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.

Disclaimer

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

John Waggoner
Contributing Writer, Kiplinger.com
John Waggoner has put personal finance and investing into plain English for more than three decades. He was a senior columnist for InvestmentNews and, prior to that, USA TODAY's personal finance columnist for 25 years. He has written for Morningstar, The Wall Street Journal, and Money magazine. Waggoner has also written three books on finance and investing. He has an undergraduate and graduate degree in English literature and is working on his Certified Financial Planner designation. He lives in Vienna, Virginia.