Bridging the Green Gap in Emerging Markets: A Conceptual Framework Linking Sustainable Investment Strategies, Market Performance, and Investor Behaviour in India
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Abstract
The urgency of India’s Paris Agreement commitments to reduce emissions to net zero by 2070 and achieving 50% non-fossil energy by 2030 contrasts sharply with the ESG mutual fund market’s domestic AUM share of 0.3% (AMFI, 2024). This research explores discrepancies through the ESG market, investor behaviour, and structural factors. Methodology entails analysing 42 peer-reviewed journals (2000-2024), secondary index data (NSE Nifty 100 ESG Index, 2019-2024), and policy-related documents from SEBI, RBI, UNEP-FI, the World Bank, et al. The research findings reveal that Indian ESG indices perform robustly by risk-return measures compared to conventional indices over 1 to 5 years but face challenges owing to low financial literacy, greenwashing concerns, limited supply, and a weak regulatory framework. The critical analysis proposes the Green Finance Adoption Framework for Emerging Markets (GFAFEM), a conceptual framework for the supply and performance of sustainable investments, investor behaviour, and structural factors in India. This research informs policy recommendations for SEBI, fund managers, and a sustainable financing strategy for the NAPCC plan
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