ESG performance and stock price behavior: A study of select Indian companies

Environmental, Social and Governance (ESG) performance has become an important aspect of corporate accountability in India, especially with the implementation of Business Responsibility and Sustainability Reporting (BRSR) framework by SEBI. Although there is a developing regulatory focus, little empirical evidence is available regarding the relationship between the post BRSR period ESG and stock price at the company level. The proposed research will analyse the ESG performance of 45 BSE listed Indian-based companies in nine industries and explore the short-term effect on stock price behaviour of the financial year 2023-24 and 2024-25. The study uses descriptive statistics and One-Way ANOVA, correlation analysis, simple and multiple linear regression as well as Support Vector Regression (SVR) using the CRISIL ESG Ratings and NSE stock price data . Findings indicate that the average ESG score is 61.38 with sectoral difference being statistically significant (F=26.77, p=0.000) with the IT sector and Banking sector on the top and the Energy sector on the bottom. Simple linear regression (R 2=0.003, p=0.598), multiple linear regression (R 2=0.042, p=0.300) and SVR (R 2= -0.0946) all prove the absence of statistically significant effect of ESG performance on stock prices in the short term, thus accepting the null hypothesis. These results indicate that, even though the ESG scores might not cause short-term changes in the stock prices, they could be significant in the determination of the long term sustainability of the corporation and can be included in the long-term risk management model of the investors.