The market environment for sustainable investments has been challenging for investors, including redemptions of funds and a rejection of environmental, social, and governance goals in the US. But for sustainably minded investors, a number of exchange-traded funds continue to look promising.
You can read about the challenges for sustainable investing here, as well as the problems outflows cause for fund investors here.
Finding 5 ESG ETFs
In this story, we highlight five US ESG ETFs that have continued to command investor attention. They are the largest sustainable ETFs in a screen of 174 vehicles as measured by assets under management. They have also earned Medalist ratings of either Silver or Bronze, indicating that Morningstar analysts believe these investment vehicles will outperform, on a risk-adjusted basis, best-fit indexes for their Morningstar category over at least five years. These forward-looking ratings are based on three pillars: people (the fund’s management team), process (the underlying investment process), and parent (the parent firm). For more on Morningstar Medalist ratings, read here.
Three of the resulting funds focus on US stocks, while two invest in foreign stocks. All are domiciled in the US and available to US investors.
Screening Methodology
To find these 174 sustainable ETFs, we applied multiple screens across all exchange-traded funds in Morningstar’s database, selecting only equity investments that are both domiciled in the United States and traded on a United States Exchange. Next, we filtered the remaining ETFs down to only those Morningstar designates as an “ESG Intentional Investment – Overall.” In short, funds that are tagged as ESG intentional investments overall must “claim to have a sustainability objective, and/or use binding ESG criteria for their investment selection. Funds that employ only limited exclusions or only consider ESG factors in a nonbinding way are not considered to be a sustainable investment product.” (For more on Morningstar’s ESG Intentional Investments and Exclusions Methodology, read here.) For these ESG ETFs, all fund sizes are as of June 2, 2025.
iShares ESG Aware MSCI USA ETF ESGU
- Morningstar Category: Large Blend
- Morningstar Medalist Rating: Silver
- Morningstar ESG Risk Rating: Above Average
- Analyst: Lan Anh Tran
IShares ESG Aware MSCI USA ETF tops our screen with $13.37 billion in assets under management. Incepted in December 2016, the fund has returned 0.48% year to date, trailing a 1.06% return for the S&P 500 and a 0.86% return for the Morningstar US Market Index in 2025. Over the past three years, the fund has posted a 13.59% annualized return, underperforming the S&P 500 at 14.41% and the Morningstar US Market Index at 14.05%.
This passively managed fund tracks the MSCI USA Extended ESG Focus Index. Morningstar manager research analyst Lan Anh Tran writes that the MSCI USA Extended ESG Focus Index “starts by implementing ESG screens on the MSCI USA Index—a market-cap-weighted portfolio of large- and mid-cap US stocks. It removes companies involved in severe controversies or controversial businesses such as tobacco, fossil fuels, controversial weapons, and civilian firearms.” Awarding the Silver Morningstar Medalist a High Process rating, she notes, “Its top holdings significantly overlap with those of the category index and other broad-market ESG-agnostic peers, so the fund’s performance should closely track the broader market over the long term.” Out of 297 total holdings, the fund’s largest positions are Nvidia NVDA at 6.48% and Microsoft MSFT at 6.21%.
Vanguard ESG US Stock ETF ESGV
- Morningstar Category: Large Blend
- Morningstar Medalist Rating: Silver
- Morningstar ESG Risk Rating: Above Average
- Analyst: Lan Anh Tran
The only ETF offered by a provider other than iShares that places among our screen’s five largest vehicles is the $10.16 billion Vanguard ESG US Stock ETF. The Silver Morningstar Medalist was launched nearly seven years ago in September 2018. Year to date, investors have seen a negative 0.21% return, leaving the fund trailing the S&P 500 and the Morningstar US Market Index by 1.27 percentage points and 1.07 percentage points, respectively. In the past three years, however, the fund has delivered a 14.45% annualized return, slightly overperforming the S&P 500 at 14.41%.
Like the other four largest funds in our screen, Vanguard ESG US Stock ETF is passively managed, designed to replicate the performance of the FTSE USA All Cap Choice Index, which Morningstar manager research analyst Lan Anh Tran says “filters out companies that violate FTSE’s diversity and controversial product involvement criteria, as well as companies noncompliant with the UN Global Compact principles and FTSE’s sanction criteria.” Relative to peers, Tran emphasizes that the fund “leans more toward technology stocks … which adds a growth tilt to the portfolio. This comes at the expense of its industrials and energy exposure, as these sectors are more prone to ESG risks.” The fund comprises 1,335 total holdings, of which tech giants Apple AAPL and Microsoft dominate, weighted at 7.16% and 6.73%, respectively.
iShares ESG Aware MSCI EAFE ETF ESGD
- Morningstar Category: Foreign Large Blend
- Morningstar Medalist Rating: Silver
- Morningstar ESG Risk Rating: Above Average
- Analyst: Zachary Evens
The largest ETF falling under the foreign large-blend Morningstar Category and the third largest across our screen overall is the $9.73 billion iShares ESG Aware MSCI EAFE ETF. Opened to investors in June 2016, this Silver medalist has returned an impressive 16.7% year to date against a 5.22% return for the Morningstar Global Markets Index. The fund’s three-year annualized return is 11.3%, trailing the Morningstar Global Markets Index by 0.42 percentage points.
In keeping with the remainder of the five largest funds in our screen, iShares ESG Aware MSCI EAFE ETF is passively managed, tracking the MSCI EAFE Extended ESG Focus Index. Morningstar analyst Zachary Evans writes that the index “targets large- and mid-cap stocks from 21 overseas developed markets, while optimizing the portfolio to maximize its exposure to stocks with high ESG ratings.” Evans rates the fund’s process as Above Average, writing that because “MSCI’s ESG scoring system … looks at risks specific to each industry … it means the fund may hold stakes in companies that some ESG investors would rather avoid. For example, its allocation to the energy sector typically measures close to that of its average category peer.” Overall, the fund has 424 holdings, with its largest positions in German enterprise planning software provider SAP SE SAP at 1.94% and photolithography player ASML Holding NV ASML at 1.73%.
iShares ESG Aware MSCI EM ETF ESGE
- Morningstar Category: Diversified Emerging Mkts
- Morningstar Medalist Rating: Bronze
- Morningstar ESG Risk Rating: Above Average
- Analyst: Lan Anh Tran
IShares ESG Aware MSCI EM ETF ranks fourth in our screen with $4.73 billion in assets under management. Launched in June 2018, ESGE has returned 9.74% in 2025, beating a 7.54% return for the Morningstar Emerging Markets Index. Looking over a longer horizon, the fund’s three-year annualized return is 4.62%, trailing a 5.46% return for the Morningstar Emerging Markets Index.
This Bronze Morningstar Medalist is passively managed, seeking to replicate the performance of the MSCI Emerging Markets Extended ESG Focus Index. In her coverage of the fund, Morningstar analyst Lan Ahn Tran writes that its “benchmark starts with all stocks in the MSCI Emerging Markets Index and eliminates firms in controversial businesses, including tobacco, controversial weapons, civilian firearms, oil sands, and thermal coal. The index uses an optimizer to maximize its exposure to firms with the highest ESG ratings while keeping its tracking error against the parent index around 1%.”
Tran cautions that the “portfolio still owns large state-owned enterprises such as China Construction Bank and Petrobras despite its ESG mandate. MSCI’s ESG ratings consider state ownership when evaluating a firm’s corruption and business ethics risks, but the impact of this consideration isn’t strict enough to exclude these companies.” With 465 total holdings, the fund’s highest-weighted constituents are Taiwan Semiconductor Manufacturing Co Ltd 2330 at 10.11% and Chinese internet titan Tencent Holdings Ltd 00700 at 4.64%.
iShares ESG MSCI KLD 400 ETF DSI
- Morningstar Category: Large Blend
- Morningstar Medalist Rating: Bronze
- Morningstar ESG Risk Rating: High
- Analyst: Ryan Jackson
Rounding out our list of the top five largest US-domiciled ESG Equity ETFs is iShares ESG MSCI KLD 400 ETF with $4.5 billion in assets under management. Incepted in November 2006, it is the oldest fund among the five largest in our screen by nearly a decade. Year to date, DSI has returned negative 0.88%, trailing the S&P 500 by 0.18 percentage points, but outperforming the Morningstar US Market Index by 0.02 percentage points.
This Bronze Morningstar Medalist passive fund seeks to replicate the performance of the MSCI KLD 400 Social Index. In recent coverage of DSI, former Senior Analyst for Passive Strategies, Ryan Jackson, writes that its parent index “weaves a market-cap-weighted, 400-stock portfolio of the companies from each sector with the best ESG traits.” Assigning the fund an Above Average Process rating, Jackson notes, “Market-cap weighting pulls this portfolio toward its largest holdings, not necessarily the greenest … So, while the fund excludes more large- and mid-cap stocks than it admits, roughly half its portfolio overlaps with the Russell 1000 Index. That makes it a fairly light-touch ESG strategy whose long-term returns haven’t drifted far from the category index.” Out of 406 total holdings, the fund is dominated by Nvidia at 12.06% and Microsoft at 11.89%.