Green Investing: The Future of Wealth Management in a Sustainable Economy

Misha Desai
Mar 9, 2025
3 min read

A growing number of investors are showing interest in aligning sustainability with earning profits. This exemplifying trend has coined the term ‘Green Investing’, a new frontier of wealth management.

According to the Morgan Stanley Institutes 2024 Sustainable Signals report, “More than half of the individual investors say they plan to increase their allocations to sustainable investments in the next year, while more than 70% believe strong ESG practices can lead to higher returns.” (1)

Source: Morgan Stanley Institute for Sustainable Investing, January 2024

The rules we apply when investing regularly also apply to building a sustainable portfolio. One must start early to leverage compounding, diversify across asset classes to minimise risk, and invest for both short term and long-term goals such as retirement.

Let us understand this by illustrating an example.

Think of green investing as a blue-chip investment. Blue chip companies prioritise good corporate governance and well-being of stakeholders with retail investors providing them with necessary funds for such practices. Building a sustainably responsible portfolio is equivalent to looking at our funds through the lens of environmental, social, and governance (ESG) effects.

A notable success in green investing is the growth of Renew Power, an Indian renewable energy company. By investing in solar and wind energy, the company has reduced carbon emissions while delivering retuns for their customers

There are two kinds of green investing – the first is active investing, where we channel our investments to push organisations to inculcate values that align with supporting practices such as environmental responsibility. The second kind is impact investing where we invest by choosing funds or companies that focus on ESG initiatives that align with our beliefs.

There is a third option which is a combination of both options.

When we practice impact investing where we directly buy stocks, it is important to focus on those practices of the company that positively contribute to the environment, society, and governance. There are multiple ways we can contribute positively through mutual funds.

ESG funds such as Axis ESG Funds or Quant Equity ESG Funds, invest in stocks that have the best ESG ratings focusing on sustainability themes such as climate action, clean energy solutions, circular economy, along with diversity and inclusion. Impact mutual funds on the other hand invest in companies that have pledged to improve the environment, society, and in turn, the world.

We also have the option to choose from passive income instruments that include funds who track ESG indices available on BSE and NSE. Debt instruments like green bonds also let us narrow down on specific environmental friendly projects. For example, Greenko Group in India is the largest issuer of green bonds focused on funding hydro, solar, and wind power projects in several Indian cities.

To get started, it is as simple as searching on an investment platform such as Coin for ESG funds. Our portfolio can also be adjusted to allocate certain funds for sustainable investment. Platforms like “Jupiter Money” provide solutions that help an investor match their sustainability goals with their personal goals, creating effective portfolios.

Green investing comes with the risk of greenwashing, where companies exaggerate or falsely claim to be sustainable. The investment principle of diversifying your portfolio is applicable for sustainable portfolios as well, minimizing dependency on one sector and reducing the risk of greenwashing. Adding new age, riskier options to a base of sustainable ESG-compliant companies gives us a comprehensive portfolio.

ESG assets are expected to reach $53 trillion by 2025 globally, over a third of the $140.5 trillion in projected total assets under management. (2) For more than 20 years, ESG companies have been resilient during volatility, outperforming the market in return over the long run. (3)

There are a range of responsible instruments to increase our financial capital. The sooner we delve into green investing, the easier it will be for us to identify what is best for us. Green investing is not just about making profits, it is about making a difference and securing a better future for everyone. By being responsible in our investments, we contribute to a world where finance and sustainability go hand in hand.

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