ESG ratings.

Keywords


ESG, Risk Rating, Nifty, Regression, Investment

References