14 Best-Performing and Affordable ESG ETFs for 2026

Investors are increasingly considering environmental, social and governance (ESG) principles when they choose investments. And the number of ESG-focused investments, including ETFs, is growing.

What is an ESG ETF?

ESG funds are investments that are graded using environmental, social and governance principles. ESG funds invest in companies that aim to have a positive societal impact, such as those with a small carbon footprint or diverse leadership boards.

ESG funds are not individual stocks. They are a collection of multiple stocks grouped together. Buying a fund rather than an individual stock can decrease risk, since a fund holds shares of many companies rather than just one. ETFs work similarly to index funds and other passively managed funds, with the main difference being that ETFs can be traded throughout the day, like stocks.

Best-performing ESG ETFs

Here are some of the best-performing ESG ETFs. To compile this list, our editors screened for U.S. equity ETFs with corporate governance themes, then ranked them by one-year performance.

» Some brokers are better than others. Read our roundup of top-rated brokerages for ETFs

Cheapest ESG funds

Sustainable funds used to get a bad rap for being expensive, and it's true that the funds above may carry higher expense ratios than their traditional peers. Impact investors are often willing to pay a bit more to ensure they're investing in a way that aligns with their values, but if you're also concerned with costs — and all investors should be — ETFs can provide some relief.

To determine the cheapest ESG ETFs, we looked at corporate governance-themed funds and filtered by expense ratio.

» How much does a fund cost? Estimate a fund’s expenses with a mutual fund calculator

What are some of the benefits of investing in ESG ETFs?

“Putting our investment dollars to work in ESG influences the behavior of the largest and most powerful multinational corporations in the world for the greater good of society," says Kenneth Chavis, a certified financial planner and senior wealth advisor at Versant Capital Management in Phoenix. “To me, this illuminates the breadth of power the everyday investor has, and is an excellent way to make a large-scale, meaningful difference,”

But if influencing powerful companies to make meaningful change isn't a good enough reason to invest with ESG principles, there's another reason: the potential for increased performance.

Morgan Stanley's most recent Sustainable Reality report shows that while ESG funds can sometimes underperform their traditional counterparts in the short term, long-term performance paints a slightly brighter picture.

The report found that if you had put $100 into an ESG fund back in 2018, that investment would be worth $162 in 2026. On the other hand, if you had put that money into a traditional fund, the investment would be worth $152 — a slightly lower return^[0]

» Need more information? Learn how to get started with socially responsible investing

How to choose the best ESG funds for you

Deciding you want to invest in ESG funds adds some extra considerations you may not have when picking more conventional funds.

1. Understand the difference between active and passive funds

Active and passive funds have different pros and cons. Make sure you know their differences before you dive in.

• Strategy. Actively managed funds aim to beat the stock market's performance. This strategy may sound good in theory, but overall, actively managed funds often underperform their passive counterparts. Passively managed funds are also known as index funds because they are invested to reflect a specific market index, such as the S&P 500. These funds mirror the performance of the index they track.

• Cost. Keep in mind, higher fees can also negate higher returns. Many of the funds listed as "best overall" above are actively managed, whereas the funds on the low-cost list are passive. Actively managed ESG funds tend to be more expensive than passively managed funds, so if you’re looking to add sustainable investments to your portfolio with a smaller price tag, passively managed ESG funds may be a better option.

• Availability. There are far more actively managed ESG funds than passively managed ESG funds, but passively managed ESG funds are becoming more common. And while passive ESG funds have been growing in popularity, you’ll have more choices if you’re looking at active funds.

When choosing between active and passive funds, Chavis emphasizes that the decision depends on factors such as your investment goals, investing experience and tax situation. He also recommends consulting an investment professional during this process

2. Decide where you want to have an impact

In addition to checking expense ratios, make sure an ESG fund’s mission speaks to you. “An investor should look for an ESG fund that is in alignment with their goals. Let’s say social impact is of the utmost importance to you, specifically regarding diversity, equity and inclusion initiatives. You should seek a fund that rewards, in investment dollars, companies for high diversity, equity and inclusion scores on their boards, executive teams and with their employment practices,” says Chavis.

Think about whether there are particular missions you’d like to support with your investment dollars, such as clean water, renewable energy or women in leadership. If there’s an impact area that’s really important to you, that may outweigh a slightly higher expense ratio.

3. Consider your existing investments

Before adding any new investments to your portfolio, think about how an ESG fund would fit in. Be sure you're not overinvesting in a particular industry or asset class. If you’d like to invest in ESG funds but don’t want to choose your investments yourself, there are several robo-advisors that offer ESG portfolios for no extra charge.

» See the list: Our picks for the best robo-advisors

4. Understand your ESG fund’s impact

Maybe you’ve added a few ESG funds to your portfolio. So how do you know if those investment dollars actually made a difference?

“What I would look for, and what investors should insist upon, is an impact report,” says Jon Hale, the former Global Head of Sustainability Research at Morningstar. “That will give you a way to assess the impact of a fund as an investment. Impact reports talk about things like shareholder engagement, the portfolio’s carbon footprint or gender diversity on the Boards of the companies held. That’s a good way to gain a sense of what impact you’re having as an investor.”

ESG funds may periodically release an impact report, or you can probably request one from the fund managers.