Best ESG ETFs to Buy in 2026

An ESG exchange-traded fund (ETF) invests in companies that meet certain environmental, social, and governance standards. Over the past decade, ESG has gone from a niche idea to a major theme in investing, and for a while, money poured into these funds.

Supporters argue ESG investing isn’t just about values. It can also be good business, with some research suggesting companies with strong ESG practices can outperform over time.

More recently, though, enthusiasm has cooled, especially in the U.S., with almost $27 billion in outflows in the fourth quarter of 2025. Political backlash, high interest rates, uneven performance, and concerns about greenwashing have all played a role.

The iShares ESG Aware MSCI USA ETF (ESGU +0.20%) tracks the MSCI USA Extended ESG Focus Index. The index is derived from the MSCI USA Index, which tracks the broad performance of U.S. large- and mid-cap stocks.

Fund areas of exclusion include:

• Nuclear weapons.
• Controversial weapons.
• Tobacco.
• Civilian firearms.
• Oil sands.
• Thermal coal.
• UN Global Compact violators.

The ETF had more than 280 holdings in April 2026. Its largest positions included Nvidia (NVDA -0.48%), Microsoft (MSFT +1.62%), Apple (AAPL +3.26%), Google parent company Alphabet (GOOG +0.27%) (GOOGL +0.20%), and Amazon (AMZN +1.25%).

Launched in 2016, the fund had underperformed the S&P 500 on both a one- and five-year basis through the end of 2025.

2. Vanguard ESG U.S. Stock ETF

The Vanguard ESG ETF (ESGV +0.45%) holds more than 1,200 U.S. stocks. It’s a passive ETF that uses exclusionary principles. Companies left out include those that derive revenue from production, supplying, or retailing in the following areas:

• Controversial weapons.
• Civilian firearms.
• Nuclear power.
• Fossil fuels.
• Tobacco.
• Cannabis.
• Conventional military weapons.
• Alcohol.
• Gambling.
• Adult entertainment.

Companies are also screened for various diversity criteria. Violations of labor, human rights, anti-corruption, or environmental standards can disqualify companies. Its largest holdings include Apple, Nvidia, Microsoft, Alphabet, Amazon, and Meta Platforms (META -0.55%).

Since its inception in 2018, the fund’s returns have slightly lagged the returns of the top S&P 500 ETFs.

3. iShares Global Clean Energy ETF

iShares Global Clean Energy ETF (ICLN +0.87%) tracks the S&P Global Clean Energy Index. It specifically focuses on clean energy production, equipment, and technologies, and holds stakes in about 100 companies. There are also significant positions in wind and solar energy.

The ETF’s largest holdings include Bloom Energy Corp. (BE +2.33%), First Solar Inc. (FSLR +5.03%), Iberdrola SA Inc. (IBDRY +0.00%), SSE PLC (OTC:SSEZ.Y), Vestas Wind Systems (VWDRY -3.32%), and Enphase Energy.

The fund had an abysmal 2024, but shares rebounded by about 45% in 2025. The surge reflects renewed investor interest in the clean energy sector, as data centers and the growing adoption of electric vehicles (EVs) have driven electricity demand to soar.

However, the ETF has been a lackluster performer in the long term. But if you believe that clean energy will be a profitable investment in the long run, this clean energy ETF may be worth considering.

iShares ESG Aware MSCI EAFE ETF‘s (ESGD -0.24%) benchmark index tracks the performance of large- and mid-cap stocks with positive ESG characteristics in developed markets outside the U.S. and Canada.

Fund areas of exclusion are:

• Nuclear weapons.
• Controversial weapons.
• Tobacco.
• Civilian firearms.
• Oil sands.
• Thermal coal.
• UN Global Compact violators.

The fund has more than 380 holdings, the largest of which include SAP SE (SAP +0.75%), ASML Holding (ASML -0.81%), Novartis AG (NVS -0.87%), AstraZeneca (NASDAQ:AZN), and HSBC Holdings PLC (HSBC +0.10%).

Since its launch in 2016, the fund has had average annual returns of about 9.5%, significantly lower than the S&P 500 for the same period.

5. Vanguard ESG International Stock ETF

The Vanguard ESG International Stock ETF (VSGX -0.14%) holds about 6,600 stocks. Its regional allocation includes 35% in European companies, 28% in emerging markets, and 28% in the Pacific.

The fund’s benchmark index uses ESG exclusionary principles, avoiding companies that derive revenue from the production, supplying, or retailing of:

• Controversial weapons.
• Civilian firearms.
• Nuclear power.
• Fossil fuels.
• Tobacco.
• Cannabis.
• Conventional military weapons.
• Alcohol.
• Gambling.
• Adult entertainment.

Companies are also filtered for workplace and board diversity, labor and human rights principles, and environmental standards. To be included, companies must also meet the U.N. Global Compact principles.

The largest holdings include Taiwan Semiconductor Manufacturing (TSM +0.42%), ASML Holding NV, Alibaba Group Holding (BABA -0.31%), and Samsung Electronics Co. Ltd. (OTC:SSNFL).

The fund delivered one-year returns of about 26% as of late April 2026. Its long-term performance has been relatively poor, with five-year returns of about 6%. However, if you want significant exposure to companies with strong ESG standards in emerging markets, you might want to check out the VSGX ETF.

How to buy ESG ETFs

1. Open your brokerage account: Log in to your brokerage account where you handle your investments. If you don’t have one yet, take a look at our favorite brokers and trading platforms to find the right one for you.
2. Search for the ETF: Enter the ETF’s ticker into the search bar to bring up the stock’s trading page.
3. Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
4. Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you’re willing to pay.
5. Submit your order: Confirm the details and submit your buy order.
6. Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.

Benefits and risks of investing in ESG ETFs

Benefits

• Values-based investing: ESG ETFs allow you to invest in companies that align with your values — or avoid those whose practices you find objectionable, depending on the fund’s approach.
• Thematic approach to investing: Some ESG ETFs allow you to invest in specific themes, such as sustainable agriculture or climate solutions. Investing in these funds is riskier than investing in a broad ESG ETF. However, it’s generally a safer bet compared to investing in a single company or two.
• Long-term focus: Investing in ESG ETFs can also benefit your bottom line. Companies that adhere to ESG principles may be less likely to face litigation or regulatory scrutiny. Businesses with a strong focus on sustainable infrastructure and fair labor practices often create greater long-term shareholder value than those that cut corners to achieve short-term profits.

Risks

• Inconsistent ESG standards: There’s no universal definition of what qualifies as ESG, and rating systems can vary widely between providers. That means two ESG ETFs may hold very different companies, including those that don’t meet your definition of socially responsible.
• Potential for sector concentration: Some ESG ETFs exclude entire industries, such as fossil fuels, tobacco, or defense. While that aligns with certain values, it can also limit diversification and lead to underperformance if those sectors outperform the broader market. Many ESG funds are also overweight in technology, which can increase volatility.
• Higher fees and potential greenwashing: ESG ETFs often come with higher expense ratios than comparable broad-market index funds. Some funds may engage in greenwashing, meaning they market themselves as sustainable without meaningfully different investment strategies, making it harder for investors to know what they’re actually paying for.

HSBC Holdings is an advertising partner of Motley Fool Money. Robin Hartill, CFP has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Alphabet, Amazon, Apple, Bloom Energy, First Solar, Meta Platforms, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Alibaba Group, HSBC Holdings, and SAP. The Motley Fool has a disclosure policy.