Best ESG & Climate ETFs

Intermediate

Compare ETFs focused on environmental, social and governance criteria, and clean energy. Invest sustainably without sacrificing returns.

Updated 2025-05

Written by Mottalib RadifMBA INSEAD

ESG (Environmental, Social, Governance) investing has seen explosive growth in recent years, driven by growing climate awareness and European regulatory developments. ESG and climate ETFs allow you to invest in companies that meet certain sustainability criteria, while excluding controversial sectors like coal, tobacco or weapons.

In Europe, the SFDR regulation (Sustainable Finance Disclosure Regulation) classifies funds by their degree of sustainable commitment: Article 6 (no specific sustainability objective), Article 8 (promotes ESG characteristics) and Article 9 (sustainable investment objective). Most available ESG ETFs are classified as Article 8, while the most ambitious climate funds target Article 9.

ESG indices take several forms: "screened" indices (SRI, ESG Leaders) exclude the lowest-rated companies, "Paris-Aligned" (PAB) or "Climate Transition" (CTB) indices focus on carbon emission reduction trajectories, and "Clean Energy" indices specifically target renewable energy companies. This comparison helps you navigate this growing universe to find the ESG ETF that matches your convictions and financial goals.

Avg. TER

0.28%

Avg. 1Y Perf

+18.9%

Total AUM

128.4B

ETFs available

ESGU — MSCI USA Extended ESG Focus

iShares ESG Aware MSCI USA ETF

View details→

+62.6%

Simulated from available data points. Past returns do not guarantee future results.

How to choose an ESG or climate ETF

The first choice is between a "broad" ESG ETF and a "pure" climate ETF. An MSCI World SRI or ESG Screened ETF maintains sector diversification close to the parent index, simply excluding the lowest-rated companies — performance therefore stays highly correlated with the standard MSCI World. A Paris-Aligned or Clean Energy ETF is more concentrated and can diverge significantly from the benchmark.

ESG ETF fees are generally slightly higher than their conventional equivalents, but the gap is shrinking. You can now find MSCI World SRI ETFs with a TER of 0.18-0.25%, compared to 0.12-0.20% for a standard MSCI World. AUM and liquidity are important criteria: ESG ETFs from iShares, Amundi and Xtrackers have the largest fund sizes.

Beware of "greenwashing": check the underlying index methodology. Some ETFs labelled ESG only exclude a small percentage of companies and remain very close to the standard index. SRI (Socially Responsible Investment) indices generally apply stricter filters than simple "ESG Screened" versions. Review the index documentation to understand exactly which exclusion and selection criteria are applied.

Full Comparison

#	Name	TER	AUM	Replication	Distribution	1Y	3Y	5Y
1	ESGUiShares MSCI USA Extended ESG Focus	0.15%	17.7B	physical	distributing	+17.4%	+18.5%	+10.0%
2	USEAiShares MSCI USA ESG Enhanced Focus CTB	0.07%	14.0B	physical	accumulating	—	—	—
3	WLDSiShares MSCI World ESG Screened	0.20%	8.5B	physical	accumulating	+24.7%	+13.5%	+7.8%
4	SUUSiShares MSCI USA ESG Screened	0.07%	8.5B	physical	accumulating	+20.1%	+12.8%	+10.8%
5	DFNGXtrackers MSCI World Low Carbon SRI Leaders	0.20%	7.0B	physical	accumulating	+4.1%	+33.1%	—
6	SUSWiShares MSCI World SRI Select Reduced Fossil Fuels	0.20%	6.7B	physical	accumulating	+18.8%	+12.6%	+9.0%
7	VDNRVanguard FTSE Global All Cap Choice	0.24%	6.4B	physical	distributing	+18.0%	+18.7%	+10.7%
8	USRIXtrackers MSCI USA ESG Leaders Low Carbon ex Tobacco	0.15%	5.5B	physical	accumulating	—	—	—
9	IESEiShares MSCI Europe SRI Select Reduced Fossil Fuels	0.20%	5.4B	physical	accumulating	+14.3%	+8.4%	+4.5%
10	INRGiShares S&P Global Clean Energy Transition	0.65%	4.2B	physical	distributing	+28.6%	-1.1%	-4.3%
11	SUSAiShares MSCI USA ESG Select	0.25%	4.0B	physical	distributing	+18.0%	+17.5%	+9.1%
12	WSRIAmundi MSCI World SRI Filtered PAB	0.18%	3.9B	physical	accumulating	+21.6%	+5.8%	+4.6%
13	SUESiShares MSCI EM SRI Select Reduced Fossil Fuels	0.25%	3.9B	physical	accumulating	+23.4%	+11.7%	+4.5%
14	SUSMiShares MSCI World Small Cap ESG Enhanced Focus CTB	0.35%	3.9B	physical	accumulating	+23.5%	+13.6%	+3.9%
15	SUASiShares MSCI USA SRI Select Reduced Fossil Fuels	0.20%	3.7B	physical	accumulating	+19.8%	+14.7%	+10.0%
16	ICLNiShares S&P Global Clean Energy	0.40%	2.9B	physical	distributing	+28.2%	+0.9%	-5.2%
17	IH2OiShares S&P Global Water	0.65%	2.2B	physical	distributing	+1.7%	+6.1%	+3.0%
18	ERNSiShares Bloomberg MSCI EUR Corporate 0-3 Sustainable SRI	0.12%	2.0B	physical	distributing	-0.3%	+0.0%	+0.1%
19	WPABiShares MSCI World Climate Paris Aligned Benchmark	0.20%	1.8B	physical	accumulating	—	—	—
20	TANInvesco MAC Global Solar Energy	0.67%	1.7B	physical	distributing	+34.2%	-7.7%	-10.6%
21	XMEMXtrackers MSCI Emerging Markets Select ESG Screened	0.18%	1.5B	physical	accumulating	+34.5%	+17.6%	+7.7%
22	ESGVInvesco MSCI World ESG Universal Select Business Screens	0.19%	1.5B	physical	accumulating	—	—	—
23	SJPAiShares MSCI Japan SRI Select Reduced Fossil Fuels	0.20%	1.2B	physical	accumulating	+24.0%	+16.1%	+9.9%
24	SUAGiShares Bloomberg MSCI USD Corporate Sustainable SRI	0.15%	1.2B	physical	distributing	-1.5%	-1.5%	-2.9%
25	PUSTAmundi Solactive US Large & Mid Cap Technology	0.30%	1.2B	synthetic	accumulating	+22.2%	+21.0%	+14.2%
26	ESGEBNP Paribas CAC 40 ESG	0.25%	1.1B	physical	distributing	+23.1%	+13.0%	+8.2%
27	SAWDiShares MSCI World Climate Paris Aligned Benchmark Select	0.20%	1.0B	physical	accumulating	+19.4%	+19.6%	+11.3%
28	USDVSPDR S&P ESG High Yield Dividend Aristocrats	0.35%	900M	physical	distributing	+12.0%	+5.6%	+5.3%
29	LOWCiShares MSCI World Low Carbon Target	0.20%	900M	physical	distributing	—	—	—
30	QCLNFirst Trust NASDAQ Clean Edge Green Energy	0.58%	837M	physical	distributing	+40.0%	-0.8%	-6.0%
31	GLGGL&G Solactive Clean Water	0.49%	723M	physical	accumulating	+5.7%	+9.3%	+6.0%
32	ECARiShares STOXX Global Electric Vehicles & Driving Technology	0.40%	649M	physical	accumulating	+47.0%	+15.8%	+8.8%
33	ESGBiShares Bloomberg MSCI EUR Corporate Liquid Bond Screened	0.12%	572M	physical	distributing	-14.5%	+18.2%	+9.8%
34	PBWInvesco WilderHill Clean Energy	0.62%	485M	physical	distributing	+37.4%	-7.3%	-17.2%
35	ESGWUBS MSCI World SRI Low Carbon Select 5% Issuer Capped	0.22%	314M	physical	accumulating	+20.8%	+19.2%	+10.8%
36	CLWDiShares MSCI World ESG Screened	0.20%	224M	physical	accumulating	—	+1.6%	+1.1%
37	FOODRize Foxberry Tematica Research Sustainable Future of Food	0.45%	63M	physical	accumulating	-1.8%	-3.0%	-9.1%

Key takeaways

1MSCI World SRI ETFs offer a good balance between sustainable convictions and diversification, with fees starting from 0.18%.
2The historical performance of ESG ETFs is comparable to conventional indices — responsible investing doesn't mean sacrificing returns.
3Paris-Aligned (PAB) indices incorporate a carbon reduction trajectory aligned with the Paris Agreement: -7% emissions per year.
4Clean Energy ETFs are far more volatile and concentrated than broad ESG ETFs — they're a thematic bet, not a core portfolio replacement.
5The SFDR classification (Article 8 or 9) provides a first level of reading, but doesn't replace analysis of the index methodology.
6Several ESG ETFs are PEA-eligible (Amundi MSCI World SRI), combining tax advantages with responsible investing.

Frequently asked questions

Does an ESG ETF perform as well as a conventional ETF?

Academic studies and market data show that ESG ETFs deliver comparable performance to their non-ESG equivalents over the long term. Sometimes slightly higher (thanks to excluding companies with reputational risk), sometimes slightly lower (due to excluding sectors like fossil energy during oil price rallies). The gap is generally small and depends heavily on the period considered.

What's the difference between ESG Screened, SRI and Paris-Aligned?

ESG Screened applies a light filter, only excluding the most controversial companies (weapons, tobacco, coal) — the index remains very close to its parent. SRI (Socially Responsible Investment) selects the top 25-50% of companies by ESG rating within each sector — it's a more demanding filter. The Paris-Aligned Benchmark (PAB) adds strict climate criteria: 50% carbon intensity reduction from the start and 7% per year thereafter, in line with the Paris Agreement.

Are ESG ETFs PEA-eligible?

Yes, several ESG ETFs are PEA-eligible through synthetic replication. Amundi notably offers a PEA-eligible MSCI World SRI ETF, along with ESG variants on the MSCI Europe and S&P 500. These products allow you to combine responsible investing with tax advantages. Check specific eligibility for each fund with your broker.

What do the labels SRI, PAB and CTB mean?

SRI (Sustainable and Responsible Investment) is a French label certifying a responsible approach. PAB (Paris-Aligned Benchmark) targets a 50% CO₂ emission reduction vs the parent index. CTB (Climate Transition Benchmark) targets –30%. PAB is the most restrictive.

Do ESG ETFs underperform traditional ETFs?

Academic studies show comparable long-term performance. ESG ETFs exclude certain sectors (fossil fuels, tobacco) but overweight tech and healthcare. Performance depends more on the market than on the ESG filter itself.

How can I avoid greenwashing in ESG ETFs?

Favour Article 9 (SFDR) ETFs over Article 8, check the index’s exclusion methodology, and compare the portfolio’s actual composition. PAB indices are the most demanding in terms of climate criteria.

Data sourced from fund factsheets. Last updated 2025-05.

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