NSE Indices Introduces Nifty500 Ahimsa: Ethical Portfolio Choices
NSE Indices Limited has launched the Nifty500 Ahimsa Index, a new thematic benchmark aimed at tracking companies within the Nifty 500 that adhere to the principle of “Ahimsa,” or non-violence. This index is part of NSE’s ongoing expansion of its index offerings. It focuses on companies committed to responsible and sustainable business practices, allowing investors to align their portfolios with ethical considerations.
The Nifty500 Ahimsa Index is developed in collaboration with the Ahimsagain Foundation and is based on the foundation’s Ahimsa Investment Movement (AIM) framework. This framework evaluates companies based on their adherence to Ahimsa principles, helping investors avoid businesses linked to animal cruelty. The index includes companies from the Nifty 500 universe, ensuring diversified sectoral representation while prioritizing ethical practices.
Index Structure and Reconstitution
The Nifty500 Ahimsa Index has a base date of April 1, 2016, with a starting value of 1,000. It will be reconstituted biannually, with constituent weights determined by free-float market capitalization. The introduction of this index enhances NSE’s portfolio of thematic and ESG-focused indices, catering to investors interested in ethical screening while maintaining exposure to the broader Indian equity market.
Market analysts believe the index could attract both domestic and international investment funds that are increasingly adopting values-based screening in their equity strategies. The AIM framework has assessed over 1,100 companies listed on the NSE and BSE, identifying those that align with ethical investment criteria.
AIM Assessment Methodology
Companies are categorized into Green, Orange, and Red bands based on the AIM assessment. Only those classified in the Green band are eligible for inclusion in the index, while those in the Orange and Red bands are excluded. NSE Indices stated that the launch of the Nifty500 Ahimsa Index represents a response to evolving investor preferences for transparent, rules-based benchmarks that integrate ethical considerations with broad equity market exposure.
The index is designed to serve as a benchmark for asset managers and facilitate the creation of passive investment products, including Exchange Traded Funds (ETFs) and index funds.
Growth of Thematic Indices in India
India has seen a rise in the launch of green thematic indices in recent years, such as the Nifty100 ESG Index and the Nifty Midcap150 ESG Index. These indices align with global trends in ESG and sustainable investing. Institutional investors are increasingly factoring in non-financial risks, including climate change and social responsibility, into their investment decisions.
A recent report from Bloomberg indicated that companies in the green economy reached a market valuation of $10 trillion, with revenues from environmental products and services growing to $5.5 trillion last year. This growth reflects a broader trend where companies generating significant revenue from green initiatives have outperformed the wider equity market.
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