Sustainable Finance and ESG in India: What Current Research Reveals

Sustainable finance in India has crossed the point where it can be dismissed as a compliance formality.

Companies have to compulsorily disclose the ESG report, especially the top 1000 listed ones. The green bonds are also increasingly becoming a part of this ecosystem, with investors increasingly pricing sustainability into decisions. The important question now is whether it matters, whether it will work, and whether it reaches everyone.

The International Conference on Reimagining Sustainable Finance and Business Practices focused on these questions for inclusive growth; the session was hosted by the Faculty of Commerce at Parul University.

The research presented there, by scholars from institutions across India, offers a useful snapshot of where the field actually stands. What follows synthesises that work. Each figure below is a claim from a specific study, attributed as such, not a settled national statistic.

At its simplest, sustainable finance directs capital toward projects that deliver environmental or social value alongside financial return. In India, two instruments carry most of the momentum.

• Green bonds: debt raised specifically for renewable energy, clean transport, and sustainable infrastructure. Research presented at the conference reported a steady rise in green bond issuance as investor confidence grows.
• Impact investing: capital placed in healthcare, education, agriculture, affordable housing, and rural development, chosen for measurable social return as well as profit.

The same research identified the brakes on the sector: limited public awareness, thin regulation in places, and a market still small relative to the economy. The recurring recommendation was consistent across papers, that transparency and standardised measurement are the preconditions for scale.

This is the question that decides whether ESG survives a downturn, and one conference study tested it directly on Indian insurers.

Analysing ten listed private insurance companies over five years, the study found that ESG disclosure correlated positively with accounting performance, measured through return on assets and return on equity, while its effect on market valuation, measured through Tobin’s Q, was weaker. Of the three ESG pillars, governance showed the strongest link to financial performance. The disclosure framework driving this is SEBI’s Business Responsibility and Sustainability Reporting mandate, which now applies to the top 1,000 listed companies.

The takeaway the presenter drew is worth holding onto: ESG disclosure behaves less like a cost centre and more like a governance signal that markets slowly learn to trust. That reframes it from obligation to strategy.

Governance, more than environment or society, is where ESG disclosure meets the balance sheet.

Disclosure is only as good as the systems behind it. A comparative study of 25 Indian and 25 international corporations examined how digital tools, artificial intelligence, blockchain, and compliance automation, change governance quality.

Its central claim was that digital governance maturity predicts corporate transparency and accountability, and that international firms currently lead on it. The gap, the study argued, is regulatory and institutional rather than geographic, and Indian IT majors already match global peers on governance. The paper proposed a digital governance, transparency and accountability framework to let organisations measure their own maturity rather than guess at it.

The mechanism it described is worth keeping. ESG quality, the study found, partially mediates the link between digital governance and stakeholder trust, and firms with stronger ESG performance adopted artificial-intelligence governance tools at higher rates. The framing it landed on is the one boards tend to miss: digital governance is not an information-technology purchase but a strategic capability, and treating it as the former is why so many transparency efforts stall at the pilot stage.

If ESG has a credibility weak point, it is verification. One presentation examined whether blockchain can fix carbon accounting by making credits traceable and tamper-proof, addressing double counting and fraud in carbon markets. It set this against India’s Carbon Credit Trading Scheme of 2023 and flagged the legal gap: evidence law, liability for faulty smart contracts, and fragmented oversight across SEBI, the Reserve Bank, and other agencies remain unresolved. The proposed fix was a dedicated Carbon Accounting Verification Authority to harmonise standards. The technology can prove a record is unchanged. It cannot yet prove the record was true to begin with, which is the real problem.

• Tokenised carbon-credit platforms that make each credit individually traceable.
• Supply-chain emission tracking recorded on a shared, tamper-evident ledger.
• Smart-contract-enabled green bonds that release funds against verified milestones.
• Voluntary carbon-offset tokenisation to reduce double counting.

If ESG at the firm level is uneven, so is sustainability at the level of the states. A study of India’s environmental governance framework compared how states balance green energy with economic development, using government figures, and found the performance sharply split.

• Leaders and laggards: states such as Kerala, Tamil Nadu, and Karnataka were far ahead on green energy, while Bihar, Jharkhand, and Uttarakhand trailed.
• Concentrated funding: the study reported that around 60 percent of green-energy funds flowed to solar and wind, leaving water conservation and agriculture underfunded.
• The real bottleneck: the core problem identified was poor coordination between government departments, not a shortage of policy.

“India has created a good policy framework for sustainable development. Its success will finally depend on effective governance.” – Shagun Sharma and Muskan Sharma, presenters

The lesson mirrors the corporate one. India rarely lacks a policy. It lacks the execution and coordination that turn a policy into an outcome, which is a governance problem before it is a funding problem.

Sustainability commitments do not exist in a vacuum. Research from scholars at St. Xavier’s College, Kolkata, modelled how proposed cuts to United States climate spending could ripple into Indian firms.

The argument ran both ways. Reduced global pressure and thinner green capital could weaken the incentive for Indian exporters to maintain strict ESG reporting. At the same time, firms that hold their sustainability line could win investors from Europe and Japan who are moving the other way. A regression in the study linked stronger climate support and disclosure to higher green investment, and found export-dependent firms most exposed to policy swings abroad. The strategic reading is that ESG discipline becomes a differentiator precisely when others relax it.

Inclusive growth was the conference theme, and two studies grounded it. A field study of over 150 people in rural Himachal Pradesh tested whether banking schemes serve men and women equally. The finding was mixed: basic accounts, farmer credit cards, and self-help groups showed parity, while housing, correspondent-banking, and employment-guarantee schemes showed real gender gaps.

“Real financial inclusion involves equal access, usage and benefit for everyone.” – Dr. Vijay Kumar, Parul Institute of Commerce

A separate study on forensic accounting made the transparency case from the enforcement side, arguing that traditional audits miss modern fraud and that forensic techniques are now essential to keep banking credible. Inclusion and integrity, across these papers, turn out to be the same problem viewed from two ends.

That a conference of this range was convened, and drew chairs from the Delhi School of Economics and Auro University, is itself a signal about research culture. Parul University’s own sustainability record sits behind it: it is placed in the Sustainability Impact Ratings at Top 40 in India, with strong positions on the quality-education and partnerships goals, and it backs research with more than 58 crore rupees in government-funded projects. The full event, and the range of societal research it carried, is covered in a companion report on the conference.