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What is ESG: Sustainable ESG investment

Create a better tomorrow with green and sustainable investing.

What is ESG?

Environmental, Social and Governance (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 in our investment decisions and in 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 investments – an approach to developing sustainable investment solutions focused on longer-term wins, shaped by ESG principles. HSBC has served the needs of an ever-evolving word for over 150 years. We're committed to 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.

HSBC sustainable investments include investment approaches or instruments which consider ESG and/or other sustainable factors to varying degrees. There's no guarantee that sustainable investments will produce returns similar to those that don't consider these factors. At HSBC, we see three main ways to embed sustainability into an investment portfolio, which can be applied across your 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.

ESG Enhanced 

Thematic 

Impact 

Ways to invest

Unit trusts

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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.

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

Key features

Mitigate risk

E, S and G factors are important in understanding the inherent risks of companies and their operating performance in the long term and increasingly in the nearer term. Integrating ESG issues in investment decisions can help manage these risks.

Unlock opportunities

Sustainability is opening a world of opportunity – deployment of sustainable solutions can help capture these opportunities.

Deliver potential capital growth

Evidence shows that companies with better Environmental, Social and Governance (ESG) credentials may be more likely to show better financial performance1. 

Source: NYU Stern: Centre for Sustainable Business: ESG And Financial Performance: Uncovering the Relationship by Aggregating Evidence from 1,000 Plus Studies Published between 2015 – 2020.

Understanding your sustainable investing preferences

At HSBC, we're committed to helping you understand your preferences when it comes to sustainable investing.

You can speak to your Relationship Manager to find out more about the 'ESG analysis' feature on your Wealth Dashboard and other resources such as ESG Insights. These are designed to support your sustainable investment journey.

Your Relationship Managers may invite you to complete a short questionnaire. This will help us identify your sustainable investing interests and preferences. The questionnaire is not mandatory to your investing with us, and your responses won't affect the suite of products we offer you.

Ways to invest

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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

Enhanced 

Thematic 

Structured products

Structured products3 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 bond4 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

How can an investor meet their financial goals through sustainable and responsible investing? 

Is it true that investors don't care about sustainability? 

Will investing sustainably hurt my financial returns? 

Is there a trade-off between short-term gains and company stocks that adopt sustainable practices? 

What kinds of investment products might HSBC classify as a 'sustainable investment'? 

Does HSBC's classification of sustainable investments apply at other banks? 

I hold a similar product at another institution but its sustainable investment classification is different to HSBC's. Why? 

How frequently does HSBC review investment products to check if they can still be considered 'sustainable investments'? 

Where can I find 'ESG enhanced', 'thematic' and 'impact' products under 'My holdings' in HSBC Online Banking? 

What is the scale of ESG rating? 

Sustainability at HSBC

For more information on HSBC Group's Sustainability commitments, please refer to Our Climate Strategy for the most up to date information.

More resources

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Sustainability, the HSBC way

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

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Your quick guide to sustainable investing

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

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Pick up our latest ESG insights

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

1  Original Source: UNA-UK, sustainablegoals.org.uk.
   Proposed Source: SDG Impact, sdgimpact.undp.org/assets/SDG-Impact-Brochure.pdf

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

3 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.

4 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.

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

Disclaimer 

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.

ESG and Sustainable Investing Disclosure

In broad terms "ESG and sustainable investing" products include investment approaches or instruments which consider environmental, social, governance and/or other sustainability factors to varying degrees.  Certain instruments we classify as sustainable may be in the process of changing to deliver sustainability outcomes. There is no guarantee that ESG and Sustainable investing products will produce returns similar to those which don't consider these factors.  ESG and Sustainable investing products may diverge from traditional market benchmarks.  In addition, there is no standard definition of, or measurement criteria for, ESG and Sustainable investing or the impact of ESG and Sustainable investing products. ESG and Sustainable investing and related impact measurement criteria are (a) highly subjective and (b) may vary significantly across and within sectors.

HSBC may rely on measurement criteria devised and 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 ESG / 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 ESG / sustainability impact will be achieved. ESG and Sustainable investing is an evolving area and new regulations are being developed which will affect how investments can be categorised or labelled. An investment which is considered to fulfil sustainable criteria today may not meet those criteria at some point in the future.

When we classify an investment product or service against our ESG and Sustainable Investing (SI) categories described in this document: ESG Enhanced, Thematic or Impact, this does not mean that all individual underlying holdings in the investment product or portfolio will meet the relevant SI criteria. As such, an SI classification does not mean that all underlying holdings in a fund or discretionary portfolio meet the relevant sustainable investment criteria.  Similarly, where an equity or fixed income investment is classified under an Enhanced, Thematic or Impact category this does not mean that the underlying issuer's activities are fully sustainable. Not all investments, portfolios or services are classifiable under our SI categories. This may be because there is insufficient information available or because a particular investment product does not meet HSBC's SI classifications criteria.

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