Sustainable Investing after SEBI Regulations: A Study of ESG Mutual Funds

Sustainable investing has gained increasing importance as investors, regulators and financial institutions recognize that environmental, social and governance (ESG) factors can influence both corporate sustainability and long-term investment outcomes. In India, the Securities and Exchange Board of India (SEBI) has progressively strengthened the regulatory framework surrounding ESG disclosures and ESG-oriented mutual fund schemes. These measures seek to improve transparency, standardize investment practices, reduce green washing and enable investors to better understand the sustainability characteristics of financial products. This study examines the development of sustainable investing in India after the introduction and strengthening of SEBI's ESG-related regulations, with particular emphasis on ESG mutual funds. The study uses a descriptive and analytical research design based on secondary information obtained from SEBI publications, mutual fund documents, academic studies and other publicly available sources. It evaluates the regulatory changes affecting ESG mutual funds, examines their investment strategies, and discusses their risk-return characteristics and major challenges. The study finds that SEBI's regulatory intervention has contributed to greater standardization and transparency in ESG investing. At the same time, differences in ESG assessment methodologies, limited historical data, concentration in particular sectors, and the possibility of green washing remain important concerns. The paper argues that regulation can improve the credibility of sustainable investing, but investor awareness, independent ESG assessment and consistent reporting are equally important for the long-term development of ESG mutual funds in India.