ESG investing means putting your money into funds that screen companies on environmental, social and governance factors, not just profit. In Singapore you can do it today through a single SGX-listed ETF, the ESG portfolios at Endowus, Syfe and StashAway, or ESG-labelled unit trusts on platforms like FSMOne. Since 1 January 2023, any retail fund sold here with an 'ESG' or 'sustainable' label has to follow the MAS disclosure circular and put at least two-thirds of its assets to work in line with its stated ESG strategy. The honest part: ESG funds usually cost more than a plain index fund, they globally saw their first full year of net outflows in 2025, and the label tells you less than the methodology behind it. This guide covers what you can actually buy, what it costs, and how to check a fund is doing what it claims.
ESG stands for environmental, social and governance. An ESG fund is one that uses these factors as its main investment focus, not as an afterthought. MoneySense, the government's financial education arm, defines it plainly as a fund that uses environmental, social and/or governance factors as its key investment focus and strategy.
The three buckets cover different things. Environmental looks at emissions, energy use, pollution and biodiversity. Social covers labour standards, human rights and how a company treats its supply chain. Governance is about board structure, shareholder rights, ethics and how the company is actually run. A company can score well on one and badly on another, which is why ESG ratings from different providers often disagree on the same stock.
The thing to get straight early: ESG is a way of selecting and weighting companies, not a separate asset class. You are still buying equities, bonds or a mix. The ESG layer changes which names go in and how much of each, so an ESG global equity fund and a plain global equity fund can hold many of the same large caps.
ESG is not one method. Two funds with the same label can be built completely differently, and the difference matters more than the badge. MoneySense describes the main approaches as integration, screening and impact investing, with active ownership layered on top; in practice fund managers split these into the categories below.
Behind almost every ESG fund sits a ratings provider. Fund managers buy company-level ESG scores from firms like MSCI and Morningstar Sustainalytics, then use those scores to build the portfolio. Banks lean on them too: DBS labels the equities, bonds and funds it sells with MSCI ESG ratings, so the letter you see on a factsheet usually traces back to one of these data houses.
MSCI scores each company on a seven-step letter scale from AAA down to CCC, judged against industry peers rather than the whole market. The top two letters are tagged 'leaders', the middle three 'average', and the bottom two 'laggards'. Sustainalytics takes the opposite framing: instead of a quality grade, it measures how much unmanaged ESG risk a company still carries and sorts that into five bands from negligible to severe, where a lower number is better. The two systems are not interchangeable, which trips up investors who assume an ESG score is an ESG score.
The bigger catch is that the providers often disagree about the same company. Each one decides which issues matter for an industry, how to weight them, and how to fill gaps where companies disclose nothing, so an oil major can land mid-table at one agency and near the bottom at another. Academic studies have repeatedly found ESG ratings across major providers correlate far more weakly than credit ratings do. The practical lesson: a single letter is a starting point, not a verdict, and it is worth knowing which provider your fund relies on.
Two checks make ratings useful rather than misleading. First, read the rating in context of the provider's scale, because 'A' is a middling MSCI grade, not a top one. Second, look at what the rating actually rewards. A high score can reflect strong disclosure and risk management rather than a genuinely greener business, which is why a tobacco or oil company can still earn a respectable ESG rating within its own sector. Pair the rating with the fund's expense ratio so you can judge the green premium against what you are getting.
| Provider | Scale | What it measures | Best score | Worst score |
|---|---|---|---|---|
| MSCI ESG Ratings | AAA to CCC (7 steps) | Industry-relative ESG quality vs peers | AAA (leader) | CCC (laggard) |
| Morningstar Sustainalytics | Negligible to severe (5 risk bands) | Unmanaged ESG risk a company still carries | Negligible risk (low number) | Severe risk (high number) |
Browse fund pages and you will hit a wall of near-synonyms: sustainable, responsible, ethical, green, impact. They overlap, but they are not the same thing, and the distinction tells you how strict a fund really is. ESG is the broad umbrella, covering any approach that weighs environmental, social and governance factors alongside the numbers. The terms below sit underneath or beside it.
Socially responsible investing, or SRI, is the older, values-first cousin. It usually starts by excluding what an investor objects to, such as tobacco, weapons or gambling, and is more about avoiding harm than chasing a measurable outcome. Ethical investing means much the same in everyday use, screening out activities that clash with a moral or faith-based line.
Impact investing is the strict end of the spectrum. It demands a measurable real-world result, such as renewable capacity built or affordable homes financed, sitting alongside the financial return, and it reports against those targets. Thematic or green investing narrows the focus to one outcome like clean energy or water. The rule of thumb: exclusion-led funds (SRI, ethical) tell you what they avoid, while impact funds have to show what they actually changed. A 'sustainable' label on its own tells you neither, which is exactly why the MAS disclosure rules below matter.
Singapore tightened the rules to stop fund managers slapping a green label on an ordinary fund. The Monetary Authority of Singapore issued Circular CFC 02/2022 on 28 July 2022, with the disclosure and reporting guidelines taking effect on 1 January 2023.
The most useful number for an investor: a retail ESG fund is normally expected to have at least two-thirds of its net asset value invested in line with its stated ESG strategy. If a fund calls itself ESG but only a third of the portfolio reflects that, it should not carry the label. The circular also forces upfront disclosure in the prospectus and recurring disclosure in annual reports, covering the fund's ESG focus, the criteria and metrics used, the data sources, and how the manager monitors and acts on ESG.
Two practical takeaways. First, the rules apply to retail funds authorised or recognised in Singapore, so a fund sold to the public here should have this paperwork. Second, the disclosure is your homework: before you buy, the prospectus has to tell you what the fund actually does, and reading that is how you catch greenwashing.
Separately, MAS runs the Singapore-Asia Taxonomy launched in December 2023, a traffic-light system that classifies economic activities as green, amber (transition) or red (ineligible) across eight sectors. It mostly governs corporate and institutional finance rather than your retail fund choice, but it is the reference point regulators and banks use when they say an activity is genuinely 'green' versus merely 'transitioning'.
For all the talk, the menu of pure ESG products a Singapore retail investor can buy directly is shorter than the headlines suggest. Here is what is realistically available in 2026.
The cleanest local option is the Lion-OCBC Securities Singapore Low Carbon ETF, listed on SGX since 28 April 2022. It trades under ticker ESG in Singapore dollars and ESU in US dollars. It tracks the iEdge-OCBC Singapore Low Carbon Select 40 Capped Index, which screens out fossil-fuel-involved companies and applies a carbon-performance exclusion based on Scope 1 and 2 emissions per unit of revenue. The management fee is 0.40% a year and the total expense ratio is capped at 0.45% a year. Distributions are semi-annual at the manager's discretion. You can buy it through any SGX broker and hold it via the CDP or a custodian account.
If you want a hands-off global portfolio, the robo-advisors all run an ESG line: Endowus offers ESG portfolios you can fund with cash, SRS or CPF; Syfe and StashAway both run responsible-investing ESG portfolios funded with cash or SRS. These hold underlying ESG ETFs and unit trusts, so you get global diversification without picking funds yourself. Fees sit on top of the underlying fund costs and broadly range from about 0.15% to 0.65% a year depending on the platform and how much you invest.
For a wider shelf, fund platforms such as FSMOne, Endowus and bank platforms list dozens of ESG-labelled unit trusts from managers like BlackRock, Schroders and abrdn. Most actively managed ESG products in Singapore come as unit trusts rather than ETFs, which means higher fees and often a spread between ETF and unit trust economics worth weighing.
| Route | Example | Typical cost | Funding | Best for |
|---|---|---|---|---|
| SGX ETF | Lion-OCBC SG Low Carbon ETF (ESG/ESU) | 0.45% TER cap | Cash via broker | Low-cost Singapore equity tilt |
| Robo ESG portfolio | Endowus / Syfe / StashAway ESG | ~0.15-0.65% platform fee plus fund costs | Cash, SRS, some CPF | Hands-off global diversification |
| ESG unit trusts | Funds on FSMOne, Endowus, banks | ~1-2% all-in | Cash, SRS, some CPFIS | Active or thematic exposure |
The money lens matters here because the ESG label usually comes with a price tag. A plain global equity index ETF can charge well under 0.30% a year; ESG versions and especially actively managed ESG unit trusts tend to charge more for the extra screening and research. Over decades, a fee gap of even 0.5% to 1% compounds into a real chunk of your final balance.
Run the numbers yourself before deciding the premium is worth it. On a S$500 monthly investment over 25 years, the difference between a 0.30% all-in cost and a 1.3% all-in cost is tens of thousands of dollars in foregone returns. Use a compound interest calculator to see the gap for your own contribution and time horizon, and check how the fee feeds into your expected investing return versus leaving the money in a deposit.
ESG also concentrates you in particular ways. Many global ESG indices end up overweight technology and underweight energy and materials, because tech companies score well on carbon. That is fine when tech leads and painful when energy leads, which is part of why ESG funds lagged in 2022 and again in 2024. The point is not that ESG is bad value, it is that you are paying more for a portfolio that behaves differently, so go in knowing what you are buying.
If you only read the marketing, ESG looks like an unstoppable trend. The fund-flow data tells a more sober story. Morningstar reported that global sustainable funds saw US$84 billion of net outflows across full-year 2025, their first full year of net redemptions, reversing the US$38 billion of inflows in 2024. Europe recorded its first annual outflows since Morningstar began tracking the region in 2018, and US sustainable funds bled money for a 13th straight quarter.
Performance is part of it. Morningstar found only about 42% of sustainable funds finished in the top half of their categories, so on average they have not beaten conventional peers. A political backlash in the US, where the label has become contentious, and large institutions shifting from pooled ESG funds into bespoke mandates also drove redemptions. Several asset managers quietly dialled back ESG branding.
What this means for you in Singapore: the label is not a guaranteed winner, and a fund that was loud about ESG two years ago might be repositioning now. None of that changes the case for matching your investments to your values if that is what you want. It does mean you should treat ESG as one input, judge each fund on its actual holdings and costs, and not assume the badge protects your returns.
Greenwashing is when a fund looks more sustainable than it really is. Singapore's disclosure rules give you the documents to catch it; the work is reading them. A few checks separate a real ESG fund from a marketing exercise.
If you have decided ESG fits your goals, keep the first step small and boring. The same rules that make any investing work apply: have your emergency fund in place first, invest only money you will not need for years, and spread risk across regions rather than betting on one theme.
A practical starting point is a single low-cost ESG ETF or one ESG robo portfolio, bought regularly through dollar-cost averaging rather than timing the market. If you are using SRS, you can fund an Endowus, Syfe or StashAway ESG portfolio from it and pick up tax relief in the same move: SRS contributions of up to S$15,300 a year for citizens and PRs (S$35,700 for foreigners) qualify for tax relief, capped within the overall S$80,000 personal income tax relief ceiling. See how the relief affects your bill with an income tax calculator and the SRS calculator.
Beyond that, the honest advice is the unglamorous kind. Decide how much of your portfolio you want in ESG versus plain index funds, automate the contributions, and review once a year rather than chasing the latest sustainable theme. The label will keep going in and out of fashion; a low-cost, diversified, automated plan is what actually compounds.
It is worth it if matching your money to environmental, social and governance values matters to you and you accept it usually costs more than a plain index fund. On returns alone, ESG funds have not reliably beaten conventional ones, and global sustainable funds saw their first full year of net outflows in 2025. Treat it as a values choice with a fee premium, not a guaranteed performance edge.
The main one is the Lion-OCBC Securities Singapore Low Carbon ETF, listed since April 2022 under ticker ESG (Singapore dollars) and ESU (US dollars). It tracks the iEdge-OCBC Singapore Low Carbon Select 40 Capped Index, charges a 0.40% management fee with the total expense ratio capped at 0.45% a year, and pays semi-annual distributions at the manager's discretion.
Yes. Since 1 January 2023, retail ESG funds sold in Singapore must follow MAS Circular CFC 02/2022. They have to disclose their ESG focus, criteria, metrics and data sources upfront in the prospectus and again in annual reports, and they are normally expected to invest at least two-thirds of net asset value in line with their stated ESG strategy.
SRS can be used for ESG ETFs and the ESG portfolios at Endowus, Syfe and StashAway, and SRS contributions up to S$15,300 a year for citizens and PRs qualify for tax relief. CPF use is narrower: Endowus offers a CPF-eligible ESG portfolio, but most ESG products are not on the CPF Investment Scheme list, so check eligibility before buying with CPF.
On average they have not outperformed. Morningstar found only about 42% of sustainable funds finished in the top half of their categories, partly because many ESG indices overweight technology and underweight energy, which hurt during 2022 and 2024. Performance swings with which sectors lead the market rather than being consistently better or worse.
Read the factsheet and prospectus, not the marketing. Check the actual top holdings against a plain index fund, find the stated strategy and methodology, confirm the fund follows the MAS retail ESG circular, look for a named ratings provider, and compare the expense ratio to a non-ESG equivalent so you know what the green label is costing you.
A normal index fund holds the whole market in proportion. An ESG fund adds a screen, dropping or downweighting companies that score badly on environmental, social or governance measures and tilting toward better scorers. You still own equities and carry market risk, but the holdings and sector weights differ, and the ESG version usually charges a higher fee.
It is one provider's score for how a company handles environmental, social and governance issues relative to its industry. MSCI uses a letter scale from AAA down to CCC, where AAA and AA are leaders and B and CCC are laggards. Morningstar Sustainalytics instead scores unmanaged ESG risk in five bands from negligible to severe, where a lower number is better. A rating often reflects disclosure and risk management more than how clean the underlying business is, so treat it as a starting point rather than a verdict.
Each provider decides which issues matter for an industry, how to weight them, and how to handle companies that disclose little, so they reach different conclusions on the same stock. Studies have found ESG ratings across the major agencies correlate far more weakly than credit ratings do. That is why it pays to know which provider your fund relies on rather than assuming every ESG score means the same thing.
ESG is the umbrella term for weighing environmental, social and governance factors in investing. Socially responsible investing (SRI) and ethical investing are values-first and mostly about excluding what you object to, such as tobacco or weapons. Impact investing is the strictest: it requires a measurable real-world outcome, like renewable capacity built, alongside the financial return. A plain 'sustainable' label tells you which camp a fund is in only once you read its strategy.
This is general financial information for Singapore, not personal financial advice. Figures change — verify current rates against the official sources above before acting. See our full disclaimer.