Signals from NSE’s new Ahimsa index: When love for animals meets investments

“Nifty500 Ahimsa Index will be attractive to investors who wish to invest in stocks of companies that do not engage in activities that harm animals,” a press release by NSE’s subsidiary NSE Indices noted.

The index was developed by the exchange in collaboration with the Ahimsagain Foundation, a non-profit organisation started in November 2024 by ethical finance advocates to provide a transparent medium to invest in animal cruelty-free companies.

Who is in the index?

The new index consists of companies that meet Ahimsagain Foundation’s Ahimsa Investment Movement (AIM) framework. This framework classifies companies into green, orange, and red bands, with the green band signifying companies that are fully compliant with its animal-cruelty-free criteria. The index comprises companies belonging only in the green band.

The index includes all the top names across the IT services, automobile, real estate, and healthcare sectors. However, the index notably excludes most Reliance Group companies (except Reliance Power), pharmaceutical companies using animal testing, all commercial banks and major NBFCs due to their dealings in sectors that do not align with the movement’s values, and dairy, meat, poultry, and leather companies.

It also excludes all fashion brands, retail chains, and cosmetics companies due to their use of leather and wool as raw materials.

‘New investing conversation’

While many sustainable thematic indices focus on carbon footprints and environmental and social governance-compliant companies, NSE’s new index is the first to have a laser focus on animal cruelty.

“ESG investing made ethics part of finance long ago, packaging those questions inside globally recognised frameworks and ratings produced by firms such as MSCI and Sustainalytics. India has now decided to ask an entirely different question. Not whether a company emits carbon or whether it has independent directors. But whether its business aligns with the principle of Ahimsa,” Kotak Neo noted in a report last week.

The index comes after the BSE launched its Saatvik 100 index on June 17, another thematic index with a broader focus on the “Saatvik” philosophy, which stands against animal cruelty and exploitation, addictive and toxic products, and activities considered harmful or violent.

“Two exchanges, two indices, two Indian philosophical ideas, launched within weeks of each other, feel less like a coincidence and more like the beginning of a new investing conversation,” Kotak Neo said.

Important theme for the future

The index is expected to serve as a benchmark for asset managers and facilitate the development of passive investment products, including exchange-traded funds (ETFs), index funds, and other structured investment solutions, NSE Indices’ press release said.

“It is good to see such new sustainable themes launched. While it’s still early days now, such sustainable themes are expected to be a big play in the future as focus shifts towards sustainable investing. Especially with a country with a young population like us with an increasing retail population,” a fund manager at a domestic fund house said.

“It will take time for the mutual fund industry to develop products around it, like always. But the theme in itself could become popular in the coming years,” the fund manager added.