ESG stands for Environmental, Social, and Governance factors used when assessing companies and investment risks.

Do all ESG mutual funds follow the same strategy?

No. ESG methodologies, exclusions, scoring systems, and portfolio construction can differ significantly between funds.

Are ESG Funds safer than normal equity funds?

Not necessarily. They remain market-linked investments and can experience substantial losses.

What is greenwashing?

Greenwashing is the risk that sustainability-related marketing or claims make a product or company appear more environmentally or socially responsible than its actual practices justify.

Can an ESG Fund invest in a company with environmental problems?

Potentially, depending on the scheme's methodology. Some strategies use exclusions, while others may invest in companies based on relative ESG performance or improvement.

Does ESG investing guarantee better returns?

No. Returns depend on portfolio holdings, valuations, market conditions, and investment decisions.

Home

Mutual Funds

Best ESG Mutual Funds

Explore top ESG mutual funds. Compare returns, NAV and ratings to find the right fund for your portfolio.

All ESG Mutual Funds

FUND

NAV

RATING

Overview

Overview of ESG Mutual Funds

ESG mutual funds invest using environmental, social, and governance factors alongside conventional financial analysis.

The objective is to build portfolios based on a defined ESG investment approach while still seeking investment returns.

ESG is not a single universal strategy. Different funds can interpret environmental, social, and governance considerations differently, which makes the scheme's methodology particularly important.

Explained

What Are ESG Mutual Funds?

ESG stands for Environmental, Social, and Governance.

These three areas can cover issues such as:

Environmental factors
Carbon emissions
Energy efficiency
Pollution
Waste management
Water use
Climate-related risks
Social factors
Employee practices
Product safety
Customer relationships
Supply-chain standards
Community impact
Governance factors
Board structure
Shareholder rights
Accounting quality
Management incentives
Corporate governance
Related-party transactions

An ESG-oriented fund incorporates relevant factors into its investment process according to its stated methodology.

Explained

How Do ESG Mutual Funds Work?

The investment manager defines an ESG framework and applies it when selecting or weighting companies.

A fund may use approaches such as:

Excluding specified businesses
Selecting companies with stronger ESG scores
Investing in companies improving ESG practices
Integrating ESG risks into fundamental research
Focusing on specific sustainability themes
Two ESG funds can therefore hold very different portfolios.
One may exclude certain industries entirely, while another may invest in companies within those industries if they meet its methodology.

Suitability

Who Should Invest in ESG Mutual Funds?

ESG Funds may suit investors who:

Want ESG factors incorporated into investment decisions.
Understand that ESG methodologies vary.
Have a long-term investment horizon.
Can tolerate equity-market volatility.
Are willing to examine the fund's methodology rather than relying on the ESG label.
Want their equity allocation to follow a particular responsible-investment approach.
ESG investing does not guarantee higher returns or lower risk.

Advantages

Advantages of ESG Mutual Funds

Incorporation of non-financial risks
Environmental, social, and governance issues can create material financial consequences. Considering them can provide additional information when evaluating a business.
Governance focus
Corporate governance can have a direct impact on shareholder outcomes. Weak accounting, poor capital allocation, or conflicts of interest can destroy value even when a company's industry is growing.
Potential identification of long-term risks
Environmental regulations, resource constraints, labour issues, or governance failures may affect future business performance.
Professional ESG research
A fund can combine company financial analysis with ESG data and research rather than requiring individual investors to build their own framework.

Before you invest

Things to Consider Before Investing in ESG Mutual Funds

ESG methodologies differ
There is no reason to assume two funds with ESG in their names will own the same companies. Read the scheme's methodology carefully.
Greenwashing risk
Marketing language can make an investment strategy appear more sustainable than its actual portfolio or process. Look beyond the label to holdings and documented investment criteria.
Data limitations
ESG data can be incomplete, inconsistent, or based on different scoring methodologies. Two research providers can give the same company different ESG assessments.
Portfolio concentration
Excluding certain industries can change sector weights and create meaningful differences from broad-market benchmarks.
Performance differences
An ESG portfolio can underperform or outperform broader markets depending on sector exposure, stock selection, valuations, and market conditions.

Taxation

Taxation of ESG Mutual Funds

Where an ESG scheme qualifies as an equity-oriented mutual fund under applicable Indian tax rules, equity-oriented capital-gains provisions generally apply.

For qualifying units held for more than 12 months, gains are generally treated as long-term capital gains.

Long-term capital gains covered under Section 112A are generally taxed at 12.5% above the applicable annual exemption threshold.

Qualifying gains on units held for 12 months or less are generally treated as short-term capital gains and taxed at the applicable special rate under Section 111A.

The ESG label itself does not determine taxation. Check the individual scheme's tax classification.

Step by step

How to Invest in ESG Mutual Funds?

Define what ESG considerations matter to you.
Read the scheme's ESG investment methodology.
Review exclusions and stock-selection rules.
Examine actual portfolio holdings.
Compare the portfolio with its benchmark.
Check sector concentration.
Review expenses, Riskometer, and exit load.
Evaluate long-term performance and investment consistency.
Complete KYC.
Invest through an SIP or lump sum according to your financial plan.

Good to know

Frequently Asked Questions

What does ESG mean?
ESG stands for Environmental, Social, and Governance factors used when assessing companies and investment risks.
Do all ESG mutual funds follow the same strategy?
No. ESG methodologies, exclusions, scoring systems, and portfolio construction can differ significantly between funds.
Are ESG Funds safer than normal equity funds?
Not necessarily. They remain market-linked investments and can experience substantial losses.
What is greenwashing?
Greenwashing is the risk that sustainability-related marketing or claims make a product or company appear more environmentally or socially responsible than its actual practices justify.
Can an ESG Fund invest in a company with environmental problems?
Potentially, depending on the scheme's methodology. Some strategies use exclusions, while others may invest in companies based on relative ESG performance or improvement.
Does ESG investing guarantee better returns?
No. Returns depend on portfolio holdings, valuations, market conditions, and investment decisions.

Recap

Key Takeaways

ESG Funds incorporate environmental, social, and governance considerations into investing.
ESG is not one standardised investment strategy.
Investors should examine methodology and actual holdings rather than relying on the label.
ESG data and ratings can differ across providers.
ESG Funds remain market-linked investments and do not guarantee superior returns.

Loved by 2M+ users with a 4.3+ ⭐ app rating. Join now!

Home

Mutual Funds

Best ESG Mutual Funds

Explore top ESG mutual funds. Compare returns, NAV and ratings to find the right fund for your portfolio.

All ESG Mutual Funds

View All Mutual Funds

FUND

Quant ESG Integration Strategy Fund Direct GrowthEquity ESG

₹41.99

2.09%

22.32%

16.73%

18.79%

ICICI Prudential ESG Exclusionary Strategy Fund Direct GrowthEquity ESG

₹22.24

1.33%

-7.37%

10.42%

9.17%

Aditya Birla Sun Life ESG Integration Strategy Fund Direct GrowthEquity ESG

₹18.78

1.37%

-1.47%

9.43%

6.84%

SBI ESG Exclusionary Strategy Fund Direct GrowthEquity ESG

₹253.21

1.72%

-1.59%

8.1%

8.16%

Invesco India ESG Integration Stategy Fund Direct GrowthEquity ESG

₹18.13

1.73%

-3.87%

8.06%

6.71%

Axis ESG Integration Strategy Fund Direct GrowthEquity ESG

₹21.97

2.18%

-4.44%

7.67%

5.19%

Kotak ESG Exclusionary Strategy Fund Direct GrowthEquity ESG

₹17.71

1.27%

-5.06%

7.58%

6.76%

Quantum ESG Best In Class Strategy Fund Direct GrowthEquity ESG

₹24.38

1.38%

-4.22%

7.55%

7.32%

Mirae Asset Nifty 100 ESG Sector Leaders Fund of Fund Direct GrowthEquity ESG

₹17.57

1.15%

-6.48%

7.05%

5.93%

WhiteOak Capital ESG Best-In-Class Strategy Fund Direct GrowthEquity ESG

₹10.12

1.52%

-3.8%

N.A.

Quant ESG Integration Strategy Fund Direct Reinvestment of Income Distribution cum cptl wthdrwl optEquity ESG

₹41.93

2.09%

22.31%

16.72%

18.77%

ICICI Prudential ESG Exclusionary Strategy Fund DirectReinvestment Inc Dist cum Cap WdrlEquity ESG

₹15.46

1.4%

-8.02%

9.66%

8.71%

Aditya Birla Sun Life ESG Integration Strategy Fund Direct Payout Inc Dist cum Cap WdrlEquity ESG

₹15.25

1.42%

-1.87%

8.9%

6.54%

SBI ESG Exclusionary Strategy Fund Direct Reinvestment Inc Dist cum Cap WdrlEquity ESG

₹90.9

1.72%

-1.59%

8.1%

8.16%

Invesco India ESG Integration Stategy Fund Direct Payout of Income Dist cum Capital WtdrlEquity ESG

₹14.79

1.73%

-3.84%

7.36%

6.28%

Axis ESG Integration Strategy Fund Direct Pyt of Inc Dis cum Cap WdrlEquity ESG

₹14.37

2.18%

-5%

6.98%

4.5%

Kotak ESG Exclusionary Strategy Fund Direct Reinvestment of Income Distribution cum Cap WdrlEquity ESG

₹17.7

1.27%

-5.08%

7.58%

6.76%

Baroda BNP Paribas ESG Best-in-Class Strategy Fund Direct Reinvestment Inc Dist cum Cap WdrlEquity ESG

₹10.22

1.22%

N.A.

Mirae Asset Nifty 100 ESG Sector Leaders Fund of Fund Direct Reinvestment of Income dis cumcptlwdrlEquity ESG

₹17.57

1.15%

-6.47%

7.05%

5.92%

Quant ESG Integration Strategy Fund Direct Payout of Income Distribution cum capital withdrawal optEquity ESG

₹41.93

2.09%

22.31%

16.72%

18.77%

Showing 1–20 of 25

All ESG Mutual Funds

FUND

NAV

RATING

Overview

Overview of ESG Mutual Funds

ESG mutual funds invest using environmental, social, and governance factors alongside conventional financial analysis.

The objective is to build portfolios based on a defined ESG investment approach while still seeking investment returns.

ESG is not a single universal strategy. Different funds can interpret environmental, social, and governance considerations differently, which makes the scheme's methodology particularly important.

Explained

What Are ESG Mutual Funds?

ESG stands for Environmental, Social, and Governance.

These three areas can cover issues such as:

Environmental factors
Carbon emissions
Energy efficiency
Pollution
Waste management
Water use
Climate-related risks
Social factors
Employee practices
Product safety
Customer relationships
Supply-chain standards
Community impact
Governance factors
Board structure
Shareholder rights
Accounting quality
Management incentives
Corporate governance
Related-party transactions

An ESG-oriented fund incorporates relevant factors into its investment process according to its stated methodology.

Explained

How Do ESG Mutual Funds Work?

The investment manager defines an ESG framework and applies it when selecting or weighting companies.

A fund may use approaches such as:

Excluding specified businesses
Selecting companies with stronger ESG scores
Investing in companies improving ESG practices
Integrating ESG risks into fundamental research
Focusing on specific sustainability themes
Two ESG funds can therefore hold very different portfolios.
One may exclude certain industries entirely, while another may invest in companies within those industries if they meet its methodology.

Suitability

Who Should Invest in ESG Mutual Funds?

ESG Funds may suit investors who:

Want ESG factors incorporated into investment decisions.
Understand that ESG methodologies vary.
Have a long-term investment horizon.
Can tolerate equity-market volatility.
Are willing to examine the fund's methodology rather than relying on the ESG label.
Want their equity allocation to follow a particular responsible-investment approach.
ESG investing does not guarantee higher returns or lower risk.

Advantages

Advantages of ESG Mutual Funds

Incorporation of non-financial risks
Environmental, social, and governance issues can create material financial consequences. Considering them can provide additional information when evaluating a business.
Governance focus
Corporate governance can have a direct impact on shareholder outcomes. Weak accounting, poor capital allocation, or conflicts of interest can destroy value even when a company's industry is growing.
Potential identification of long-term risks
Environmental regulations, resource constraints, labour issues, or governance failures may affect future business performance.
Professional ESG research
A fund can combine company financial analysis with ESG data and research rather than requiring individual investors to build their own framework.

Before you invest

Things to Consider Before Investing in ESG Mutual Funds

ESG methodologies differ
There is no reason to assume two funds with ESG in their names will own the same companies. Read the scheme's methodology carefully.
Greenwashing risk
Marketing language can make an investment strategy appear more sustainable than its actual portfolio or process. Look beyond the label to holdings and documented investment criteria.
Data limitations
ESG data can be incomplete, inconsistent, or based on different scoring methodologies. Two research providers can give the same company different ESG assessments.
Portfolio concentration
Excluding certain industries can change sector weights and create meaningful differences from broad-market benchmarks.
Performance differences
An ESG portfolio can underperform or outperform broader markets depending on sector exposure, stock selection, valuations, and market conditions.

Taxation

Taxation of ESG Mutual Funds

Where an ESG scheme qualifies as an equity-oriented mutual fund under applicable Indian tax rules, equity-oriented capital-gains provisions generally apply.

For qualifying units held for more than 12 months, gains are generally treated as long-term capital gains.

Long-term capital gains covered under Section 112A are generally taxed at 12.5% above the applicable annual exemption threshold.

Qualifying gains on units held for 12 months or less are generally treated as short-term capital gains and taxed at the applicable special rate under Section 111A.

The ESG label itself does not determine taxation. Check the individual scheme's tax classification.

Step by step

How to Invest in ESG Mutual Funds?

Define what ESG considerations matter to you.
Read the scheme's ESG investment methodology.
Review exclusions and stock-selection rules.
Examine actual portfolio holdings.
Compare the portfolio with its benchmark.
Check sector concentration.
Review expenses, Riskometer, and exit load.
Evaluate long-term performance and investment consistency.
Complete KYC.
Invest through an SIP or lump sum according to your financial plan.

Good to know

Frequently Asked Questions

What does ESG mean?
ESG stands for Environmental, Social, and Governance factors used when assessing companies and investment risks.
Do all ESG mutual funds follow the same strategy?
No. ESG methodologies, exclusions, scoring systems, and portfolio construction can differ significantly between funds.
Are ESG Funds safer than normal equity funds?
Not necessarily. They remain market-linked investments and can experience substantial losses.
What is greenwashing?
Greenwashing is the risk that sustainability-related marketing or claims make a product or company appear more environmentally or socially responsible than its actual practices justify.
Can an ESG Fund invest in a company with environmental problems?
Potentially, depending on the scheme's methodology. Some strategies use exclusions, while others may invest in companies based on relative ESG performance or improvement.
Does ESG investing guarantee better returns?
No. Returns depend on portfolio holdings, valuations, market conditions, and investment decisions.

Recap

Key Takeaways

ESG Funds incorporate environmental, social, and governance considerations into investing.
ESG is not one standardised investment strategy.
Investors should examine methodology and actual holdings rather than relying on the label.
ESG data and ratings can differ across providers.
ESG Funds remain market-linked investments and do not guarantee superior returns.

Loved by 2M+ users with a 4.3+ ⭐ app rating. Join now!

Best ESG Mutual Funds

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MORE EQUITY MUTUAL FUNDS

All ESG Mutual Funds

Overview of ESG Mutual Funds

What Are ESG Mutual Funds?

How Do ESG Mutual Funds Work?

Who Should Invest in ESG Mutual Funds?

Advantages of ESG Mutual Funds

Incorporation of non-financial risks

Governance focus

Potential identification of long-term risks

Professional ESG research

Things to Consider Before Investing in ESG Mutual Funds

ESG methodologies differ

Greenwashing risk

Data limitations

Portfolio concentration

Performance differences

Taxation of ESG Mutual Funds

How to Invest in ESG Mutual Funds?

Frequently Asked Questions

Key Takeaways

Trusted by 2M+ Users

Trusted by 2M+ Users

Best ESG Mutual Funds

FILTERS

MORE EQUITY MUTUAL FUNDS

All ESG Mutual Funds

All ESG Mutual Funds

Overview of ESG Mutual Funds

What Are ESG Mutual Funds?

How Do ESG Mutual Funds Work?

Who Should Invest in ESG Mutual Funds?

Advantages of ESG Mutual Funds

Incorporation of non-financial risks

Governance focus

Potential identification of long-term risks

Professional ESG research

Things to Consider Before Investing in ESG Mutual Funds

ESG methodologies differ

Greenwashing risk

Data limitations

Portfolio concentration

Performance differences

Taxation of ESG Mutual Funds

How to Invest in ESG Mutual Funds?

Frequently Asked Questions

Key Takeaways

Trusted by 2M+ Users

All ESG Mutual Funds