17 Best Environmental, Social, and Governance (ESG) ETFs to Invest In

In this article, I will discuss the best Environmental, Social, and Governance (ESG) ETFs to invest in. As more investors seek to align their portfolios with sustainable practices

ESG ETFs offer an excellent way to focus on companies that prioritize social responsibility, environmental protection, and ethical governance. Here, we’ll explore top options to consider for your investment strategy.

What Is An ESG ETF?

Uniquely rated through ESG (environmental, social and governance), ESG funds are a mixture using 3 principles that stands out from the typical investment pools.

ESG funds target companies that seek to make a positive contribution to the world because they aim to have a smaller carbon foot print, or possess a more diverse board of directors.

ESG funds are not individual stocks. They are a combination of various different stocks put into ones portfolio. Investing into a fund as opposed to an individual stock can reduce risk since a fund owns stocks in many businesses instead of just one.

Exchange traded funds (ETFs) are essentially index funds and other funds that are passively managed but with some distinct differences. The major difference is that ETFs are actively traded and can be bought and sold during the course of the day similar to stocks.

Key Points & Best Environmental, Social, and Governance (ESG) ETFs to Invest In List

ETF Name	Unique Feature
Shares Global Clean Energy ETF	Targets global clean energy companies
First Trust Water ETF (FIW)	Focus on water-related infrastructure and technology
iShares ESG Screened S&P 500 ETF	ESG screening of S&P 500 companies
Vanguard ESG U.S. Stock ETF (ESGV)	Broad exposure to U.S. companies with ESG alignment
SPYG (iShares ESG Aware S&P 500 ETF)	S&P 500 with ESG focus
Xtrackers MSCI All World ex US ESG ETF (ESGU)	Excludes U.S. for international diversification
BlackRock U.S. Carbon Transition Readiness ETF (LCTU)	Emphasis on companies preparing for carbon neutrality
Invesco Solar ETF (TAN)	Exposure to the solar energy sector
Global X Conscious Companies ETF (KRMA)	Targets companies with strong social and environmental performance
Nuveen ESG Large-Cap Growth ETF (NULG)	Focus on large-cap growth stocks with ESG criteria
State Street Global Advisors ESG ETF (SUSA)	Focus on large and mid-cap U.S. companies with ESG compliance
Invesco S&P 500 Equal Weight ESG ETF (RSPE)	Equal weight S&P 500 with an ESG overlay
TIAA-CREF Social Choice Equity Fund (TISCX)	Socially responsible investing with active management
WisdomTree U.S. ESG Fund (ESG)	Targets U.S. companies with high ESG ratings
JPMorgan Active Growth ETF	Actively managed growth-focused ETF with ESG integration
American Century Mid Cap Growth Impact ETF	Emphasizes mid-cap stocks with positive social/environmental impact
Harbor Human Capital Factor US Large Cap ETF	Prioritizes companies with strong human capital practices

17 Best Environmental, Social, and Governance (ESG) ETFs to Invest In

1.Shares Global Clean Energy ETF

The Shares Global Clean Energy ETF shares invests products solely with companies that are part of or are creating renewable resources. With a strong emphasis on ESG

It seeks to promote responsible energy investments while giving investors a stake in rising clean energy economies. This is perfect for environmentally friendly solutions.

Pros and Cons Shares Global Clean Energy ETF

Pros:

• Aims at the expanding world’s clean energy network.
• Invests only in renewable energy companies with a good ESG score.
• Offers different types of exposure to the clean energy sector.
• Leverages multi-decade sustainability trends.
• Aligns with ethical investors who wish to invest without compromising their beliefs on nature.

Cons:

• Could be volatile because of the focus on new technologies.
• Minimal investment in other mature energy sectors can affect diversification.
• Affected by the government policy and grants.
• Exposed to changes in renewable energy policies and provision of support.
• Can underperform in environments with low rates of clean energy practice adoption.

2.First Trust Water ETF (FIW)

First Trust Water ETF (FIW) is geared towards companies that deal in water resources, utilities, infrastructure, and technologies. It is themed towards ESG as this is aimed at businesses adding value and solutions to sustainable water resources management.

This ETF is exposed to a crucial sector that is not only able to address the global water scarcity issue but certainly, this is a great fund for responsible investors wishing to advocate for environmental sustainability.

Pros and Cons First Trust Water ETF (FIW)

Pros:

• Targets companies participating with water infrastructures and technology.
• Good for carry positions as water scarcity is an increasing concern.
• Further enhances exposure to water industry across various markets around the globe.
• Gives the opportunity to further enhance sustainable water management strategies targeting ESG objectives.
• Provides exposure to niche resource sector that will be in high demand globally.

Cons:

• Exposed to regulatory risks, changes of water industry regulations.
• Returns can be impacted by droughts and water-scarceties.
• Industry remains underdeveloped and lacks future growth in comparison to technological or energy industries.
• Relatively more leveraged on the performance of water utilities and associated infrastructure companies.
• Performance can be poor in an environment of low interest rates dampening water infrastructures investment.

3.iShares ESG Screened S&P 500 ETF

The iShares ESG Screened S&P 500 ETF allows investment into the S&P 500 companies which rank highly in Environmental, Social, and Governance (ESG) factors.

First and foremost, firms with poor ESG will be excluded, meaning the investments will bear the principle of sustainability. The ETF is suited for investors who would want ethical diversity but with a responsible business. Here, finance has been married to social responsible investment.

Pros and Cons iShares ESG Screened S&P 500 ETF

Pros:

• Eliminates organizations with low ESG scores, thus creating ethical investment strategies.
• Offers wide coverage of large cap US equities. 
• Helps investors increase their investments to socially responsible and sustainable firms and businesses.
• Follows the S%P 500, which means stability and the potential for good returns as well. 
• Good for investors who want to have ESG but do not want to sacrifice market performance.

Cons:

• Content is And US based only, hence geo diversity is limited. 
• Prefers to avoid certain industries and sectors of the economy perhaps restricting the prospects of growth.
• They may suffer from higher management fees as compared to basic S%P 500 ETFs. 
• Subject to the level of quality and consistency of the ESG screening which is done. 
• May also suffer from underperformance especially when a lot of high performers get taken out of the index during ESG screening.

4.Vanguard ESG U.S. Stock ETF (ESGV)

The Vanguard ESG U.S. Stock ETF (ESGV) focuses its investments on American companies that adhere to strict Environmental, Social, and Governance investment standards.

It avoids companies that engage in activities such as tobacco, fossil fuels, and arms manufacturing. For socially responsible investors

ESGV provides extensive investment coverage of U.S. equities without compromising on the fundamental principles of responsible and sustainable investing for the long haul.

Pros and Cons Vanguard ESG U.S. Stock ETF (ESGV)

Pros:

• Does not include companies that operate in negative spheres like tobacco, fossil fuel, etc.
• Provides the scope of investment in US equities with an ESG approach.
• Recommended for people that look for ethical investments connected to sustainability goals.
• Investment cost which is quite reasonable and suitable Levels for ESG investment.
• Aims to provide growth over the long-term by offering exposure to a portfolio of responsible companies.

Cons:

• Scope is restricted to only certain industries that qualify under the ESG goals.
• Maybe profitable but such companies are kept out with lower ESG scores.
• Chances of underperformance compared with non-ESG tilt ETFs during bull market conditions.
• Susceptible to changes in ESG regulations and changes in attitudes of investors.
• Has an emphasis on the US market and is therefore less globally diverse.

5.SPYG SPYG iShares ESG Aware S&P 500 ETF

The iShares ESG Aware S&P 500 ETF (SPYG) focuses on investing with S&P 500 firms that demonstrate strong Environmental, Social, and Governance practices. In such approaches, ESG involvement is considered during stock selection

while achieving weight in the large-cap US stocks market index. For those who want to invest for long-term market returns while focusing on sustainability and ethical practices, SPYG is great.

Pros and Cons SPYG SPYG iShares ESG Aware S&P 500 ETF

Pros:

• Ethisphere’s integration of ESG factors into the S&P 500 enhances moral growth and provides a large investment perspective.
• Retains sizable U. S. corporations’ overall market exposure.
• Facilitates bio-friendly investments in growth-oriented businesses.
• This target is useful for investors who want an investment strategy that incorporates some aspects of ESG consideration approaches without having to abandon traditional indexed investing.
• It is structured as an S&P 500 security, which adds to its liquidity and ease of access.

Cons:

• Exclusion of potential high performing companies based on the ESG criteria might become an issue.
• Notable underperformance in sectors with lesser companies exhibiting better ESG ratings is a possibility.
• Dependence on ESG ratings which is subject to subjectivity and will contain various discrepancies.
• Above average expense ratio compared to the ordinary S&P 500 ETF’s.
• Very little exposure to foreign countries, concentrate on U.S. companies.

6.Xtrackers MSCI All World ex US ESG ETF (ESGU)

The Xtrackers MSCI All World ex US ESG ETF (ESGU) provides exposure to companies, other than those in the America, who adhere to enhanced Environmental, Social, and Governance (ESG) standards. The** ESGU** was designed to appeal to socially responsible investors by investing in flourishing business on a global scale.

It looks into the MSCI All World Lagging U.S. Companies Index which prioritizes global ESG leaders. ESGU is a great option for investors who want to invest globally while promoting responsible investing and practices that create positive impact in society.

Pros and Cons Xtrackers MSCI All World ex US ESG ETF (ESGU)

Pros:

• There is the unlocking of global exposure to ESG bets located outside of the United States.
• Also, this fund is able to track the MSCI All World ex U.S. ESG Leaders Index which enables for various international assets.
• The focus is on companies that adhere to better ESG practices from both the developed and emerging markets.
• This is most suitable for investors targeting ethical investing with an emphasis on geographic diversification.
• There exists potential upside in the regions focusing on sustainability and providing growth in ESG factors.

Cons:

• It is restrictive to exclude US companies and therefore domestic market opportunities are potentially limited.
• It is likely to lag in performance when the US market is doing really well.
• Reactions can be mixed to local ESG and political factors.
• It avoids industries that may be hampered due to ESG specifications thus limiting sector flexibility.
• Quite a few online global ETFs are more affordable.

7.BlackRock U.S. Carbon Transition Readiness ETF (LCTU)

The BlackRock U.S. Carbon Transition Readiness ETF (LCTU) is focused on investing in companies based in the United States that are spearheading the change to low carbon economies. It lays funds on businesses that are making efforts to reduce carbon rate and are gearing up towards a sustainable future.

Investors looking for exposure to the U.S.-listed equities and correlatively nations’ climate goals will find LCTU appealing as it addresses ESG issues and helps in creating environmental impact changing businesses in the course of its long term growth.

Pros and Cons BlackRock U.S. Carbon Transition Readiness ETF (LCTU)

Pros:

• Emphasizes American firms that are frontrunners in the shift to net-zero initiatives.
• Places funds in companies willing to tackle C02 emissions and become more sustainable.
• Supports the worldwide fight against climate change and overarching goals of carbon neutrality.
• Perfect for ESG-portfolio managers who want to help in the greening of the economy.
• Offers access to sectors expected to perform better in a world with lower carbon emissions.

Cons:

• Can remain lower than the performance of more traditional energy markets for some time.
• Dependent on how fast the climate change measures that are implemented are rolled out.
• Companies that are based outside of the US are scarcely represented, which limits the extent of global diversification.
• Could be impacted by movements in the green technologies sector and or changes in the clean energy marketplace.
• Primarily concerned with carbon transition: other ESG investment aspects such as social governance are omitted.

8.Invesco Solar ETF (TAN)

The Invesco Solar ETF (TAN) aims to provide investors with exposure to companies involved in generating and manufacturing solar power. This ETF is environmentally-friendly, seeking to invest in ethically sustainable solutions in the effort to stem climate change.

TAN is a great investment opportunity for those who wish to invest in the expanding solar market and promote global environmental protections.

Pros and Cons Invesco Solar ETF (TAN)

Pros:

• Offers direct exposure to the expansion of solar energy market.
• Takes advantage of the global movement towards renewable energy and clean technologies.
• Invest in companies active in the field of solar energy generation and/or solar energy technology.
• Great for those who want to be holders of shares of companies that promote the creation of clean energy sources.
• Has opportunities to benefit from subsidies and policies that support the development of the renewable power sector.

Cons:

• Almost depends on the availability and variation of government financial supports and structures.
• Like any other business segment, price volatility occurs depending upon market scenario.
• Inadequate exposure to other regions as it is focused mainly on companies pertaining to solar energy.
• Performance is prone towards unrest and over optimisim in the field of soter technology.
• Unlikely to outperform industries driven by other sources of energy.

9.Global X Conscious Companies ETF (KRMA)

The Global X Conscious Companies ETF (KRMA) puts money into businesses that actively work towards achieving a balance between gaining profits and doing good for society and the environment.

It aims at firms with superior values and management practices, emphasizing leadership’s ethics and sustainability. For those investors who wish to back the companies whose values and beliefs they share while aiding the companies’ development and growth, KRMA is an ideal investment tool.

Pros and Cons Global X Conscious Companies ETF (KRMA)

Pros:

• Makes investments in firms that are really dedicated to effecting social/cultural and environmental change.
• Targets organizations with process owners who care about sustainable management and strategy.
• Complements investors who want to use their funds to influence society in different ways.
• Practises a conscious investing approach through which exposure across various sectors is extended.
• Invests in businesses with good ESG that enhance the creation of wealth over time.

Cons:

• Risks omitting the most successful companies who do not meet ESG criteria.
• Company performance might be affected by management’s relatively concentrated ethical-style management of the companies.
• Maybe limited competitiveness in other areas because of reduced exposure to traditional non-ESG sectors.
• May fail to achieve competitive returns in times when non-ESG sectors are prevailing.
• Assesses the social and environmental activities of companies in quite a subjective manner.

10.Nuveen ESG Large-Cap Growth ETF (NULG)

NULG stands for the Nuveen ESG Large-Cap Growth ETF which invest in large-cap growth stock based in U.S. market with high ESG qualification. It chooses companies that are well-performing in ESG with an idea of growth and adding value.

As for NULG, investors looking to invest in top-performing large-cap companies but would like to promote a responsible and ethical business values.

Pros and Cons Nuveen ESG Large-Cap Growth ETF (NULG)

Pros:

• U.S. large-cap growth equities with well-established ESG practices are the target of investments.
• Targets well-managed firms for investment with long-term growth and sustainability in mind.
• Perfect for those investors who want to have their fiscal wealth go hand-in-hand with ethical considerations.
• It enables investors to own shares in companies with a socially conscious and sustainable environment.
• Appropriate for investors who want to apply an ESG perspective to investments in large-cap growth stocks.

Cons:

• May leave out growth oriented firms and areas that concentrate on the ESG metric.
• Limited diversification, as only the large-cap US stocks come into the investment focus.
• The strategy is able to perform poorly in those regions which have sparse presence of ESG compliant companies.
• High expense ratio compared to those of the ordinary growth ETF products.
• Exposed to changes in ESG ratings and the evolving parameters of what should be looked upon as sustainability.

11.State Street Global Advisors ESG ETF (SUSA)

The State Street Global Advisors ESG ETF (SUSA) is an advanced fund that acquires large – and mid – capitalisation companies in the USA that have strong, qualitative ESG characteristics.

The purpose is to invest in companies that are good corporate citizens and comply with sound ESG practices while within the framework of S&P 500 ESG Index. SUSA’s investors would

therefore, be those who would want to earn a good return while at the same time maximise their investments in companies with strong sensibilities of social responsibility.

Pros and Cons State Street Global Advisors ESG ETF (SUSA)

Pros:

• Invests in companies with best-in-class ESG ratings and are situated in the mid- and large-cap sectors in the US.
• Provides exposure to US and international sustainability companies through the S&P 500 ESG Index.
• Satisfies the need to invest ethically and sustainably.
• Aims to expand investment base by utilizing high-cap firms with a history of success.
• Reasonably priced with a low expense ratio making it a good option for investors prioritizing ESG.

Cons:

• Cuts allocation to industries and firms that fail to meet the ESG framework which limits diversification.
• There is a lack of investment in smaller companies and companies from other regions.
• Will likely lag behind in performance when companies with higher returns on sales are removed due to ESG concerns.
• Has a high exposure to shifts in the ESG policies targeting the investment community.
• Recently, it has been volatile which can harm ESG-related firms during challenging times in the economy.

12.Invesco S&P 500 Equal Weight ESG ETF (RSPE)

The Invesco S&P 500 Equal Weight ESG ETF (RSPE) deploys funds in Equal Weight Strategy which invests in such companies within S&P 500 Index that score well on Environmental, Social, and Governance criteria.

This method guarantees a well-balanced participative exposure across the concern areas while maintaining a sustainability effort. Investors who wish to ethically invest with diversification over large-cap US equities with focus on ESG will find RSPE attractive.

Pros and Cons Invesco S&P 500 Equal Weight ESG ETF (RSPE)

Pros:

• Provides investors with opportunities to invest in companies exhibiting best ESG practices.
• Diminishes the concentration risk since all holdings are treated on an equal basis irrespective of their market capitalization.
• Gives an ESG tilt to all the sectors of S&P 500 index thereby achieving the required diversification.
• Ideal for investors who want a compromise between ESG investing and more traditional index funds.
• Encourages positive and right activities in business across various sectors.

Cons:

• Avoids companies having poor ESG practices hence hindering diversification.
• Equal weighting approach may lead to lower returns when compared to other SP5 ETFs.
• Have greater changes in investment compositions and rebalancing costs as compared to pure cap weighted indexes.
• Only US corporations are targeted hence no outside US exposure.
• Is dependent on both the robustness and the consistency of the ESG screening.

13.TIAA-CREF Social Choice Equity Fund (TISCX)

The TIAA-CREF Social Choice Equity Fund (TISCX) focuses on large-cap US stocks of companies that satisfy its high Environmental, Social, and Governance (ESG) criteria. It favors businesses with “better” values and “better” social impact and excludes those related to tobacco, alcohol, and others.

Investors who are looking for equity allocation with a long investment horizon should consider TISCX as it maintains a socially responsible approach and considers all ‘stakeholders’.

Pros and Cons TIAA-CREF Social Choice Equity Fund (TISCX)

Pros:

• Does not allow investment into companies with vices such as tobacco and weaponry.
• Invest only in large companies based in the U.S. with high standards of ESG.
• Since this strategy is actively managed, timely and selective investments are possible as far as social goals are concerned.
• Investment costs are lower than in other actively managed ESG focused funds.
• A fair amount of sustainable firms which are ethical in nature expands the investment base.

Cons:

• Limited foreign investment since the focus is mainly in U.S. companies only.
• For periods of the strong investors, when growth is high, this strategy may perform poorly in relation to alternative market capitalisations.
• Some sectors are not covered-investing into such sectors may provide growth potential which is not utilised.
• Social investment policy depends on subjective criteria for the screening.
• Due to its high turn over the taxes are likely to be affected. Unlike in passive Esg funds.

14.WisdomTree U.S. ESG Fund (ESG)

The WisdomTree U.S. ESG Fund (ESG) focuses on U.S. firms that have better Environmental, Social and Governance (ESG) practices. It looks out for businesses that outperform their competitors in the areas of sustainability, responsible governance and social responsibility.

ESG is the perfect investment vehicle for investors who wish to incorporate good investing principles into their portfolio international companies and organizations with a focus on promoting sustainable development goals.

Pros and Cons WisdomTree U.S. ESG Fund (ESG)

Pros:

• Emphasizes U.S. stocks with strong ESG values.
• Excludes companies engaged in certain controversial activities such as tobacco and firearms.
• Garners a vast exposure to ethical and sustainable businesses in the US market.
• Finance ratios are base on low cost hence making it a good ESG investment option.
• Suitable for those looking for returns on investment along with sustainability.

Cons:

• There is a lack of global exposure and this ETF only concentrates on US markets.
• Could be held back during an upswing in the market given that some other non-ESG sectors gain strength.
• Disqualifies companies that do rather well but have a low ESG score.
• Can be subject to high volatility whereby some level of change in ESG requirements may face growth constraints as a result of sector exclusions.
• Owing to its criteria of ESG screening, it may miss out on some high growth industries entirely.

15.JPMorgan Active Growth ETF

The JPMorgan Active Growth ETF is focused on sustainable U.S. growth stocks. It is actively managed and invests only in companies it believes will grow and have long-term business strategies.

This is a suitable ETF for those who wish to have growth in their investments while still maintaining ESG strategies, integrating strategies of growth and sustainable investing.

Pros and Cons JPMorgan Active Growth ETF

Pros:

• Seemed to be putting time into sourcing high-growth U.S. stocks that have decent ESG standards.
• Allows adjustment to the portfolio in line with the market cycle and opportunities.
• Investing in firms and enterprises with higher level and scope of sustainable growth.
• Good for the people who want both growth and social responsibility in their investments.
• Investments are managed professionally for the best possible returns, taking into consideration the ESG criteria.

Cons:

• In comparison to passive ETFs, the management fees are comparatively greater.
• Risk of underperformance to benchmark due to active management decisions which are out of sync with the markets.
• Low non-US exposure which limits international diversification opportunities.
• Can perhaps steer clear of certain high-growth companies which do not pass the ESG criteria.
• HR relies on the manager’s ability to turn stock picks into winners on a consistent basis.

16.American Century Mid Cap Growth Impact ETF

The American Century Mid Cap Growth Impact ETF focuses on mid-cap U.S growth firms possessing strong Environmental, Social and Governance characteristics.

The fund targets businesses that have a favorable social and environmental impact as they pursue growth. It is perfect for the social-whistle blowers as it gives exposure to mid-cap equities but also encourages such business practices which are ethical and create stake value in the long run.

Pros and Cons American Century Mid Cap Growth Impact ETF

Pros:

• Invests in U.S. mid-cap firms with active ESG initiatives and social value.
• Focuses on growth prospects within the mid-cap segment, which are expected to provide a greater edge.
• Invests in firms that are kites out for sustainability and making a constructive impact in society.
• Not a passive investment, which permits a degree of selectivity and focus on impact and inflation protection.
• Gives exposure to a focused sector likely to have robust growth in the long-term.

Cons:

• Available only mid-cap US stocks and does not provide much in the way of diversification.
• The mid-cap segment was bound to be plagued by high volatility especially, during the recessions.
• Eliminates the companies that don’t measure up to requirement in ESG criteria, forcing reduction in opportunities.
• More so than passive ETFs, could bear up daunting levels of fees due to active stewardship.
• Might disappoint in periods when large-cap outshines the mid-cap out.

17.Harbor Human Capital Factor US Large Cap ETF

The Harbor Human Capital Factor US Large Cap ETF holds stakes in U.S. large-cap companies with effective human capital practices, particularly companies that focus on the welfare of their employees, high employee diversity, and the corporate culture of the companies.

This ETF promotes investment in a socially responsible manner by targeting firms that support Environmental Social and Governance (ESG) principles while at the same time exhibiting potential for growth and value in the long term.

Pros and Cons Harbor Human Capital Factor US Large Cap ETF

Pros:

• Concentrates on big US corporates that emphasize human capital value.
• Places importance on firms that focus on their employees, their culture and diversity element.
• Meets ESG criteria and invests with companies that possess social value.
• Aims for companies that possess the ability to develop and nurture high organizational culture for growth in the long run.
• Perfect for investors inclined towards companies focusing on human value creation.

Cons:

• Restrictive to big US companies and does not provide investment opportunities in small companies or foreign corporations.
• Performance can be hindered by the myopic view concentrating on human capital factors only.
• Omits companies that could probably be strong on financial results but gets low scores in the value of human capitalHeadcount bias.
• Can be more volatile when the period is such that human capital oriented factors have been out of favor.
• Strong human capital endorsements are unsatisfactory in case the market thinks otherwise.

Why Should I Invest in ESG ETFs?

Investing in ESG ETFs enables you to put your money where your heart is, supporting firms that are environmentally friendly, socially responsible, and have a good governance framework in place.

Not only do these investments help build a better world, but also they provide the opportunity to make gains over a long period.

Furthermore, ESG ETFs can enhance your portfolio diversification by investing in companies with strong ethical values, thus, minimizing risks linked to poor management and environmental disasters.

As the world’s attention shifts towards sustainable investing, so too will these funds be able to take advantage of new trends, making them an attractive option for investors looking to the future.

Here are key factors to consider when picking the best Environmental, Social, and Governance (ESG) ETFs to invest in:

Use of ESG Screening Process: Make sure the ETF implements a strong ESG screening process so that the companies included in the portfolio focus on sustainability.

Diversity in Sector and Industry: Check the industries and sectors contained in the ETF and if they are not contrary to your beliefs, such as fossil fuels, tobacco or the arms trade.

Risk and Return: Assess the past performance, risk levels of the ETF, and the potential for the fund to grow in the long run and comply with the ESG standards.

Low Costs and High Expense Ratios: Funds with a low expense ratio will be better as higher ones will mean high costs which are not in relation to returns.

Portfolio Construction and Diversification: Pick ETFs that are diversified across regions, industries or sectors to ensure risks are spread out and returns are increased.

Management Team and Performance of the Fund: Read about the background and performance of the fund’s management and more so the experience in ESG investing.

Commitment to Desired Change: Look for the ESG ETFs that seek to make other commitments by taking part with companies on ESG issues and making return that is not only based on profit.

Investment Style and the Size: Usually, bulky and highly liquid ETFs have lower costs of trading and this make them appropriate for regular investment.

Transparency: Investors should seek out ETFs which offer some detail as to how they are able to adhere to ESG criteria in their investments and report any social or environmental issues that may arise from these investments.

Alignment with Personal Values: Analysis of the ETF should be done to check whether its ethical, environmental and social investment objectives are in line with the investors’ values.

Conclusion

When you invest in ESG ETFs, you are able to grow your portfolio with the knowledge that long-term targets in both sustainability and ethics are being pursued.

To do so, one may look at the screening criteria used, the diversification, the expected performance, and the management of the fund itself to gauge whether a particular ETF would encourage ideas of responsible businesses.

It is also crucial to note that focusing on ESG investments helps generate a more positive effect to society and the environment whilst still being financially viable.