Funds That Prosper From Fighting Climate Change

Sustainable investing, sometimes called ESG for the environmental, social and governance criteria that define the investing style, has taken the fund world by storm.

Green energy
(Image credit: Getty Images)

Sustainable investing, sometimes called ESG for the environmental, social and governance criteria that define the investing style, has taken the fund world by storm. But it’s not always possible to isolate the E from the S and G, and strategies vary, too. Some portfolios are defined by what they don’t own—firms that derive most revenues from fossil fuels, say. Others concentrate on innovative firms that are making the planet greener, such as renewable-energy companies.

The 10 mutual funds and exchange-traded funds highlighted below have at least a partial focus on the environment. We’ve organized them into three groups that define different approaches: Thematic ETFs that zero in on climate change exclusively; diversified funds that have a sustainable bent; and actively managed funds that hew to an ESG-oriented investment process and get high marks for environmentally friendly portfolios—whether that’s their stated aim or not. Which tack you take will depend on how passionate you are about battling climate change as well as how much risk you want to take.

Data is as of January 31. Source for returns: Morningstar Inc.

Nellie S. Huang
Senior Associate Editor, Kiplinger's Personal Finance

Nellie joined Kiplinger in August 2011 after a seven-year stint in Hong Kong. There, she worked for the Wall Street Journal Asia, where as lifestyle editor, she launched and edited Scene Asia, an online guide to food, wine, entertainment and the arts in Asia. Prior to that, she was an editor at Weekend Journal, the Friday lifestyle section of the Wall Street Journal Asia. Kiplinger isn't Nellie's first foray into personal finance: She has also worked at SmartMoney (rising from fact-checker to senior writer), and she was a senior editor at Money.