Ahimsa Pays

When Anand Doctor first began investing in the stock market as a college student more than two decades ago, he would screen out companies that dealt in meat and poultry. Belonging to the Jain community in Mumbai, he took its tenet against violence, including to animals, seriously. “People have mental pockets, right?” he says, while explaining why many who adopt practices against animal slaughter and cruelty in almost all aspects of their life fail to extend it to their investment decisions. “They will slot one thing, but not the other. They will go to a temple in the morning and then do whatever they want for the rest of the day. They will follow ahimsa [non-violence] in their food habits, but not in their investments.”

Doctor’s method however wasn’t entirely foolproof. He was filtering out the obvious stocks, like those of companies that dealt in meat and poultry, but he was missing the less obvious ones, like stocks of pharma companies, which use animals for lab tests. Over time, however, as he gained experience, he would correct this, going through his investments with a fine comb, and only investing in those that he felt aligned with his value system. But at some point, he added mutual funds to his portfolio. “Once that happened, obviously, I did not have any control. And my investments became fully not aligned [with my values],” he says.

In recent years, Doctor has once again begun scrutinising his investments. He has redeemed almost all his mutual funds and estimates that around 95 per cent of his portfolio today is fully aligned with his values. “I have some residual things which are locked in. But the moment they become sellable, I will be exiting those too,” he says. “Today, all my money is entirely in stocks. I don’t mind the volatility because it gives me control over exactly where my money is going.”

A values-based investing mantra isn’t a new phenomenon. Environmental, Social, and Governance (ESG) investing, where companies are screened for their climate policies, human rights and fair management, exploded into the mainstream in Wall Street and elsewhere over the last decade. Sharia or halal investing, which follows Islamic law by avoiding businesses involved in alcohol, gambling, conventional banking and other prohibited activities, has been a mainstay in India and elsewhere too for quite some time. And while there have always been investors, usually from the Jain community in India, who have steered clear of businesses engaged in activities that harm animals or deal with addictive substances like tobacco and alcohol, there hasn’t really been a movement to make this form of ethical investing mainstream. It has usually just been the individual investor scrutinising the market, without any guides, indices or financial products catering to his or her values.

Such an approach—which Doctor and others like him refer to as Ahimsa investing—is now having a moment under the sun. India’s top two bourses recently launched indices that for the first time track companies based on such an ethical framework. First off the block was the Bombay Stock Exchange's (BSE) Saatvik 100 Index, which monitors stocks that align with “Sattvik” principles, followed soon after by the National Stock Exchange's (NSE) Nifty500 Ahimsa Index that tracks companies based on the principle of Ahimsa. Kotak Neo, Kotak Securities’ stock trading and investment platform, framed these launches as one that gives values-based investing a distinctly Indian vocabulary. “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,” it said in a report. Apart from these indices, a handful of financial products like mutual funds (MFs) and portfolio management systems (PMS) have also emerged that cater to such investors.

NSE built the Nifty500 Ahimsa Index in collaboration with Ahimsagain Foundation, a non-profit that champions this form of investing. The exchange borrows the foundation’s Ahimsa Investment Movement (AIM) framework, which categorises companies into green, orange and red bands, with those in the green band signifying full compliance, and those in the red band signalling the least. NSE’s Ahimsa Index, however, features only those in the green band.

“The index is a broad framework for any individual to compare with their investment portfolio,” says Atul Doshi, a member of Ahimsagain Foundation. “Now, we hope that the exchanges will launch some kind of index-based products like futures and options, or maybe ETF [exchange-traded fund] or mutual fund, based on this index.” Doshi hopes that if this concept takes off, and companies that follow Ahimsa norms get access to cheaper capital, it could have a large impact on the market. “Suppose any company, if compliant with Ahimsa norms, can have lower cost of capital, like what is happening for ESG companies, then this can be an added advantage for companies to be ethical businesses. And slowly, somewhere it may happen that a company which sells cigarettes or a liquor company, may be forced to scale down or else not get additional capital,” Doshi says. “Our framework is religiously neutral and open to all. But it will have an appeal to communities like Jains and Marwaris, which are huge in the investment fraternity. If they start looking at their portfolios minutely and not put money into unethical businesses, this will have huge implications for companies involved in non-ethical businesses.”

Zankhana Shah, a member of Ahimsagain Foundation and the founder of MoneyCare Financial Planning, which handles the financial planning of high net worth individuals and families, believes religious and personal trusts will be among the first to adopt this form of ethical investing. “It will start with trust funds and religious organisations, and then, I believe, it will move towards individuals,” she says. “Nobody had this [indices] in the past. People can now make an informed call, find out which companies to avoid and which are aligned to my values.”

It may seem logical to think that when one limits the pool of stocks one can invest in, it will have a direct impact on the performance of those investments. But according to its proponents, the companies on the Ahimsa and Sattvik indices do just as well or outperform broader benchmarks. “The BSE back-calculated the Sattvik index and they found that it had done much better than BSE’s index. Similarly, NSE also did the back-testing of the Ahimsa Index, and it found that it gives better returns compared to the Nifty,” Doshi says. According to its proponents, this is because even after the filtering, they still contain plenty of the best and top-performing companies and sectors.

Doshi, who is a chartered accountant, was drawn to Ahimsa investing about 12 years ago when he turned vegan. This was also the time when he, along with a few others, began to consult an investment guide that used to be periodically issued by a Pune-based charity for animal rights (Beauty Without Cruelty). It provided a classification of companies into various bands, based on whether and how much animal cruelty was involved in their businesses. “It used to be a very detailed guide and I was organising my personal portfolio based on it,” he says. “But sometime around 2015 or 2016, they stopped publishing it.” When Doshi and a few others came together to start Ahimsagain Foundation, they reintroduced this concept through its AIM framework.

Doshi’s personal investments today fall under what he calls “green plus banks”. Most of his equities are in the fully-compliant green band, but he also holds stocks in banking and financial institutions, which because they provide capital to companies in the red band, are considered partially compliant, and hence in the orange band. “It may look very philosophical, but I strongly believe in the holistic principles of Ahimsa. Not just limited to veganism, but in everything we do in our lives,” Doshi says. “So when you align your [investment] portfolio [with your values], it gives you so much internal strength. I never lose any sleep over the market, even if there are lots of ups or downs.”

Doctor’s motivation to realign his investments with his values came about a decade ago when he used to write on financial matters on Quora quite frequently, and a Pune-based individual, who had read his writings, asked for help in investing money in a cruelty-free manner. “This was something I was aligned with, but which I had missed in my own investment journey. I thought, if somebody wants to do this, I must help him,” he says. This has expanded over the last four years or so, and Doctor today runs an Ahimsa-based wealth management service called Ahinsak Wealth. “It’s still a small number. But more are starting to join. Today, I handle about 15 clients, with the total investments among them being around `15-16 crores. It’s not a very large sum, but it’s a beginning,” he says.

Apart from the launch of Ahimsa indices and wealth management services, a few financial products like mutual funds have now also begun to emerge to cater to this new form of ethical investing. The Wealth Company Mutual Fund, the asset management arm of Pantomath Group, was the first to offer one called The Ethical Fund in 2024. “Many investors consciously make choices about the food they consume, the products they buy and the lifestyles they follow. Yet, when it comes to investing, they do not have [much] choice, and their investments often end up supporting businesses that may not align with [their] beliefs. We felt there was a need to bridge this gap,” says Aparna Shanker, the chief investment officer–equity at The Wealth Company Mutual Fund. “At the same time, we believed India deserved a faith-based investing framework that was not merely imported from global markets. Concepts like Ahimsa, conscious consumption and responsible wealth creation are deeply embedded in Indian culture and have remained relevant for centuries.”

The fund’s selections go through two filters. The first, Shanker explains, is a faith-based filter, followed by one that looks at the quality of companies as an investment. “The starting point is identifying activities that are inconsistent with the principles of Ahimsa and Sattvik living. However, faith-based investing cannot stop at exclusions alone. Once a company clears our filtration screen, it must still qualify on traditional investment parameters including corporate governance, balance-sheet strength, cash-flow generation, capital allocation, competitive advantage and growth visibility,” she says. “The faith-based filter determines the universe. Investment merit determines the portfolio.”

The response to the fund, Shanker claims, has been positive. “Investors are now asking deeper questions about faith-based capital allocation, sustainability of business models and long-term societal impact. We are also seeing interest from investors who may not necessarily be looking for a faith-based solution, but who appreciate avoiding businesses associated with addictive products, animal cruelty or other activities they do not wish to support,” she says. The launch of the two indices, she believes, will further accelerate awareness and acceptance. “It validates that ethical investing is evolving from a niche idea into a recognised investment category.”

Ahimsa investing will in all probability remain limited to the stock market, but there is at least one venture capitalist firm that uses the same principles for investing in startups. Called Ahimsa VC, it is dedicated exclusively to finding alternatives to animal-based food and materials. “We operate in this space because there is a big need to find ways to produce food and materials that do not cause animal cruelty, and do not harm the environment and human health,” says Siddharth Kothari, a partner at the firm, who also serves as the chief investment strategist at the Om Kothari Group, which has businesses across various sectors. “When we invest in a startup, it doesn’t just stop there. We also help them by bringing in our understanding of industrial ecosystems and connecting the firms with our network of experts.”

Kothari became interested in this space about 15 years ago when he turned vegan. Since its establishment in 2024, Ahimsa VC’s portfolio of investments has now grown to around 11 firms, from those that develop plant-based meat brands like GoodDot and Demolish Foods and dairy alternatives like Phyx44, to those like Eori Leather that use what is called vegan leather to make footwear and other products. “The mood might have soured in this space in recent times. The IPOs [connected to plant-based meat market] may not have done well. But we believe this space has a lot of potential to grow in the future. There is plenty of light in the tunnel,” he says.

Doshi believes that the launch of these indices will make this form of ethical investing mainstream. “People have already started talking about it, enquiring about how it works. Now, we just have to wait and see how the market responds,” he says.

While these indices do introduce a new form of investing, they bring along with it, questions on how and where to draw the line when evaluating a company’s Ahimsa quotient. NSE’s Ahimsa Index, for instance, may have done away with businesses that directly harm animals and the planet, but there are still plenty of automobile companies and industries, all of which through emissions, mining and manufacturing contribute to environmental harm, and, if one extends the argument, to wildlife too. Doshi agrees that there is an issue over where one draws the line, but to him, the underlying philosophy of minimising violence is the most important. “Even in our day-to-day lives, whatever precautions we take, there will always be some harm to some being. The whole attempt here is to minimise that harm,” he says. “Also, we wanted to address financial institutions like mutual funds. If we made it too strict, no company will come up with products on these principles.”

Once Ahimsa investing matures and different financial products become available, perhaps then, Doshi thinks, indices with stricter norms can be introduced. He says, “Frankly, if you begin to look at it very microscopically, then nothing really will be within the green band.”