Green, Orange, Red: how NSE’s new Ahimsa Index screens companies for ethical investing

Companies in NSE Indices’ new Nifty500 Ahimsa Index are sorted using a three-tier colour classification: Green, Orange and Red. Only those placed in the Green category are eligible for inclusion in the index, while companies classified under Orange and Red are excluded, according to ANI.

The classification comes from the Ahimsa Investment Movement, or AIM, framework, developed by the Ahimsagain Foundation, under which companies are assessed based on their products, services and overall business practices. NSE Indices Limited, the index services subsidiary of the National Stock Exchange, worked with the foundation to build the new thematic index, which tracks companies from the Nifty 500 universe aligning with the principles of ‘Ahimsa,’ or non-violence.

The index is designed for investors seeking exposure to companies whose business practices align with animal welfare considerations. NSE Indices said the launch reflects growing demand for thematic and responsible investment products that combine market exposure with specific sustainability and ethical considerations.

‘The index offers market participants a transparent, rules-based benchmark that integrates ethical considerations with broad-based equity market exposure,’ the company said. The Nifty500 Ahimsa Index draws from the diversified Nifty 500 universe, allowing representation across sectors while applying the screening criteria.

The index has a base date of April 1, 2016, with a base value of 1,000. Its constituents will be reviewed and rebalanced semi-annually, with stock weights determined based on free-float market capitalisation, and it is expected to support fund managers and the creation of passive investment products such as ETFs and index funds.