Takeaways

• ESG ETFs are becoming increasingly popular as investors seek both profit and purpose through sustainable investing.
• The best-performing ESG ETFs of the year delivered returns as high as 80%, while the cheapest options offer low-cost entry points for value-conscious investors.
• Experts say ESG investing supports positive change and can also lead to better long-term performance than traditional funds.

As environmental, social, and governance (ESG) investing gains traction, more investors are turning to ESG exchange-traded funds (ETFs) to align their portfolios with sustainable values. ESG ETFs bundle shares of companies that demonstrate strong sustainability practices, from lowering carbon emissions to promoting workplace diversity, and can be traded like regular stocks.

According to the latest data, several ESG ETFs have outperformed the broader market this year. The Stance Sustainable Beta ETF (CHGX) leads the pack with an impressive 80.75% annual return, followed by Franklin Responsibly Sourced Gold ETF (FGDL) at 47.85% and Neuberger Berman China Equity ETF (NBGE) at 40.66%. Other strong performers include WisdomTree China ex-State-Owned Enterprises Fund (CXSE), First Trust Emerging Markets Human Flourishing ETF (FTHF), iShares ESG Aware MSCI USA Growth ETF (EGUS), and Nuveen Winslow Large-Cap Growth ESG ETF (NWLG), all of which posted returns between 26% and 37%.

Read More: June 2025’s Best and Cheapest ESG ETFs to Watch

While performance attracts attention, costs remain an essential factor for investors. Historically, sustainable funds carried higher expense ratios, but that’s changing. Some low-cost ESG ETFs now rival traditional funds on fees. Leading the list is the TCW Transform 500 ETF (VOTE) with an expense ratio of 0.05%, followed by Xtrackers MSCI USA Climate Action Equity ETF (USCA) at 0.07%. Close behind are iShares ESG Select Screened S&P 500 ETF (XVV), Goldman Sachs Access Municipal Bond ETF (GMUN), FlexShares ESG & Climate US Large Cap Core Index Fund (FEUS), Vanguard ESG U.S. Stock ETF (ESGV), and NYLI Candriam U.S. Large Cap Equity ETF (IQSU), all under 0.1%.

Beyond numbers, ESG investing continues to prove its financial relevance. A Morgan Stanley Sustainable Reality report found that a $100 investment in ESG funds made in 2018 would be worth $136 by 2024, compared with $131 from traditional funds, a clear edge for sustainability-focused portfolios.

Experts also stress that ESG investing empowers individuals to drive corporate responsibility. “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, Senior Wealth Advisor at Versant Capital Management.

For those just starting out, passive ESG ETFs or robo-advisors offering ESG portfolios are an easy way to invest responsibly without the need for active management.

Also Read: Top 5 Best Environmental ETFs for Green Investing in 2025

As sustainable investing matures, these top-performing and low-cost ESG ETFs highlight that doing good for the planet can also mean doing well financially.

Follow more news and views via our Investors and Featured Articles sections, and stay updated on the top ESG events to attend in 2025 for industry insights and networking.

Source: nerdwallet