THE NEXUS BETWEEN SUSTAINABLE INVESTING AND MUTUAL FUND SCHEMES: A STUDY IN THE RANCHI REGION

Abstract

Sustainable finance refers to financial services that consider environmental, social, and governance (ESG) criteria to ensure that investments contribute to sustainable development. The primary objective of sustainable finance is to allocate capital in a way that supports economic growth while addressing global challenges such as climate change, social inequality and corporate governance. It has emerged as a critical component of the global financial system. Sustainable finance considers ESG factors to generate long-term financial returns while promoting sustainable development. In India, sustainable finance is gaining traction as investors, regulators, and financial institutions recognize the need to align financial activities with long-term sustainability goals. This approach ensures that mutual funds not only seek financial returns but also contribute positively to society and the environment. The integration of ESG factors into investment decisions is increasingly viewed as a means to mitigate risks and identify opportunities. Environmental factors consider a company's impact on natural resources and the environment, including its carbon footprint, waste management practices, and resource efficiency. Social factors examine a company's relationships with employees, customers, suppliers, and the communities in which it operates, and assess the quality of a company's leadership, executive compensation, shareholder rights, and transparency. Investors are increasingly recognizing that companies with strong ESG practices are likely to be more resilient in the face of challenges, leading to better long-term financial performance. Mutual funds, as key players in the financial markets, are increasingly integrating ESG factors into their investment strategies. This paper explores the current state of sustainable finance in mutual funds in the capital of Jharkhand. It highlights the reason for investment in sustainable finance with non-financial objectives and the investor’s taste. The focus of this research is to see the development and popularity of ESG funding in Ranchi City.