The environment, social and governance (ESG) mutual funds are the ones which invest in companies which demonstrate strong environment, social and governance practices.
Although these are quite diverse criteria to choose from, still they are strung together by a common thread of ‘ethical behaviour’ manifested through commitment towards environment, society and governance practices.
It would not be wrong to say that the phenomenon of ESG is still quite contemporary and till date, most investors do not aim to invest in stocks or funds based on their commitment towards ESG. The key goal of any investor is usually not to invest in one category of companies, but to maximise the chances of higher earnings.
Therefore, when the selection of stocks is based entirely on the moral fibre, the occurrence of earning higher returns would only be a coincidence, and not a logical conclusion.
However, the other way to look at this theme is that investment in well-managed companies is the right thing to do.
“When you see it purely from the lens of higher returns, ESG funds do not hit the bull’s eye. Counterintuitively, if the ESG companies do not deliver good returns in the long run, then who else will? So, it is important in the long run to stay invested in the stocks of companies that have shown commitment towards environment, society and governance,” says Deepak Aggarwal, a Delhi-based chartered accountant and financial advisor.
These are some of the ESG funds in India
I. ABSL ESG Integration Strategy Fund: It has an AUM of ₹652.99 crore (as on June 29, 2025). It is managed by Chanchal Khandelwal and Dhaval Joshi.
II. Axis ESG Integration Strategy Fund: It has an AUM of ₹1,272 crore (as on June 30, 2025). It is managed by Hitesh Das, Vishal Agarwal and Krishnaa N. Top constituent stocks in the fund are ICICI Bank, HDFC Bank, Bharti Airtel and Bajaj Finance.
III. ICICI Prudential ESG Exclusionary Strategy Fund: This was launched on Oct 9, 2020 and has an AUM of ₹1,5488 crore. It is managed by Mittul Kalawadia.
IV. Kotak ESG Exclusionary Strategy Fund: It was launched on Dec 11, 2020 and managed by Mandar Pawar. Its AUM is ₹893 crore.
V. Quant ESG Integration Strategy Fund: It was launched on Nov 5, 2020 and is managed by Sandeep Tandon, Ankit Pande, Varun Pattani , Ayusha Kumbhat, Yug Tibrewal, Sameer Kate and Sanjeev Sharma.
VI. SBI ESG Exclusionary Strategy Fund: Having launched on Jan 1, 1991, it is the oldest ESG fund and boasts of an asset size of ₹5,830 crore. Currently, it is managed by Rohit Shimpi.
VII. WhiteOak Capital ESG Best-in-class Strategy Fund: It was launched last year on October 30. It is a very small fund with AUM of ₹67 crore.
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