ESG ETFs, or Environmental, Social, and Governance ETFs, are exchange-traded funds that invest in companies that meet specific environmental, social, and governance (ESG) criteria. These criteria typically focus on climate change, employee diversity and rights, human rights, and ethical business practices. ESG investing is to achieve positive financial returns while promoting positive social and environmental outcomes.

ESG ETFs typically invest in a diversified portfolio of companies that have been screened for ESG factors. The screening process may involve using various data sources and rating agencies that assess the companies' performance on these factors. Some ETFs may also use negative screening to exclude companies that don't meet specific ESG standards, such as those that produce tobacco or weapons.

ESG ETFs can provide investors with a way to align their investments with their values while potentially achieving financial returns. Additionally, since ESG factors can indicate good management and robust risk management, some researchers argue that companies that score well in ESG may be less risky and more stable in the long run. However, it's important to note that the approach and criteria used for screening companies may vary among ESG ETFs, so investors should conduct their research and due diligence before investing in these funds.

The Parnassus Value Select ETF is an actively managed large-cap value ETF that seeks capital appreciation through a concentrated portfolio of undervalued U.S. companies selected for financial strength and sustainable business practices.

NYSE

PRVS

Amplify Etho Climate Leadership U.S. ETF tracks the Etho Climate Leadership Index, selecting U.S. stocks that exhibit the least carbon impact within their industry while excluding industries with negative ESG profiles.

NYSEArca

ETHO

RSPE

The Invesco Global Equity Net Zero ETF (IQSZ) is an actively managed fund that invests in global companies with current or planned efforts to reduce greenhouse gas emissions and align with the transition to a net zero economy. It provides diversified global equity exposure while integrating climate and net-zero considerations into security selection.

Symbol	Name	Sharpe Ratio (1Y)	Sharpe Ratio (5Y)	Sharpe Ratio (10Y)	Risk / Return Rank
PRVS	Parnassus Value Select ETF	2.48	—	—	90
ETHO	Amplify Etho Climate Leadership U.S. ETF	2.27	—	—	89
RSPE	Invesco ESG S&P 500 Equal Weight ETF	2.21	—	—	85
IQSZ	Invesco Global Equity Net Zero ETF	2.17	—	—	84
EFIV	State Street SPDR S&P 500 ESG ETF	2.01	0.82	—	82

Top ESG ETFs by Sharpe Ratio

Top ESG ETFs by Sharpe Ratio