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5 Best ESG ETFs to Buy in Q4 2025
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Evaluating a company’s performance using environmental, social, and governance criteria along with its financials, has become a popular way to invest. ETFs offer easy access to the best ESG stocks and this guide picks some out to help you get started.
What are the top ESG ETFs to buy?
Copy link to sectionOur expert analysts have evaluated the best ESG ETFs and selected their top five for the coming year which you can find listed below. Keep scrolling to learn more about each one.
| # | ETF symbol | ETF name | Learn more |
|---|---|---|---|
| 1 | VFTAX | Vanguard FTSE Social Index Fund | Learn more > |
| 2 | ICLN | iShares Global Clean Energy ETF | Learn more > |
| 3 | QCLN | First Trust NASDAQ® Clean Edge® Green Energy Index Fund ETF | Learn more > |
| 4 | GSFP | Goldman Sachs Future Planet Equity ETF | Learn more > |
| 5 | PBW | Invesco WilderHill Clean Energy ETF | Learn more > |
1. Vanguard FTSE Social Index Fund (VFTAX)
Copy link to section- Assets: $19 billion
- Expense ratio: 0.14%
- Year of inception: 2019
- Average annual return since inception: 113%
- Dividend Yield: 1.16%
- Benchmark index: FTSE US Choice Index
Top of our list is the Vanguard FTSE Social Index which seeks to track the performance of an index called the FTSE US Choice Index. It invests in large and mid cap U.S. stocks which have been screened for certain social criteria. VFTAX invests in 457 companies
It excludes stocks of companies operating in the adult entertainment, alcohol, tobacco, weapons, gambling, and nuclear industries. The Vanguard ETF contains nearly 500 companies and its top ten holdings amount to over 30% of its total assets. VFTAXs top holdings consist of tech powerhouses: Microsoft, Apple, Nvidia, Meta Platforms, and Amazon.
The VFTAX ETF has done well since its inception because it tracks most companies in the S&P 500 index. Its top holdings are some of the biggest companies in the world, which have typically done well over the years. It is also a highly cheap ETF to invest in with its expense ratio of just 0.14%.
2. iShares Global Clean Energy ETF (ICLN)
Copy link to section- Assets: $2.26 billion
- Expense ratio: 0.41%
- Year of inception: 2019
- Average annual return since inception: -6%
- Dividend Yield: 1.57%
- Benchmark index: S&P Global Clean Energy Index
The iShares fund is a renewable energy ETF which fits the criteria of ESG conscious investors. It’s the largest clean energy ETF on the market with more than $6 billion in assets. It holds over 120 stocks from all over the world and has a particular focus on companies that generate wind and solar energy.
ICLNs two largest holdings, Enphase Energy and First Solar, both operate in the solar and wind energy sectors and combined amount to about 16% of the fund’s total holdings. Its top ten stocks amount to nearly 50% of the ETF while including some of the biggest players in renewable energy like Iberdrola, Consolidated Edison, Vestas Wind Systems, and Orsted.
The environment is a major part of the ESG movement since it deals with companies that offer alternatives to fossil fuels. Therefore, if you are interested in maximizing the environmental aspect of your portfolio, this is one of the best funds to have.
However, its performance has been lackluster in the past few years because clean energy companies tend to have lower returns than clean energy ones. That explains why the ICLN ETF has dropped by almost 40% in the past 12 months.
3. First Trust NASDAQ® Clean Edge® Green Energy Index Fund ETF (QCLN)
Copy link to section- Assets: $710 million
- Expense ratio: 0.59%
- Year of inception: 2007
- Average annual return since inception: 4.25%
- Dividend Yield: N/A
- Benchmark index: Nasdaq® Clean Edge® Green Energy™ Index
The First Trust Nasdaq Clean Edge Green Energy Index Fund is another popular ESG ETF to invest in. It is a fund that tracks the Nasdaq Clean Edge Green Energy Index that invests in many companies in the green transition.
Tesla, a company that made EVs cool is the biggest firm in the ETF. Companies like First Solar, ON Semiconductor, Enphase Energy, Albemarle Corporation, and Universal Display Corporation follow
The fund is a great one if you are interested in a diversified set of companies in various industries. However, the fund has low trading volumes with an average figure of $6 million. It has also underperformed the market because of the underperformance of companies like Tesla, Rivian, Lucid, and Sunrun.
4. Goldman Sachs Future Planet Equity ETF (GSFP)
Copy link to section- Assets: $42 million
- Expense ratio: 0.75%
- Year of inception: 2021
- Average annual return since inception: -5.7%
- Dividend Yield: N/A
- Benchmark index: N/A
The Goldman Sachs Future Planet was launched in the summer of 2021. It aims to invest in stocks that are innovative, attractively-valued, and aligned with durable secular growth. It focuses on companies that it believes can address environmental problems across clean energy, resource efficiency, sustainable consumption, and water sustainability.
It takes a different approach to its management and its stock selection is conducted by its fundamental equity team, composed of over 80 investment professionals. While its strategy is implemented by its quantitative investment team of over 95 professionals. GSFP invests worldwide, although has a stronger weighting towards the U.S. and Europe.
Around 40% of the fund is made up by its top ten holdings, which are fairly equally weighted. Its top two stocks include Ecolab, an American water treatment business and Enel group, an European based sustainable energy company. Investing in GSFP provides worldwide exposure to companies in growing industries while keeping within ESG criteria.
5. Invesco WilderHill Clean Energy ETF (PBW)
Copy link to section- Assets: $306 million
- Expense ratio: 0.66%
- Year of inception: 2005
- Average annual return since inception: -5.8%
- Dividend Yield: 3.8%
- Benchmark index: WilderHill Clean Energy Index
The WilderHill Clean Energy ETF is a fund that tracks American trade companies that advance conservation and clean energy. These are some of the most important building blocks of the ESG trend.
Most of the companies in the ETF are in the industrials, technology, consumer discretionary, and materials. Some of the top names in the fund are companies like First Solar, American Semiconductor, Ameresco, Enovix, and Bloom Energy.
There are two main issues with this fund. It is an expensive one with an expense ratio of 0.66%, which is higher than most other ETFs. The fund also has a long track record of underperforming main ETFs like the Invesco QQQ and SPDR S&P 500 fund.
Where to buy the best ESG ETFs
Copy link to sectionTo buy shares in an ETF you’ll first need to register with a broker. Exchange traded funds operate just like stocks do and you can buy or sell them at any time. Below you will find links to some of the top ETF brokers. Once you’ve signed up, you can get started straight away.
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CFD service. 82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
This information is NOT relevant to EU residents who are to be serviced by EU subsidiaries of the Plus500 Group, such as Plus500CY Ltd, authorised by CySEC (Reg. 250/14). Different regulatory requirements apply in Europe such as leverage limitations and bonus restrictions.
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What is a ESG ETF?
Copy link to sectionIt’s an exchange traded fund that holds shares in companies that meet the criteria for ESG investing. ESG refers to a company’s environmental, social, and governance values. ETFs holding these stocks can belong to any sector or industry and it’s common to find some of the biggest companies in the world prominent in many of these ETFs.
Are ESG ETFs a good investment?
Copy link to sectionYes they can be and they are a good way for investors who have a preference for ESG investing to access a broad range of stocks matching their criteria. ESG investing avoids some companies that operate in higher risk industries such as gambling and tobacco, however it does restrict an investor from accessing the whole market.
The recent rise in popularity of environmental social governance investing is a positive for ETFs in this space, as more are likely to be added in the future giving investors greater choice. ESG investing includes industries such as renewable energy which is expected to substantially grow in future years.
Whatever you decide to do, it’s key to keep up to date with the latest news, market analysis, and developments which you can do by clicking on any of the links below. You’ll also need to register with an online broker and if you click the blue button you’ll be directed to our expertly selected platforms to get you started right away.
Methodology: How we choose the best ESG ETFs
Copy link to sectionAt Invezz, we are dedicated to helping investors make informed decisions by providing authoritative, accessible, and engaging advice and recommendations. Our curated section of the best Exchange-Traded Funds (ETFs) is carefully selected by our team of experienced market analysts and reviewed by a sub-editor. This methodology outlines the rigorous process we follow to ensure our ETF recommendations are up-to-date, reliable, and insightful.
- Analyst research & recommendations: Our seasoned market analysts use their in-depth sector knowledge to identify ETFs with strong potential, ensuring they meet high standards of performance, liquidity, and market potential.
- ETF evaluation: We evaluate ETFs based on their underlying assets, historical performance, expense ratios, and tracking accuracy, alongside macroeconomic factors and sector trends.
- Fund performance reports: We assess ETFs through the latest performance reports, analyzing key metrics like returns, volatility, expense ratios, and assets under management (AUM).
- Sector analysis and external recommendations: Our detailed sector analysis, combined with recommendations from reputable sources like Barron’s and Zacks, provides an additional layer of validation for our selections.
- Quarterly review & refresh: We update our curated ETF list quarterly, re-evaluating each ETF based on the latest reports, industry developments, and market conditions to ensure our recommendations reflect the most current information available.