ESG Index Membership and Cost of Capital: Evidence from Nifty100 ESG and Matched Non-ESG Firms in India (2021–2024)

Volume 11, Issue 2, 2026

International Journal of Commerce and Management Studies, ISSN 2456-3684

Paper Title

Author Name and Affiliation

Dr. Adil Jiwani

Assistant Professor, Department of Management Studies, Nabira Mahavidyalaya, Katol – 441302, Maharashtra, India, Emailid: adilajiwani@gmail.com

Abstract

This paper tests whether membership in India’s Nifty100 ESG index is linked with a lower weighted average cost of capital. Prior Indian studies link ESG disclosure scores to cost of debt or cost of equity separately. This study uses index membership, an objective measure, and tests full WACC as the outcome. A sample of 20 Nifty100 ESG constituents and 20 non-index peers, matched on sector, over 2021–2024 is used as data for the study. WACC is built from CAPM cost of equity and after-tax cost of debt for 159 firm-year observations. An independent-samples t-test finds no significant difference in mean WACC between ESG and non-ESG firms (10.25% versus 10.31%, p = 0.895). A paired t-test on matched pairs confirms this (p = 0.910). An OLS regression controlling for firm size and leverage also finds no significant ESG effect (p = 0.615), although size and leverage are both strong, significant predictors of WACC. The results suggest that any apparent cost-of-capital benefit for ESG-index firms in India is explained by their size and capital structure and not by ESG status itself.

Keywords

ESG, Cost of Capital, WACC, Nifty100 ESG Index, India, Capital Structure.

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DOI

DOI: https://doi.org/10.67061/ijcams.2026.vol.11.issue.02.8092

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