The Best Sustainable Funds and ETFs to Buy

Sustainable investing has faced significant political and regulatory headwinds recently, but nuggets of opportunity remain for investors betting on soaring renewable energy investment, the climate transition, and even AI risk.

And despite recent outflows from sustainable funds, several surveys continue to show investor interest in sustainable investing. According to one conducted by the Morgan Stanley Sustainability Institute, 88% of global individual investors are interested in sustainable investing. Similarly, 86% of asset owners expect to increase their allocations to sustainable investments in the next two years.

We found three sustainable funds with ratings of Gold, the highest tier of the

, denoting conviction in a fund’s ability to outperform. For more about sustainable investing, please check out the Morningstar Sustainable Investing Framework and our sustainable investing page.

The 3 Best Sustainable Funds and ETFs to Buy in 2026

We screened for the lowest-cost primary share classes with a Medalist Rating of Gold and 100% analyst coverage. All the funds on the list carry the ESG Intentional Investment tag and have at least $100 million in assets. All data is as of Feb. 3.

• Boston Trust SMID Cap Fund BTSMX
• Boston Trust Walden Small Cap Fund BOSOX
• PIMCO Enhanced Short Maturity Active ESG Exchange-Traded Fund EMNT

Because the screen was created with the lowest-cost share class for each fund, some may be listed with share classes that are not accessible to individual investors outside of retirement plans, or they may be aimed at institutional investors and require large minimum investments. The individual investor versions of those funds may carry higher fees, reducing returns to shareholders. Medalist Ratings may differ among the share classes of a fund.

Morningstar expects the highly rated sustainable funds on this list to outperform their peers over a full market cycle. But though all these funds fall under the same theme, they may practice different strategies and behave differently. Investors need to do their homework to understand exactly what a particular fund invests in before buying.

Boston Trust SMID Cap Fund

Morningstar assigns an Above Average rating to the Boston Trust SMID Cap Fund management team and a High rating to its parent company, Boston Trust Walden. The team has an average of over five years with the fund; Richard Williams, the longest-tenured member, has been there for close to nine years.

The $746.4 million fund has gained 0.49% over the past year, while the average fund in its category is up 9.56%. The fund, launched in November 2011, has climbed 5.60% over the past three years and 7.63% over the past five.

The managers focus on identifying strong small- and mid-cap businesses with durable and predictable earnings profiles that also have reasonable valuations. The approach shines on risk management. Volatility levels are well below the benchmark’s—an impressive feat considering its minimal cash stakes.

The strategy has recently trailed the Russell 2500 benchmark as the rally after early April 2025 was led by lower-quality businesses that the strategy typically avoids, as they tend to underperform higher-quality businesses over longer periods.

Read Morningstar’s full report on the Boston Trust SMID Cap Fund.

Boston Trust Walden Small Cap Fund

This $1.1 billion fund has lost 1.88% over the past year, while the average fund in its category is up 11.16%. The Boston Trust Walden fund, launched in December 2005, has climbed 4.01% over the past three years and 7.01% over the past five.

The strategy (which has an impact mandate) focuses on identifying strong small-cap businesses with durable and predictable earnings profiles that also have reasonable valuations. The portfolio consistently ranks among the least-volatile options in the small-blend Morningstar category—an impressive feat, considering its minimal cash stakes.

The strategy’s long-term performance was impressive. From the mutual fund’s December 2005 inception through July 2025, total and risk-adjusted returns on its sole share class beat the category average and Russell 2000 Index by wide margins. It held up relatively well from the index’s latest peak in November 2024 to the trough in early April 2025. However, it was slower to rebound in the subsequent rally, which was led by lower-quality businesses that the strategy typically avoids.

Read Morningstar’s full report on the Boston Trust Walden Small Cap Fund.

PIMCO Enhanced Short Maturity Active ESG Exchange-Traded Fund

Morningstar assigns a High rating to the PIMCO Enhanced Short Maturity Active ESG Exchange-Traded Fund management team and an Above Average rating to its parent company, PIMCO. The management team has an average of more than six years with the fund.

The $211.1 million fund has gained 4.65% over the past year, while the average fund in its category is up 4.72%. The PIMCO fund, launched in December 2019, has climbed 5.27% over the past three years and 3.22% over the past five.

Veteran leadership, specialized short-term expertise, effective collaboration, and a time-tested process makes Pimco Enhanced Short Maturity Active ESG ETF a best-in-class selection among ultrashort bond peers. This exchange-traded fund is more constrained than its sibling, Pimco Short-Term.

Lead manager Jerome Schneider heads a team of dedicated ultrashort and liquidity markets specialists. Co-managers include Andrew Wittkop and Nate Chiaverini, Pimco veterans whose expertise in rates/derivatives and corporate credit, respectively, creates complementary strengths. Also, co-manager Jelle Brons, a global credit specialist, focuses on ESG implementation. The team benefits from Pimco’s world-class global investment platform of analysts, traders, macroeconomic experts, ESG analysts, and risk managers.

The strategy focuses on short-term and liquidity markets. Investment-grade credit and securitized debt feature prominently (typically 65%-95% of assets) and deliver a yield advantage over peers. The ETF avoids less conventional areas, such as high-yield bonds, and non-US currencies but can invest up to 10% of assets in non-US developed markets and 5% in emerging-market debt. The managers dynamically adjust portfolio duration across their zero-to-one-year range. While the ETF extensively uses derivatives, Pimco has consistently proved its ability to manage these instruments effectively.

Read Morningstar’s full report on the PIMCO Enhanced Short Maturity Active ESG Exchange-Traded Fund.

How to Find More of the Best Funds and ETFs for the Long Term

If investors want to expand their search beyond this list using parameters that matter to them, here are more ways to find more ETFs and mutual funds:

• Use the Morningstar Investor screener to create your own list of funds to investigate further.
• Explore Morningstar Medalist funds on our Best Investments page.
• Read our latest fund insights and analysis on Morningstar.com.