An Indian Perspective on the linkage between Environmental, Social and Governance Score and Cost of Capital

Abstract

There has been an increase in interest in ethical and sustainable business practices in emerging economies, limited research on incorporation of Environmental, Social and Governance (ESG) and its effects has been conducted in the Indian market. This paper aims to address this gap by exploring the relationship between Environmental, Social and Governance Score (ESG) and Cost of Capital (COC) of Indian firms. The research is conducted for 120 business organizations listed on National Stock Exchange (NSE). Our findings indicate that it would be advantageous for business organizations to enhance their ESG performance in order to lower the cost of capital.