What are ESG Funds? Top Investment Options in ESG Funds

Have you ever wondered if your investments can make a difference in the world? Think of putting your funds in companies that not only generate profits but also create a positive impact on society and the environment. That’s exactly what ESG (Environmental, Social, and Governance) mutual funds offer. These funds focus on sustainable and responsible investing.

When you invest in ESG mutual funds, your money supports ethical businesses. In recent years, ESG funds have gained popularity among investors looking for both financial returns and a better future.

In this blog, check out the top investment options in ESG funds in 2025.

Top Five ESG Funds to Invest in 2025

Here are five ESG funds that individuals advocating sustainable practices might consider worth investing in.

1.      SBI ESG Exclusionary Strategy Fund

This fund follows a strict exclusionary approach, avoiding companies involved in activities that may harm the environment or violate ethical practices. Primarily, it invests in companies with strong ESG scores in different sectors like financial services, technology, and consumer cyclical.

• AUM: INR5,543.93 crore
• NAV: INR 241.9727
• Expense ratio: 1.33%
• 1-Year return: 10.24%
• 3-Year return: 11.21%

2.      ICICI Prudential ESG Exclusionary Strategy Fund

Designed for responsible investors,this is one of the popular ICICI Mutual Funds that helps you build a balanced portfolio. It invests in top sectors like healthcare, communication services, and technology. You can create an SIP in this fund with just INR 100, while the minimum amount for a lump sum investment is INR 5,000.

• AUM: INR 1,470.84 crore
• NAV: INR 21.9200
• Expense ratio: 1.02%
• 1-Year return: 14.58%
• 3-Year return: 18.24%

3.      Axis ESG Integration Strategy Fund

This mutual fund actively integrates ESG factors into investment decisions, while maintaining exposure to different industries. The fund invests in companies that demonstrate strong environmental responsibility and corporate governance. Nearly a quarter of its allocations lie in financial services, while it significantly invests in consumer cyclical and technology.

• AUM: INR 1,249.20 crore
• NAV: INR 21.5900
• Expense ratio: 1.32%
• 1-Year return: 9.43%
• 3-Year return: 10.64%

4.      Kotak ESG Exclusionary Strategy Fund

The Kotak ESG Exclusionary Strategy Fund filters out companies involved in industries like fossil fuels, tobacco, and unethical labor practices. It focuses on businesses committed to sustainability and social responsibility. Some of the key sectors it invests in include financial services, technology, consumer cyclical, and basic materials.

• AUM: INR 860.61 crore
• NAV: INR 16.6390
• Expense ratio: 0.83%
• 1-Year return: 5.75%
• 3-Year return: 10.40%

5.      Aditya Birla Sun Life ESG Integration Strategy Fund

This Aditya Birla fund focuses on businesses cultivating sustainable practices while building its portfolio. It evaluates companies based on environmental, social, and governance performance.

Key sectors where the Aditya Birla Sun Life ESG Integration Strategy Fund invests are financial services, technology, consumer cyclical, and industrials. There’s no lock-in period involved with this fund. However, an exit load of 1% applies if you redeem the funds within 30 days of investing.

• AUM: INR 629.12 crore
• NAV: INR 17.7100
• Expense ratio: 1.40%
• 1-Year return: 16.06%
• 3-Year return: 10.32%

Conclusion

In this blog, we have curated some of the renowned ESG funds that delivered consistent returns to investors in the last three years. Now that you know the funds that can align your investments with ethical goals, you can choose the right fund to invest in.

If you are someone who prioritizes sustainability and social causes while investing, explore these ESG mutual funds and build your portfolio.