Gajanan Haldankar

Type of the article: Research Article

Abstract
ESG investing has emerged as a key factor in corporate strategy and capital investment, although its effects on stock returns in emerging markets such as India remain inconclusive. This paper investigates the effects of ESG scores and the financial performance of firms on the stock returns of firms in the Indian Nifty100 ESG Sector Leaders Index. Based on balanced panel data on 14 firms for 2015–2024, the study employs pooled OLS, random-effects, and fixed-effects models, conducts the Breusch-Pagan LM and Hausman tests to determine the appropriate specification, and finally estimates a two-way fixed-effects model. The empirical findings show that the ESG score has a statistically significant negative correlation with stock returns, indicating a negative relationship between ESG performance and short-term returns in the market. Return on Capital Employed (ROCE) is an important positive factor of stock returns, indicating that capital efficiency is important for stock price growth. The macroeconomic factors are also important: GDP growth has a statistically significant negative correlation with stock returns, whereas the statistical significance of inflation and industrial production is insignificant. There are no significant effects on returns in Earnings per Share (EPS) and Return on Assets (ROA). These findings imply that ESG integration in India is in its early development stage and could introduce short-term adjustment costs where corporate strategy and policy support are necessary to ensure sustainability initiatives are justified in the long-term value creation.

Type of the article: Research Article

Abstract
This study investigates how Green Banking Initiatives influence bank environmental performance in India and determines the mediating effect of Green Finance Initiatives. The study is relevant as there is an increased need for financial institutions such as banks to facilitate the transition to a low-carbon economy. The study is based on the Resource-Based View, whereby Green Banking Initiatives are viewed as internal strategic resources and Green Finance Initiatives as dynamic capabilities that direct these resources towards achieving measurable bank environmental performance. The study used a primary data collection method through purposive sampling of 200 employees of public sector banks, including clerical staff, bank officers, senior officers, and bank managers, chosen due to the reliability of their positions in providing information on green banking and green finance activities based on practice. The analysis was conducted using Partial Least Squares Structural Equation Modeling (PLS-SEM). The findings indicate that Green Banking Initiatives significantly and positively influence both Green Finance Initiatives and Bank Environmental Performance. Additionally, banks’ Green Finance Initiatives were found to significantly contribute to improving banks’ environmental performance and partially mediate the relationship between Green Banking Initiatives and banks’ environmental performance. The study’s results indicate that internal sustainability practices increase the value of environmental concerns where it is aligned with strategic green financing activities. The findings can help understand how banks can contribute to national sustainability objectives and provide viable insights for policy formulation, capacity building programs, and strategic expansion of green lending.