New Delhi: All 12 of India’s largest Asset Management Companies (AMCs), which together manage more than 80% of the country’s mutual fund assets, scored zero on climate scenario analysis and stress testing for the second year running. While three AMCs now disclose verified emissions from their own operations and two have set time-bound targets to reduce them, none publicly disclose the emissions of the companies in their portfolios (financed emissions). These findings come from the second edition of Risking Alpha, a climate-risk assessment for the mutual fund industry released on Friday by Climate Risk Horizons (CRH).
The scorecard records broad improvement across the industry. 10 of the 12 fund houses raised their overall scores this year even though the assessment criteria were applied more strictly than in 2025, and the number scoring 10 or more out of 20 rose from 3 to 7. Most of the gains came from stronger board oversight, stewardship practices, and BRSR disclosures, areas where the report notes SEBI has set clearer regulatory expectations. All 12 fund houses now have a stewardship code and a voting policy; 11 have at least a basic responsible investment or ESG screening policy; and 9 are full members of global responsible investment initiatives such as the UN PRI. 7 of the 12 fund houses engaged with CRH during the consultation for this edition.
UTI Asset Management Company took the top position scoring 12 points, up from 9 last year, on the strength of its disclosures on ESG integration, governance, stewardship and operational emissions. It is followed by SBI Funds Management on 11 points. ICICI Prudential, HDFC, Nippon Life India, Kotak Mahindra and DSP share third place on 10 points each. Axis, Mirae Asset, Tata and Bandhan each improved by three points, with Bandhan moving off a score of zero and Axis rising from 5 to 8 on the back of stronger board-level risk governance and a defined ESG integration process.
The report finds that coal policy remains the clearest gap, even as 7 of the 12 fund houses now offer ESG- or sustainability-themed funds. The 12 fund houses have not publicly disclosed a coal policy that applies across all their funds, and the only coal exclusion in place covers a single ESG scheme without specifying its scope or thresholds. The report also notes that SEBI’s ESG fund framework sets no limit on fossil-fuel exposure in ESG-labelled funds. Some of these schemes hold investments in companies with coal-related activities, and investors cannot easily tell whether those holdings are consistent with the fund’s stated strategy.
The report recommends that SEBI build on its existing disclosure architecture, which it credits with improving transparency and making ESG labels more meaningful, by requiring AMCs to disclose financed emissions across listed equity and corporate bond holdings using a recognised methodology such as PCAF. It also recommends clearer disclosure rules for ESG and exclusionary funds on what they exclude and the thresholds they apply, and the inclusion of climate-related exposures in the mutual fund Risk Management Framework.
Notable changes since 2025 include:
● Axis Asset Management Company Limited now signals stronger board-level risk governance and a defined ESG integration process. HDFC and Nippon have also shown improvement in their scores on the integration of climate and ESG-related risks into their overall risk management frameworks.
● Mirae Asset Investment Managers (India) Private Limited has issued a sustainability-themed investment for the first time, highlighting the growing importance of sustainability themed investments in an emerging market like India. Seven AMCs offer ESG or sustainability-themed mutual funds, but the report finds that three of these AMCs hold investments in companies with coal-related activities.
● DSP Asset Managers Private Limited has a responsible investment policy for equity investments, which explicitly lists ESG and climate engagement areas alongside a detailed overall risk management framework. However, it has still to adopt a comprehensive portfolio-wide climate-risk methodology or climate-specific risk thresholds and mitigation controls within its framework.
● Kotak Mahindra Asset Management Company Limited remains the only AMC with a disclosed coal-related exclusion, albeit one limited to its ESG Exclusionary Strategy Fund. However, the fund holds NTPC, which has coal-based power generation and coal mining. Kotak’s disclosures do not explain the exclusion’s scope or thresholds. The report recommends that exclusionary funds state clearly what they exclude and the thresholds they apply, particularly where the ‘ESG’ label is used.
Sneha Yadav, Climate Risk Horizons’ Sustainable Finance Analyst and author of the report, said, “SEBI has built an important architecture around ESG strategy classification, BRSR, assurance etc. which have substantially improved transparency and reduced the scope for an ESG label to mean almost anything but greater specificity is needed in how ESG funds define and disclose their exclusion criteria and thresholds. If a fund says it excludes coal, investors should be able to see exactly what that means: coal mining, coal-fired power, a revenue threshold, new coal development or the thresholds they apply, rather than leaving investors to infer what ‘ESG and exclusionary’ actually means.”