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Mother and daughter gardening together; image used for HSBC Spotlight on ESG Sustainable investing.

What is ESG: Sustainable ESG investment

Create a better tomorrow with green and sustainable investing.

What is ESG?

Environmental, Social and Governance, or ESG, is a set of criteria that can be applied to how a company operates. When we talk about ESG investing, we're referring to the use of these criteria as factors impacting investment decisions and evaluating potential companies to add to your financial portfolio.

Sustainability is the cornerstone of ESG investing. The global economy is putting a spotlight on responsible investment, an approach to developing sustainable investment solutions that are focused on longer term wins shaped by ESG principles. HSBC has spent the last over 150 years serving the needs of a constantly evolving globalised world. We are committed to the ultimate cause of sustainability because we're dedicated to the communities and societies in which we operate, and to that cause, we champion building a better tomorrow for future generations to come.

At HSBC, we see three main ways to embed sustainability into an investment portfolio, which can be applied across portfolio allocations:

Invest in companies based on relative ESG performance:

This covers a spectrum of approaches such as ESG tilting, ESG improvers or positive screening, to intentionally invest in companies based on relative ESG performance or momentum.

ESG Improvers: Strategies that focus on enhancing potential return by targeting companies with improving ESG performance. 

ESG Tilting: Strategies which focus on delivering a specified outcome by enhancing portfolio exposure to companies with strong ESG performance. 

Positive Screening: Strategies that aim to invest in companies which are relatively more advanced in managing ESG risks and/or opportunities across sectors.

Why is ESG important?

The financial world is getting increasingly plugged in to ESG development and as a result, we're seeing more and more companies incorporating ESG principles into their operations, instead of purely focusing on profitability. On an individual level, integrating ESG into your investment decisions creates a more resilient portfolio that will stand the tides of time. When individual investors, corporates and societies place ESG principles at the forefront, it's a win on all fronts that aims at building a better world and making sure the resources we have today will still be around tomorrow, all while unearthing great opportunities in the process.

With the UN Sustainable Development Goals (SDGs) in place, the world's estimated financial needs for achieving the SDGs are between USD5 trillion and USD7 trillion a year1. Major changes have taken place, spurred by the UN's 17 Sustainable Development Goals encompassing issues such as energy consumption, social justice, biodiversity, and economic growth2.

On an individual level, integrating ESG into your investment decisions may open up possibilities to support and contribute to SDGs while creating a more resilient diversified portfolio.

Exponential growth in ESG investments

This infographic shows the exponential growth in socially responsible investments from 2014 to 2016 across 4 geographical regions. Australia and New Zealand saw an increase from USD148 billion to USD516 billion, Asia experienced an increase from USD52 billion to USD526 billion, Europe saw an increase from USD10.8 trillion to USD12 trillion, and the US and Canada experienced an increase from USD7.3 trillion to USD9.8 trillion. Altogether, the 4 regions recorded a jump from USD18.3 trillion in 2014 to USD22.9 trillion in 2016.

Source: HSBC Global Asset Management, "Global Sustainable Investment Review", 2016

Common ESG sustainability issues

Windy road in the countryside.

Environmental

  • Climate change
  • Air and water pollution
  • Waste management
  • Energy efficiency
  • Water scarcity
Child drawing of family members.

Social

  • Human rights
  • Consumer privacy
  • Gender equality
  • Data security
  • Health and safety
Women working together in a coworking office.

Governance

  • Board structures
  • Company ownership
  • Financial reporting
  • Business ethics and culture
  • Executive remuneration

Reasons to consider green and sustainable investing

  1. Mitigate risks: ESG issues can affect a company's value and financial performance, as well as influence share prices1
  2. Enhance potential returns: Companies with strong ESG metrics are more likely to outperform others2
  3. Provide greater opportunities: Companies that are robust at adapting to changing consumer needs and regulatory requirements are more likely to benefit from competitive advantages in the longer term3

Invest in ESG Funds

ESG Categories

A spectrum of approaches, investing in companies based on relative ESG performance or momentum
Fund Name
Fund Code Currency Distribution
Risk level Details
HGIF - Asia ESG Bond HAEUC USD Cash Dividend 2 Click here
HGIF - Asia ESG Bond HAEUR USD Accumulation 2 Click here
HGIF - Asia ESG Bond HAERC CNY Cash Dividend 3 Click here
HGIF - Asia ESG Bond HAERR CNY Accumulation 3 Click here
HGIF - Asia ESG Bond HAEAC AUD Cash Dividend 3 Click here
HGIF - Asia ESG Bond HAEAR AUD Accumulation 3 Click here
HGIF - Asia ESG Bond HAEGC GBP Cash Dividend 3 Click here
HGIF - Asia ESG Bond HAEGR GBP Accumulation 3 Click here
HGIF - Asia ESG Bond HAESC SGD Cash Dividend 2 Click here
HGIF - Asia ESG Bond HAESR SGD Accumulation 2 Click here
HGIF - Global Lower Carbon Equity
HCEAU USD Accumulation 4 Click here
HGIF - Global Lower Carbon Equity
HCEAS SGD Accumulation 4 Click here
Schroder ISF Sustainable Multi Asset Income SSMEA EUR Accumulation
2 Click here
Schroder ISF Sustainable Multi Asset Income SSMEC EUR Cash Dividend 2 Click here
Schroder ISF Sustainable Multi Asset Income SSMSA SGD Accumulation
2 Click here
Schroder ISF Sustainable Multi Asset Income SSMSC SGD Cash Dividend 2 Click here
Schroder ISF Sustainable Multi Asset Income SSMUA USD Unit Dividend
3 Click here
Schroder ISF Sustainable Multi Asset Income SSMUC USD Cash Dividend 3 Click here
Schroder ISF Sustainable Multi Asset Income
SSMAA
AUD
Accumulation
4 Click here
Schroder ISF Sustainable Multi Asset Income
SSMAC

AUD
Cash Dividend
4 Click here
A spectrum of approaches, investing in companies based on relative ESG performance or momentum
Fund Name
HGIF - Asia ESG Bond
Fund Code HAEUC
Currency USD
Distribution
Cash Dividend
Risk level 2
Details Click here
Fund Name
HGIF - Asia ESG Bond
Fund Code HAEUR
Currency USD
Distribution
Accumulation
Risk level 2
Details Click here
Fund Name
HGIF - Asia ESG Bond
Fund Code HAERC
Currency CNY
Distribution
Cash Dividend
Risk level 3
Details Click here
Fund Name
HGIF - Asia ESG Bond
Fund Code HAERR
Currency CNY
Distribution
Accumulation
Risk level 3
Details Click here
Fund Name
HGIF - Asia ESG Bond
Fund Code HAEAC
Currency AUD
Distribution
Cash Dividend
Risk level 3
Details Click here
Fund Name
HGIF - Asia ESG Bond
Fund Code HAEAR
Currency AUD
Distribution
Accumulation
Risk level 3
Details Click here
Fund Name
HGIF - Asia ESG Bond
Fund Code HAEGC
Currency GBP
Distribution
Cash Dividend
Risk level 3
Details Click here
Fund Name
HGIF - Asia ESG Bond
Fund Code HAEGR
Currency GBP
Distribution
Accumulation
Risk level 3
Details Click here
Fund Name
HGIF - Asia ESG Bond
Fund Code HAESC
Currency SGD
Distribution
Cash Dividend
Risk level 2
Details Click here
Fund Name
HGIF - Asia ESG Bond
Fund Code HAESR
Currency SGD
Distribution
Accumulation
Risk level 2
Details Click here
Fund Name
HGIF - Global Lower Carbon Equity
Fund Code HCEAU
Currency USD
Distribution
Accumulation
Risk level 4
Details Click here
Fund Name
HGIF - Global Lower Carbon Equity
Fund Code HCEAS
Currency SGD
Distribution
Accumulation
Risk level 4
Details Click here
Fund Name
Schroder ISF Sustainable Multi Asset Income
Fund Code SSMEA
Currency EUR
Distribution
Accumulation
Risk level 2
Details Click here
Fund Name
Schroder ISF Sustainable Multi Asset Income
Fund Code SSMEC
Currency EUR
Distribution
Cash Dividend
Risk level 2
Details Click here
Fund Name
Schroder ISF Sustainable Multi Asset Income
Fund Code SSMSA
Currency SGD
Distribution
Accumulation
Risk level 2
Details Click here
Fund Name
Schroder ISF Sustainable Multi Asset Income
Fund Code SSMSC
Currency SGD
Distribution
Cash Dividend
Risk level 2
Details Click here
Fund Name
Schroder ISF Sustainable Multi Asset Income
Fund Code SSMUA
Currency USD
Distribution
Unit Dividend
Risk level 3
Details Click here
Fund Name
Schroder ISF Sustainable Multi Asset Income
Fund Code SSMUC
Currency USD
Distribution
Cash Dividend
Risk level 3
Details Click here
Fund Name
Schroder ISF Sustainable Multi Asset Income
Fund Code SSMAA
Currency AUD
Distribution
Accumulation
Risk level 4
Details Click here
Fund Name
Schroder ISF Sustainable Multi Asset Income
Fund Code SSMAC

Currency AUD
Distribution
Cash Dividend
Risk level 4
Details Click here

Structured products

Structured products5 are investment products where returns are linked to an underlying asset with pre-defined features such as tenor, currency and payout calculation.

The underlying assets of structured products can include equities, interest rates, commodities, mutual funds and foreign currencies, among others. These underlying assets can be linked to ESG-related strategies.

For more information on the availability of these structures, please contact your Relationship Manager.

Green bonds

A green bond is a bond6 that uses its proceeds solely for the financing or re-financing of green projects. The issuer must also declare the bond to be green and commit to a level of transparency on how the bond's proceeds are used. 

A green bond should be put together in line with the Green Bond Principles (GBPs), a set of voluntary guidelines created by the International Capital Markets Association (ICMA). According to these GBPs, a company does not have to be green to issue a green bond, but all of the bond proceeds have to go towards green or environmental projects. 

For more information on our range of green bonds, please contact your Relationship Manager.

FAQs

Sustainability at HSBC

We're invested in the communities and societies we operate in, and committed to serving the needs of a changing world. This is why we recognise that economic development has to be sustainable so we can start building a better tomorrow today.

Our commitment:

  • Provide USD100bil of sustainable financing and investment by 2025
  • Source 100% of our electricity from renewable sources by 2030, with an interim target of 90% by 2025
  • Establish a Centre for Sustainable Finance to provide thought leadership on climate change and the role of the financial services sector
  • Reduce our exposure to thermal coal and actively manage the transition path for other high-carbon sectors
  • Adopt the recommendations of the Task Force on Climate-related Financial Disclosures to improve transparency

We publish regular updated information on our ESG performance. You can find more information about how we do business and how we approach ESG issues and events by visiting https://www.hsbc.com/investors/esg-investors.

More resources

Wind turbine from aerial view; image used for HSBC Building a sustainable future.
 
for more details This link will open in a new window

See how we're doing our part to build a sustainable future.

Hand holding plant; image used for HSBC quick guide to sustainable investing
 
about sustainable investing page This link will open in a new window

Learn more about responsible investment and the opportunities it can create.

Family hiking in the mountain; image used for HSBC Wealth ESG Insights.
 
for more details

Get our take on the world of ESG and sustainable investing.

1 Source: UNA-UK, sustainablegoals.org.uk

2 Source: United Nations Department of Economic and Social Affairs, https://sdgs.un.org/goals

3 Source: International Institute for Sustainable Development, 24 September 2019

4 Please note that HSBC relies on the environmental, social and governance impact measurement criteria reported by third party fund managers and does not conduct its own due diligence in relation to such criteria.

5 Structured products are available only to Accredited Investors. Other eligibility criteria apply, please visit https://www.hsbc.com.sg/wealth/investments/products/structured-products/ for more details.

6 Bonds are available only to Accredited Investors. Other eligibility criteria apply, please visit https://www.hsbc.com.sg/wealth/investments/products/bonds/ for more details.

7 Source: HSBC Global Research, "ESG Playbook", October 2018

Please note that there is no guarantee that:

(a) the nature of the ESG impact of an investment will be aligned with any particular investor's ESG impact goals; 

(b) the stated level or target level of ESG impact of an investment will be achieved; or

(c) an investment approach which considers ESG factors will produce returns similar to those which don't consider these factors. Investments which consider ESG factors may diverge from traditional market benchmarks.

This document is for information only and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. The mention of any investment product or class of investment products ("product") should not be construed as representing a recommendation to buy or sell that product, nor does it represent a forecast on future performance of the product. The information contained on this web site is intended for Singapore residents only and should not be construed as a distribution, an offer to sell or a solicitation to buy any product in any jurisdiction where such activities would be unlawful under the laws of such jurisdiction, in particular the United States of America and Canada. The specific investment objectives, personal situation and particular needs of any person have not been taken in consideration. You should therefore not rely on it as investment advice. Any transaction that you decide to make will be one of your own choice and at your own risk.

Sustainable Investments risk disclosure

  • "Sustainable investments" include investment approaches or instruments which consider environmental, social, governance and/or other sustainability factors (collectively, "sustainability") to varying degrees. Certain instruments we include within this category may be in the process of changing to deliver sustainability outcomes.
  • There is no guarantee that sustainable investments will produce returns similar to those which don't consider these factors. Sustainable investments may diverge from traditional market benchmarks.
  • In addition, there is no standard definition of, or measurement criteria for sustainable investments, or the impact of sustainable investments ("sustainability impact"). Sustainable investment and sustainability impact measurement criteria are (a) highly subjective and (b) may vary significantly across and within sectors.
  • HSBC may rely on measurement criteria devised and/or reported by third party providers or issuers. HSBC does not always conduct its own specific due diligence in relation to measurement criteria. There is no guarantee: (a) that the nature of the sustainability impact or measurement criteria of an investment will be aligned with any particular investor's sustainability goals; or (b) that the stated level or target level of sustainability impact will be achieved.
  • Sustainable investing is an evolving area and new regulations may come into effect which may affect how an investment is categorised or labelled. An investment which is considered to fulfil sustainable criteria today may not meet those criteria at some point in the future.