  In this article, we present a novel approach for the construction of an
environment-friendly green portfolio using the ESG ratings, and application of
the modern portfolio theory to present what we call as the ``green efficient
frontier'' (wherein the environmental score is included as a third dimension to
the traditional mean-variance framework). Based on the prevailing action levels
and policies, as well as additional market information, scenario analyses and
stress testing are conducted to anticipate the future performance of the green
portfolio in varying circumstances. The performance of the green portfolio is
evaluated against the market returns in order to highlight the importance of
sustainable investing and recognizing climate risk as a significant risk factor
in financial analysis.
