Guide to Green and Sustainable Investing Options (2024)

This post was originally posted on Planner Bee.

Sustainability is no longer just a trend—it’s a way to secure the future. Singapore leads in green finance, aligning investments with your values. Through initiatives like the Green Plan 2030, the country is cutting emissions, promoting green practices, and aiming to become a global green finance hub. Whether you’re funding renewable energy projects or choosing eco-friendly financial products, sustainable investing lets investors like you grow your money while supporting positive change.

Here’s how to start green and sustainable investments in Singapore.

What are green and sustainable investments?

Green investments support environmental projects like renewable energy or conservation. Sustainable investments focus on Environmental, Social, and Governance (ESG) factors to assess a company’s impact and ethics.

Singapore is promoting greener cities and businesses with financial incentives and regulations for sustainable investments. Choosing green assets helps the country achieve its environmental goals while keeping your portfolio aligned with global trends.

Are green investments profitable?

Green investments don’t mean lower returns. Many green companies and ESG-focused funds deliver strong financial performance, often outperforming traditional investments long-term. Notable examples include:

• Sustainable funds’ performance in 2023: According to a report by the Morgan Stanley Institute for Sustainable Investing, sustainable funds achieved median returns of 12.6% in 2023, compared to 8.6%.
• Sustainable equity funds in 2020: Morningstar reported that three out of four sustainable equity funds surpassed their category averages. Additionally, 25 out of 26 ESG equity index funds outperformed traditional benchmarks.

Singapore supports sustainable investing with incentives like the Green Bond Grant Scheme and the MAS Green Finance Action Plan. These programmes reduce costs and risks for green projects to facilitate confident investment.

Green and sustainable investment options in Singapore

Investing in green and sustainable assets in Singapore offers opportunities to align your financial goals with environmental and social responsibility. Here are specific examples and platforms to consider:

1. Green bonds

Green bonds are debt securities issued to finance projects with positive environmental impacts, such as renewable energy and sustainable infrastructure.

• Singapore government sovereign green bonds: In 2024, the Singapore government issued sovereign green bonds worth between S$2.1 billion and S$2.5 billion, with a 30-year maturity and a fixed coupon rate of 3.25%. The proceeds are allocated to public infrastructure projects that meet sustainability criteria.
• Accessing green bonds: Individual investors can participate in green bond offerings through local banks and financial institutions. Platforms like DBS and OCBC provide avenues to invest in these bonds, either directly or through green bond funds.

2. Renewable energy stocks and funds

Investing in renewable energy companies contributes to the transition toward sustainable power sources.

• Sembcorp Industries: Sembcorp has expanded into renewable energy sectors, including solar and wind power projects across Asia. Investors can purchase Sembcorp’s stocks through the Singapore Exchange (SGX).
• BGF Sustainable Energy Fund: Managed by BlackRock, this fund invests globally in alternative energy and energy technology companies. It’s available to Singaporean investors through iFAST and Fundsupermart.

3. Green Real Estate Investment Trusts (REITs)

Green REITs invest in environmentally sustainable properties. These investments offer potential stable returns while contributing to a positive environmental impact.

• UOB APAC Green REIT ETF: This ETF focuses on higher-yielding REITs in the Asia-Pacific region with better environmental performance based on the Global Real Estate Sustainability Benchmark (GRESB).

4. ESG funds and ETFs

ESG funds and ETFs provide diversified exposure to companies meeting sustainability criteria.

• Lion-OCBC Securities Singapore Low Carbon ETF: This ETF tracks the iEdge-OCBC Singapore Low Carbon Select 50 Capped Index and focuses on companies with lower carbon intensity.
• Accessing ESG funds: Platforms like DBS Vickers, OCBC Securities, and UOB Kay Hian offer access to various ESG funds and ETFs. Additionally, robo-advisors such as StashAway and Endowus provide ESG-focused portfolios tailored to individual risk profiles.

Read more: Go Green or Go Home? Sustainable Investing is Here to Stay

Steps to start investing in green assets

Getting started with green investing doesn’t have to be complicated. You can build a portfolio that aligns with your values while securing financial growth with the right approach and tools.

1. Choose the right platform

In Singapore, banks like DBS, OCBC, and UOB offer curated portfolios with ESG-focused options. Fintech platforms like Syfe provide affordable entry points for sustainable investing.

2. Set clear goals

What matters most to you? Clean energy, sustainable real estate, or ethical governance? Decide on your priorities and choose investments that reflect them.

3. Diversify your portfolio

Don’t put all your eggs in one basket. Mix different green assets, like green bonds, REITs, and ETFs to balance your risks and returns.

4. Adopt a long-term perspective

Green investments grow steadily over time as demand for sustainable solutions increases. Stay patient, monitor your portfolio, and adjust as needed to stay on track.

Investing for a greener future

Investing in green assets aligns your finances with your values. You can support renewable energy, promote ethical business practices, and contribute to Singapore’s environmental goals while earning steady returns.

Start small, stay consistent, and make your money work for a better future. Sustainable investing isn’t just smart—it’s necessary for the world we’re building together.