ABSTRACT
This study examines the relationship between Environmental, Social, and Governance (ESG) ratings and bottom lines of Indian banks, i.e., eight banks classified into ESG leadership levels. Based on CRISIL's ESG scores and five-year history for stock prices, ROA, and ROE, this study performs correlation and regression analysis. It reports weak negative correlation among the ESG ratings and stock CAGR but moderate positive correlations with growth in ROA and ROE. These results show that although ESG integration is highly effective in affecting operational performance, it has no meaningful effect on market valuation. These results validate theoretical models such as Stakeholder Theory, Agency Theory, and Institutional Theory, which indicate that ESG practices align interests, fulfill institutional expectations, and enhance stakeholder relationships. The research addresses industry-specific knowledge requirements in the Indian context with focus on the significance of governance actions, which receive maximum CRISIL importance. The study also reveals methodological challenges presented by non-standard ESG rating scales and access to data. These findings are valuable for policymakers, investors, and banks mandated to institute ESG practices in green finance.
