7 ESG ETFs to Buy for Responsible Profits

Investors are rapidly moving toward investing with environmental, social and corporate-governance (ESG) qualities in mind.

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Investors are rapidly moving toward investing with environmental, social and corporate-governance (ESG) qualities in mind. Global assets in ESG ETFs and other exchange-traded products (ETPs) more than tripled in 2020 to a record $187 billion, says ETFGI, an independent research and consultancy firm.

By February, that number had jumped to $227 billion.

As people's hunger grows for investments aligned with their own values, companies are putting a higher priority on many ESG measures ... while still keeping their eye on the bottom line.

"Given the growing investor focus on positive and negative screening, improvement in performance on ESG metrics is a key target of corporates. However, most are also seeking to ensure their actions improve economic efficiency too," Barclays strategists said in a recap of their inaugural ESG EM Corporate Day. "Plans to reduce emissions are closely aligned with cost reduction gains, for example. Or, if premiums emerge for low carbon products in the future, companies are keen to invest now in order to gain revenue benefit subsequently."

That dual focus is expected to keep ESG from being a mere "feel-good" investment that sacrifices performance, and instead a strategy capable of producing real alpha. However, given the difficulty in assessing individual ESG stocks by their various standards, ESG ETFs help provide investors with a basket of stocks (and even bonds) that meet a baseline of various "responsible" metrics.

Here are seven of the most interest ESG ETFs to buy if you're interested in joining the trend.

Disclaimer

Data is as of April 20.

Will Ashworth
Contributing Writer, Kiplinger.com

Will has written professionally for investment and finance publications in both the U.S. and Canada since 2004. A native of Toronto, Canada, his sole objective is to help people become better and more informed investors. Fascinated by how companies make money, he's a keen student of business history. Married and now living in Halifax, Nova Scotia, he's also got an interest in equity and debt crowdfunding.