ESG indices in India

An ESG index starts from a normal stock market index, such as the Nifty 100 or BSE 100, and then changes it using ESG information. It may remove some companies, such as tobacco makers. It may keep only the best ESG performers in each sector. Or it may keep almost all companies but give more weight to those with better ESG scores.

ESG indices matter because many ESG mutual funds and index funds either track them or use them as benchmarks. So the index rules, and the ESG scores behind them, quietly decide where a lot of ESG money goes.

The result usually looks quite similar to the parent index. Most ESG indices hold many of the same large companies, just in different proportions.

Common construction methods

Nifty100 ESG Index

• Universe: Nifty 100 companies with an ESG risk score.
• Exclusions: companies with a controversy score below 70, and companies in tobacco, alcohol, controversial weapons and gambling.
• Weighting: free-float market capitalisation tilted by the normalised ESG risk score. Each stock is capped at the lower of 8% or five times its free-float weight, and sector caps apply.
• 79 constituents (factsheet of 30 September 2026); reviewed every six months; base date 1 April 2011.

Nifty100 Enhanced ESG Index

• Same base rules as Nifty100 ESG, plus the exclusion of companies with an ESG score below 60 (grades B-, C+, C and D) and companies in the severe risk category.
• 77 constituents (30 September 2026).

Nifty100 ESG Sector Leaders Index

• Launched on 15 June 2020, with a base date of 1 January 2014.
• Picks companies in each Nifty 100 sector that score well on managing ESG risk and have no major controversies, covering about 75% of each sector's eligible free-float market capitalisation.
• Excludes companies with an ESG score below 60, a controversy score below 70, 25% or more of revenue from cigarettes, breweries, weapons, gambling or nuclear power, or any revenue from controversial weapons.
• Weighted by free-float market capitalisation with a 10% cap per stock; 60 constituents (30 September 2026); reviewed in June and December.

ESG score provider for Nifty indices

The 2019 methodology for the Nifty100 ESG indices used ESG and controversy research from Sustainalytics. The latest factsheets describe the scores and grades used but do not name the provider. Check the current methodology document on the NSE Indices website before relying on a particular provider.

BSE 100 ESG Index

• Built from the BSE 100. It was originally launched as the S&P BSE 100 ESG Index by Asia Index, then a joint venture of BSE and S&P Dow Jones Indices. BSE completed its purchase of S&P Dow Jones Indices' entire stake in Asia Index on 31 May 2024.
• Rule changes from June 2022 added exclusions for thermal coal (5% revenue threshold), oil sands (5%), small arms and military contracting (10%), widened the controversial weapons exclusion, tightened tobacco limits, and excluded companies rated non-compliant with the UN Global Compact. Companies without data coverage became ineligible, and members are checked every quarter.

Dow Jones Best-in-Class Indices (formerly DJSI)

• Launched in 1999 as the Dow Jones Sustainability Indices, a family of global sustainability benchmarks. Renamed the Dow Jones Best-in-Class Indices from 10 February 2025.
• Companies are selected on a best-in-class basis using S&P Global's Corporate Sustainability Assessment (CSA). More than 3,600 companies took part in the CSA in 2025, and about 9,000 more were assessed from public information.
• The annual review now takes place at the end of April; the 2026 changes took effect on 1 May 2026.
• Indian companies often cite inclusion in these indices in their annual reports as a sign of sustainability performance.

Checks before using an ESG index

1. Overlap with the parent index. How much of the ESG index is the same as the Nifty 100 or BSE 100?
2. Sector tilts. Which sectors are overweight or underweight, and why?
3. Score provider and method. Whose scores are used, and do they measure risk to the company or impact?
4. Exclusions. Which businesses are excluded, and at what revenue thresholds?
5. Concentration. The weight of the top ten stocks.
6. Turnover. How often and how much the index changes at each review.