Is sustainable investing still relevant today?
You might have seen headlines suggesting that ESG (Environmental, Social, and Governance) investing is losing momentum. In late 2025, major global initiatives like the Net-Zero Banking Alliance shut down, and many ESG-labelled funds saw money flow out, partly due to growing political and legal pressures in parts of the U.S. and Europe.
On the surface, it can look like sustainability is no longer a priority in finance. However, if we take a closer look, we’ll find that even though the language surrounding sustainable investing has changed in recent times, it remains as relevant as ever.
It's not just about labels
Even as some organisations and investors are stepping away from “ESG” labels, the underlying issues and risks it was designed to address remain.
Across the world, extreme weather events are becoming more frequent and costly, and they carry direct financial consequences for households, businesses, and investors alike.
Physical climate risks can show up in different ways, and can be broken down into three parts:
- Hazard: The event itself, such as a flood, storm, or heatwave
- Exposure: Who or what is in the path of the event (people, homes, businesses, investments)
- Vulnerability: How much damage those affected are likely to suffer
When these three factors come together, a climate event stops being just a news story. It starts affecting the costs, incomes, and long-term financial stability of individuals.
So even if "ESG" feels less of priority today, the real question is: can we afford to ignore risks that are likely to shape our financial future?
How climate risks hit closer to home than you think
Cost of living expenses
Climate disruptions don't just affect governments or large corporations. They affect what you pay for groceries and other daily needs, and whether your savings hold their value over time.
Singapore is deeply connected to global trade networks and relies heavily on imported food and regional supply chains. When extreme weather disrupts farms, fisheries, or logistics in neighbouring countries, the effects can result in higher prices and reduced availability of everyday items here at home.
Many Southeast Asian economies also depend on climate-sensitive sectors such as agriculture, aquaculture, and outdoor labour. When hazards such as floods and heatwaves disrupts these activities, it can result in higher prices, food shortages and slower economic growth across the region.
Your Investment Exposure
Many investors have indirect exposure to climate risk without realising it.
Your investment portfolio may include:
- Markets vulnerable to extreme weather events
- Industries dependent on fragile ecosystems
- Companies with climate-sensitive supply chains
- Assets located in high-risk geographic regions
Because these risks are diverse and often hidden, they can leave your portfolio exposed. Without proper diversification and risk assessment, a portfolio may be more vulnerable when sudden disruptions happen.
Stranded Assets
Another risk is the possibility of exposure to stranded assets. These are investments that lose value because they’re no longer profitable or viable.
Some examples include:
- Coastal properties affected by rising sea levels
- Fossil fuel reserves that may never be extracted due to regulatory limits
- Older facilities that are unable to meet new environmental rules may become too costly to operate.
For investors, the concern is simple. If a portfolio is too exposed to these assets, it could face unexpected losses. That’s why sustainable investing remains relevant, even if the way we talk about ESG continues to evolve.
Managing risk through sustainable investments
At its core, sustainable investing isn’t just about wanting to “do good” with your money. Rather, it’s also a practical way to manage financial risks.
Factoring sustainability into your investment decisions can help you:
- Spot emerging risks before they weaken your portfolio
- Reduce exposure to sectors and assets that may face bigger climate risks
- Position your portfolio to benefit from opportunities arising from the energy transition
In this sense, sustainable investing is less about ideology and more about building long-term resilience as climate-related risks continue to grow.
Five ways to build climate resilience in your finances
- Diversify broadly across regions, sectors, and asset classes
- Review your exposure to climate-sensitive industries
- Look beyond the numbers. Review how companies manage environmental and regulatory risks
- Think long-term. Climate related changes play out over years and decades
- Explore ESG funds through platforms such as dollarDEX and GROW or sustainable ILP sub-funds via like Singlife Savvy Invest II . These options aim to support financial returns while factoring in sustainability considerations.
For more insights, read our article on responsible investing and how it can support your long-term financial goals.
Does sustainable investing mean lower returns?
Not necessarily. In fact, ignoring sustainability risks could leave investors more vulnerable to future losses.
Some investors assume that prioritising environmental or social goals means sacrificing returns. But sustainable investing isn’t just about values. It can also help investors identify risks and opportunities that traditional analysis might miss.
For example, research by Morgan Stanley found that a hypothetical investment of $100 in sustainable funds in December 2018 would have grown to approximately $162 by December 2025, compared with $152 for traditional funds over the same period.
Source: Morgan Stanley Institute for Sustainable Investing analysis of Morningstar data as of February 5, 2026
That said, sustainable investing doesn't always guarantee better performance. Returns still depend on market conditions, fund selection and investment manager skill. However, the broader point is this: climate related risks are becoming harder to ignore.
Just as investors already account for interest rates, inflation and geopolitical risks, climate risk is increasingly becoming another factor that needs to be actively considered. Sustainable investing can help portfolios stay better prepared for a future where these risks continue to grow.
Building a sustainable financial future together
Climate risks are no longer distant concerns. They’re financial risks that can affect markets, businesses, investments and the everyday choices people make with their money.
Whether you’re just starting out or reviewing an existing portfolio, it’s worth taking a closer look at how your investments are positioned for the long-term shifts that are already taking shape.
After all, recognising the risks is only the first step. The more meaningful question is how that awareness shapes the choices you make for the future.
For a broader view of how sustainability in Singapore, read the Singlife–SGFIN Sustainable Future Index 2026 to explore how Singaporeans relate to sustainability in their daily lives and financial decisions.
Notes:
Navigator Investment Services Ltd (“Navigator”) is a wholly owned subsidiary of Singapore Life Ltd. (“Singlife”). dollarDEX by Singlife and GROW with Singlife are platforms owned and operated by Navigator. Singlife has an introducer arrangement with Navigator, a Capital Markets Services Licensee. As an introducer to Navigator, Singlife will not receive any remuneration.
