{"id":6615,"date":"2026-04-29T12:28:34","date_gmt":"2026-04-29T12:28:34","guid":{"rendered":"https:\/\/www.paytmmoney.com\/blog\/?p=6615"},"modified":"2026-04-29T12:28:34","modified_gmt":"2026-04-29T12:28:34","slug":"esg-funds-india-returns-risks-investment-strategy","status":"publish","type":"post","link":"https:\/\/www.paytmmoney.com\/blog\/esg-funds-india-returns-risks-investment-strategy\/","title":{"rendered":"ESG Funds in India: Can You Grow Wealth Sustainably?"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Sustainable investing is no longer just a niche concept. It is becoming a mainstream conversation among Indian investors. If you have ever wondered whether your investments can generate returns while also contributing to a better world, ESG funds in India may be worth exploring.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">From climate change concerns to corporate governance issues, investors today are looking beyond just profits. But do ESG mutual funds really deliver on returns? And what risks should you be aware of? Let\u2019s break it down in a simple and structured way.<\/span><\/p>\n<h2><b>What Are ESG Funds in India?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">ESG funds in India are mutual funds that invest in companies based on three key factors:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Environmental (E):<\/b><span style=\"font-weight: 400;\"> Carbon emissions, waste management, resource usage<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Social (S):<\/b><span style=\"font-weight: 400;\"> Employee welfare, diversity, community impact<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Governance (G):<\/b><span style=\"font-weight: 400;\"> Transparency, ethical practices, regulatory compliance<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">These funds aim to balance financial returns with responsible investing.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">While ESG investing is growing rapidly, most ESG mutual funds in India are relatively new. This means long-term performance data is still limited, making careful evaluation important.<\/span><\/p>\n<h2><b>Growth of ESG Funds in India<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">I<\/span><span style=\"font-weight: 400;\">ndia\u2019s sustainable investing space is gaining strong momentum.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Green financing projects worth \u20b931,000 crore are planned for FY27<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This marks an increase of nearly one-third compared to FY26 estimates<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Around 86% of asset owners are increasing allocations towards sustainable investments<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">This trend shows that ESG funds in India are becoming an important part of the financial ecosystem.<\/span><\/p>\n<p><span style=\"font-size: 10pt;\"><i><span style=\"font-weight: 400;\">(<\/span><\/i><b><i>Source: <\/i><\/b><i><span style=\"font-weight: 400;\">The Economic Times,<a href=\"https:\/\/www.ibef.org\/news\/projects-worth-rs-31-000-crore-us-3-44-billion-to-be-funded-mainly-via-green-bonds-in-fy27#:~:text=The%20Government%20of%20India%20has,a%20total%20value%20of%20Rs\"> IBEF<\/a>)<\/span><\/i><\/span><\/p>\n<h2><b>Top ESG Mutual Funds by 5-Year CAGR<\/b><\/h2>\n<div class=\"wp-block-table\" style=\"display: block; width: 100%; overflow-x: auto; -webkit-overflow-scrolling: touch; border: 1px solid #000000; margin-bottom: 5px;\">\n<table style=\"width: 100%; border-collapse: collapse; min-width: 1000px; font-family: Arial, sans-serif; font-size: 14px; color: #000000; background-color: #ffffff;\">\n<thead>\n<tr>\n<th style=\"padding: 12px; border: 1px solid #000000; text-align: left; font-weight: bold; color: #000000; background-color: #ffffff;\">Mutual Fund Name (Direct Plan &#8211; Growth)<\/th>\n<th style=\"padding: 12px; border: 1px solid #000000; text-align: center; font-weight: bold; color: #000000; background-color: #ffffff;\">5-Year CAGR (%)<\/th>\n<th style=\"padding: 12px; border: 1px solid #000000; text-align: center; font-weight: bold; color: #000000; background-color: #ffffff;\">AUM (\u20b9 Cr)<\/th>\n<th style=\"padding: 12px; border: 1px solid #000000; text-align: center; font-weight: bold; color: #000000; background-color: #ffffff;\">Expense Ratio (%)<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td style=\"padding: 12px; border: 1px solid #000000; font-weight: bold;\"><a href=\"https:\/\/www.paytmmoney.com\/mutual-funds\/scheme\/quant-esg-equity-fund-direct-g\/inf966l01ad4\">Quant ESG Integration Strategy Fund<\/a><\/td>\n<td style=\"padding: 12px; border: 1px solid #000000; text-align: center;\">20.82<\/td>\n<td style=\"padding: 12px; border: 1px solid #000000; text-align: center;\">225.60<\/td>\n<td style=\"padding: 12px; border: 1px solid #000000; text-align: center;\">0.93<\/td>\n<\/tr>\n<tr>\n<td style=\"padding: 12px; border: 1px solid #000000; font-weight: bold;\"><a href=\"https:\/\/www.paytmmoney.com\/mutual-funds\/scheme\/icici-prudential-esg-fund-direct-growth\/inf109kc1o09\">ICICI Pru ESG Exclusionary Strategy Fund<\/a><\/td>\n<td style=\"padding: 12px; border: 1px solid #000000; text-align: center;\">13.86<\/td>\n<td style=\"padding: 12px; border: 1px solid #000000; text-align: center;\">1,246.18<\/td>\n<td style=\"padding: 12px; border: 1px solid #000000; text-align: center;\">1.06<\/td>\n<\/tr>\n<tr>\n<td style=\"padding: 12px; border: 1px solid #000000; font-weight: bold;\"><a href=\"https:\/\/www.paytmmoney.com\/mutual-funds\/scheme\/aditya-birla-sun-life-esg-fund-direct-growth\/inf209kb1u76\">Aditya Birla SL ESG Integration Strategy Fund<\/a><\/td>\n<td style=\"padding: 12px; border: 1px solid #000000; text-align: center;\">12.53<\/td>\n<td style=\"padding: 12px; border: 1px solid #000000; text-align: center;\">521.59<\/td>\n<td style=\"padding: 12px; border: 1px solid #000000; text-align: center;\">1.41<\/td>\n<\/tr>\n<tr>\n<td style=\"padding: 12px; border: 1px solid #000000; font-weight: bold;\"><a href=\"https:\/\/www.paytmmoney.com\/mutual-funds\/scheme\/sbi-magnum-equity-esg-fund-direct-plan-growth\/inf200k01se0\">SBI ESG Exclusionary Strategy Fund<\/a><\/td>\n<td style=\"padding: 12px; border: 1px solid #000000; text-align: center;\">12.34<\/td>\n<td style=\"padding: 12px; border: 1px solid #000000; text-align: center;\">4,810.38<\/td>\n<td style=\"padding: 12px; border: 1px solid #000000; text-align: center;\">1.37<\/td>\n<\/tr>\n<tr>\n<td style=\"padding: 12px; border: 1px solid #000000; font-weight: bold;\"><a href=\"https:\/\/www.paytmmoney.com\/mutual-funds\/scheme\/invesco-india-esg-equity-fund-direct-g\/inf205ka1338\">Invesco India ESG Integration Strategy Fund<\/a><\/td>\n<td style=\"padding: 12px; border: 1px solid #000000; text-align: center;\">11.29<\/td>\n<td style=\"padding: 12px; border: 1px solid #000000; text-align: center;\">348.40<\/td>\n<td style=\"padding: 12px; border: 1px solid #000000; text-align: center;\">1.14<\/td>\n<\/tr>\n<tr>\n<td style=\"padding: 12px; border: 1px solid #000000; font-weight: bold;\"><a href=\"https:\/\/www.paytmmoney.com\/mutual-funds\/scheme\/kotak-esg-opportunities-fund-direct-g\/inf174ka1fi4\">Kotak ESG Exclusionary Strategy Fund<\/a><\/td>\n<td style=\"padding: 12px; border: 1px solid #000000; text-align: center;\">11.09<\/td>\n<td style=\"padding: 12px; border: 1px solid #000000; text-align: center;\">709.25<\/td>\n<td style=\"padding: 12px; border: 1px solid #000000; text-align: center;\">0.93<\/td>\n<\/tr>\n<tr>\n<td style=\"padding: 12px; border: 1px solid #000000; font-weight: bold;\"><a href=\"https:\/\/www.paytmmoney.com\/mutual-funds\/scheme\/quantum-india-esg-equity-fund-direct-growth\/inf082j01382\">Quantum ESG Best In Class Strategy Fund<\/a><\/td>\n<td style=\"padding: 12px; border: 1px solid #000000; text-align: center;\">10.34<\/td>\n<td style=\"padding: 12px; border: 1px solid #000000; text-align: center;\">83.11<\/td>\n<td style=\"padding: 12px; border: 1px solid #000000; text-align: center;\">0.75<\/td>\n<\/tr>\n<tr>\n<td style=\"padding: 12px; border: 1px solid #000000; font-weight: bold;\"><a href=\"https:\/\/www.paytmmoney.com\/mutual-funds\/scheme\/mirae-asset-esg-sector-leaders-fund-of-fund-direct-growth\/inf769k01gq3\">Mirae Asset Nifty 100 ESG Sector Leaders FoF<\/a><\/td>\n<td style=\"padding: 12px; border: 1px solid #000000; text-align: center;\">10.13<\/td>\n<td style=\"padding: 12px; border: 1px solid #000000; text-align: center;\">78.84<\/td>\n<td style=\"padding: 12px; border: 1px solid #000000; text-align: center;\">0.44<\/td>\n<\/tr>\n<tr>\n<td style=\"padding: 12px; border: 1px solid #000000; font-weight: bold;\"><a href=\"https:\/\/www.paytmmoney.com\/mutual-funds\/scheme\/axis-esg-equity-fund-direct-growth\/inf846k01w23\">Axis ESG Integration Strategy Fund<\/a><\/td>\n<td style=\"padding: 12px; border: 1px solid #000000; text-align: center;\">9.33<\/td>\n<td style=\"padding: 12px; border: 1px solid #000000; text-align: center;\">1,006.49<\/td>\n<td style=\"padding: 12px; border: 1px solid #000000; text-align: center;\">1.40<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<div class=\"md:hidden lg:hidden xl:hidden\" style=\"text-align: center; margin-top: 10px; margin-bottom: 20px; font-size: 13px; color: #666666; font-family: Arial, sans-serif;\">\u2190 Swipe horizontally to view full performance metrics \u2192<\/div>\n<style>\n@media screen and (min-width: 768px) {<br \/>    .md\\:hidden {<br \/>        display: none !important;<br \/>    }<br \/>}<br \/><\/style>\n<p><span style=\"font-size: 10pt;\"><i><span style=\"font-weight: 400;\">(<\/span><\/i><b><i>Source:<\/i><\/b><i><span style=\"font-weight: 400;\"> Moneycontrol, Value Research)<\/span><\/i><\/span><\/p>\n<p><span style=\"font-size: 10pt;\"><b><i>Note:<\/i><\/b><i><span style=\"font-weight: 400;\"> The data is as of April 27, 2026, and pertains to Direct Plan variants of the funds. Past performance may or may not be sustained in the future, and returns are subject to market risks and change.<\/span><\/i><\/span><\/p>\n<h2><b>Types of ESG Funds in India<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Regulators have introduced multiple ESG categories, giving investors flexibility:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Exclusion Strategy:<\/b><span style=\"font-weight: 400;\"> Avoids companies with poor ESG practices<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Integration Strategy:<\/b><span style=\"font-weight: 400;\"> Combines ESG factors with financial analysis<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Best-in-Class:<\/b><span style=\"font-weight: 400;\"> Invests in ESG leaders within sectors<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Impact Investing:<\/b><span style=\"font-weight: 400;\"> Focuses on measurable social or environmental outcomes<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Sustainable Objectives:<\/b><span style=\"font-weight: 400;\"> Targets specific sustainability goals<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Transition Strategy:<\/b><span style=\"font-weight: 400;\"> Supports companies moving towards ESG compliance<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Additionally, ESG schemes must invest at least 80% of AUM in equity and related instruments aligned with their strategy.<\/span><\/p>\n<h2><b>Benefits of ESG Funds in India<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Invests in companies that focus on environmental and social responsibility<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Reduces risk by selecting companies with strong governance practices<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Helps diversify investments across sectors using ESG criteria<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Offers potential for long-term sustainable growth<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Supports positive environmental and social impact<\/span><\/li>\n<\/ul>\n<h2><b>Risks of ESG Funds in India<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Short-term returns may be lower compared to traditional funds<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Investments may be concentrated in specific sectors like renewable energy<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Changes in ESG regulations can impact fund performance<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Limited track record as most ESG funds in India are relatively new<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Higher expense ratios may reduce overall returns<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Declining investor interest may lead to capital outflows<\/span><\/li>\n<\/ul>\n<h2><b>ESG Funds vs Traditional Funds<\/b><\/h2>\n<div class=\"wp-block-table\" style=\"width: 100%; border: 1px solid #000000; margin-bottom: 20px;\">\n<table style=\"width: 100%; border-collapse: collapse; font-family: Arial, sans-serif; font-size: 15px; color: #000000; background-color: #ffffff;\">\n<thead>\n<tr style=\"border-bottom: 2px solid #000000;\">\n<th style=\"padding: 12px; border: 1px solid #000000; text-align: left; font-weight: bold; background-color: #ffffff; width: 25%;\">Feature<\/th>\n<th style=\"padding: 12px; border: 1px solid #000000; text-align: left; font-weight: bold; background-color: #ffffff;\">ESG Funds<\/th>\n<th style=\"padding: 12px; border: 1px solid #000000; text-align: left; font-weight: bold; background-color: #ffffff;\">Traditional Funds<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td style=\"padding: 10px; border: 1px solid #000000; font-weight: bold;\">What they focus on<\/td>\n<td style=\"padding: 10px; border: 1px solid #000000;\">Companies that are responsible and sustainable, along with profits.<\/td>\n<td style=\"padding: 10px; border: 1px solid #000000;\">Companies mainly chosen for financial profits and growth.<\/td>\n<\/tr>\n<tr>\n<td style=\"padding: 10px; border: 1px solid #000000; font-weight: bold;\">How they manage risk<\/td>\n<td style=\"padding: 10px; border: 1px solid #000000;\">Evaluates ethical practices, regulatory compliance, and sustainability risks.<\/td>\n<td style=\"padding: 10px; border: 1px solid #000000;\">Focuses primarily on market volatility and financial performance risks.<\/td>\n<\/tr>\n<tr>\n<td style=\"padding: 10px; border: 1px solid #000000; font-weight: bold;\">Return approach<\/td>\n<td style=\"padding: 10px; border: 1px solid #000000;\">Aims for steady, resilient long-term growth.<\/td>\n<td style=\"padding: 10px; border: 1px solid #000000;\">Often focuses on capitalizing on quick returns and market cycles.<\/td>\n<\/tr>\n<tr>\n<td style=\"padding: 10px; border: 1px solid #000000; font-weight: bold;\">Overall impact<\/td>\n<td style=\"padding: 10px; border: 1px solid #000000;\">Intended positive impact on society and the environment.<\/td>\n<td style=\"padding: 10px; border: 1px solid #000000;\">Limited focus on social or environmental consequences.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<h2><b>Taxation of ESG Mutual Funds<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Tax rules for ESG funds are the same as equity mutual funds:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Short-Term Capital Gains (STCG):<\/b><span style=\"font-weight: 400;\"> 20% (holding period &lt; 12 months)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Long-Term Capital Gains (LTCG):<\/b><span style=\"font-weight: 400;\"> 12.5% (above \u20b91.25 lakh, holding period &gt; 12 months)<\/span><\/li>\n<\/ul>\n<h2><b>Who Should Invest in ESG Funds?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">ESG funds in India might be suitable for:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Investors with a long-term investment horizon<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Those comfortable with moderate to high risk<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Investors who value ethical and sustainable investing<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Individuals who understand ESG concepts and limitations<\/span><\/li>\n<\/ul>\n<h2><b>How to Choose the Right ESG Fund<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Check the fund\u2019s strategy to see whether it excludes certain sectors, integrates ESG factors, or focuses on impact-driven investments.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Review the portfolio to understand which sectors and companies the fund invests in and how well it fits your overall portfolio.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Compare the expense ratio, as lower costs can help improve your net returns over time.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Look at the ESG scores of the underlying companies to assess how well they follow sustainability and governance practices.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Evaluate past performance against benchmarks and peers to understand how consistently the fund has performed.<\/span><\/li>\n<\/ul>\n<h2><b>Key Things to Keep in Mind<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">ESG funds require a long-term perspective<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Diversification remains important<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Returns depend on both market performance and ESG compliance<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Align investments with your financial goals and values<\/span><\/li>\n<\/ul>\n<h2><b>Investment Strategy for ESG Funds<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">To make the most of ESG investing:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Allocate only a portion of your portfolio to ESG funds<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Combine ESG funds with diversified equity funds<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Stay invested for at least 5 to 7 years<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Review fund performance periodically<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">This balanced approach helps manage risk while benefiting from sustainable growth trends.<\/span><\/p>\n<h2><b>Conclusion<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">ESG funds in India offer a unique blend of financial returns and responsible investing. While they may not always outperform in the short term, they provide exposure to companies focused on long-term sustainability.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, they are not a one-size-fits-all solution. Investors must weigh returns, risks, and personal values before investing.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If your goal is to build wealth while supporting sustainable practices, ESG mutual funds can be a meaningful addition to your portfolio.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-size: 10pt;\"><b><i>Disclaimer:<\/i><\/b><i><span style=\"font-weight: 400;\"> Mutual fund investments are subject to market risks. Read all the related documents carefully before investing. This content is purely for information purpose only and in no way is to be considered as an advice or recommendation. The securities are quoted as an example and not as a recommendation. Investors are requested to do their own due diligence before investing.<\/span><\/i><\/span><\/p>\n<p><span style=\"font-size: 10pt;\"><i><span style=\"font-weight: 400;\">SEBI Reg No.: Broking \u2013 INZ000240532, Research Analyst \u2013 INH000020086, Depository Participant \u2013 IN-DP-416-2019, Depository Participant Number: CDSL \u2013 12088800, NSE (90165), BSE (6707), MCX (57525), NCDEX (1315), MSEI (85300).<\/span><\/i><\/span><\/p>\n<p><span style=\"font-size: 10pt;\"><i><span style=\"font-weight: 400;\">Registered Office: 136, 1st Floor, Devika Tower, Nehru Place, Delhi \u2013 110019.<\/span><\/i><\/span><\/p>\n<p><span style=\"font-size: 10pt;\"><i><span style=\"font-weight: 400;\">For complete Terms &amp; Conditions and Disclaimers, visit <\/span><\/i><a href=\"https:\/\/www.paytmmoney.com\/\"><i><span style=\"font-weight: 400;\">https:\/\/www.paytmmoney.com<\/span><\/i><\/a><i><span style=\"font-weight: 400;\">.<\/span><\/i><\/span><\/p>\n<h2><b>FAQs<\/b><\/h2>\n<div style=\"max-width: 100%; margin: 20px 0; font-family: -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, Oxygen-Sans, Ubuntu, Cantarell, 'Helvetica Neue', sans-serif;\">\n<style>\n        \/* Hides default browser arrow\/triangle for a clean professional look *\/<br \/>        summary::-webkit-details-marker { display: none; }<br \/>        summary { list-style: none; outline: none; }<br \/>    <\/style>\n<details style=\"border-bottom: 1px solid #e2e8f0; padding: 15px 0; cursor: pointer;\">\n<summary style=\"display: flex; justify-content: space-between; align-items: center; width: 100%;\"><span style=\"font-weight: 600; color: #1a202c; font-size: 18px; text-align: left;\">1. What are ESG funds in India?<\/span><br \/>\n<span style=\"font-size: 24px; color: #007bff; margin-left: 10px;\">+<\/span><\/summary>\n<div style=\"padding-top: 10px; color: #4a5568; line-height: 1.6; text-align: left;\">ESG funds in India are thematic mutual funds that invest in companies based on Environmental, Social, and Governance criteria alongside traditional financial metrics. SEBI requires these funds to invest at least 65% (often up to 80% per specific fund strategy) of their assets in companies that meet high sustainability and responsible business standards.<\/div>\n<\/details>\n<details style=\"border-bottom: 1px solid #e2e8f0; padding: 15px 0; cursor: pointer;\">\n<summary style=\"display: flex; justify-content: space-between; align-items: center; width: 100%;\"><span style=\"font-weight: 600; color: #1a202c; font-size: 18px; text-align: left;\">2. Are ESG funds in India good for long-term investment?<\/span><br \/>\n<span style=\"font-size: 24px; color: #007bff; margin-left: 10px;\">+<\/span><\/summary>\n<div style=\"padding-top: 10px; color: #4a5568; line-height: 1.6; text-align: left;\">Yes, ESG funds are designed for long-term wealth creation. By focusing on companies with sustainable business models and strong governance, they aim to mitigate risks like regulatory fines or reputational damage, which can support steady growth over decades.<\/div>\n<\/details>\n<details style=\"border-bottom: 1px solid #e2e8f0; padding: 15px 0; cursor: pointer;\">\n<summary style=\"display: flex; justify-content: space-between; align-items: center; width: 100%;\"><span style=\"font-weight: 600; color: #1a202c; font-size: 18px; text-align: left;\">3. What are the risks of investing in ESG mutual funds?<\/span><br \/>\n<span style=\"font-size: 24px; color: #007bff; margin-left: 10px;\">+<\/span><\/summary>\n<div style=\"padding-top: 10px; color: #4a5568; line-height: 1.6; text-align: left;\">Key risks include <strong>sector concentration<\/strong> (as they often avoid &#8220;sin&#8221; sectors like tobacco or coal), potentially higher expense ratios due to specialized research, and the risk of &#8220;greenwashing&#8221; where companies claim to be more sustainable than they actually are.<\/div>\n<\/details>\n<details style=\"border-bottom: 1px solid #e2e8f0; padding: 15px 0; cursor: pointer;\">\n<summary style=\"display: flex; justify-content: space-between; align-items: center; width: 100%;\"><span style=\"font-weight: 600; color: #1a202c; font-size: 18px; text-align: left;\">4. How are ESG funds taxed in India?<\/span><br \/>\n<span style=\"font-size: 24px; color: #007bff; margin-left: 10px;\">+<\/span><\/summary>\n<div style=\"padding-top: 10px; color: #4a5568; line-height: 1.6; text-align: left;\">ESG funds are taxed as equity mutual funds. As of 2026, Short-term Capital Gains (STCG) on units held for less than 12 months are taxed at <strong>20%<\/strong>. Long-term Capital Gains (LTCG) on units held for more than 12 months are taxed at <strong>12.5%<\/strong> on gains exceeding \u20b91.25 lakh in a financial year.<\/div>\n<\/details>\n<details style=\"border-bottom: 1px solid #e2e8f0; padding: 15px 0; cursor: pointer;\">\n<summary style=\"display: flex; justify-content: space-between; align-items: center; width: 100%;\"><span style=\"font-weight: 600; color: #1a202c; font-size: 18px; text-align: left;\">5. How to choose the best ESG fund in India?<\/span><br \/>\n<span style=\"font-size: 24px; color: #007bff; margin-left: 10px;\">+<\/span><\/summary>\n<div style=\"padding-top: 10px; color: #4a5568; line-height: 1.6; text-align: left;\">Look for funds with a clear ESG methodology (like &#8220;Best-in-Class&#8221; or &#8220;Exclusionary Strategy&#8221;) and evaluate their expense ratio. Since SEBI now mandates BRSR Core disclosures for top companies, you can also check if the fund&#8217;s top holdings are compliant with these heightened transparency standards.<\/div>\n<\/details>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Sustainable investing is no longer just a niche concept. It is becoming a mainstream conversation among Indian investors. If you have ever wondered whether your investments can generate returns while also contributing to a better world, ESG funds in India may be worth exploring. From climate change concerns to corporate governance issues, investors today are<a href=\"https:\/\/www.paytmmoney.com\/blog\/esg-funds-india-returns-risks-investment-strategy\/\">Continue reading <span class=\"sr-only\">&#8220;ESG Funds in India: Can You Grow Wealth Sustainably?&#8221;<\/span><\/a><\/p>\n","protected":false},"author":51,"featured_media":6616,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[827],"tags":[1566,1561,1562,1557,1560,1563,1558,1568,1567,1559,1565,1564],"class_list":["post-6615","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mutual-funds","tag-benefits-of-esg-investing","tag-esg-fund-returns","tag-esg-fund-risks","tag-esg-funds-in-india","tag-esg-investing-india","tag-esg-investment-strategy","tag-esg-mutual-funds-india","tag-esg-taxation-india","tag-esg-vs-traditional-funds","tag-sustainable-investing-india","tag-types-of-esg-funds","tag-what-are-esg-funds"],"_links":{"self":[{"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/posts\/6615","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/users\/51"}],"replies":[{"embeddable":true,"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/comments?post=6615"}],"version-history":[{"count":0,"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/posts\/6615\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/media\/6616"}],"wp:attachment":[{"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/media?parent=6615"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/categories?post=6615"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/tags?post=6615"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}