Sustainable investing is more than just a fad. It is a movement that is transforming global markets. ESG investing (Environmental, Social and Governance) has now become the go-to investment strategy for ethical investors looking for returns and a socially responsible ESG investing strategy. With ESG funds consistently outperforming traditional benchmarks, this investment approach is expected to yield more significant results in 2025.
In this guide, whether you are an experienced investor or embarking on your ESG journey, we have listed ten commendable ESG funds that should be focused on in 2025 based on their performance, impact, and strategy. We will also explore critical factors to consider when choosing an ESG fund, anticipated trends, and key steps to take when starting your investment.
What is ESG Investing and What Makes it Important?
Choosing companies rated higher on Environment (sustainability efforts), Social (treatment of employees and customers), and Governance (decision making) factors to prioritize is known as ESG Investing. These funds strive to provide positive financial returns and, at the same time, have a considerable impact on the world.
Reasons Why ESG Funds Matter in 2025
- Sustainable Growth: Well-managed companies demonstrating strong ESG alignment usually outperform their competitors in managing risks and capturing opportunities within their markets.
- Regulatory Push: With global mandates on ESG reporting, there is far greater focus on funds, driving more relevance to ESG-focused funds.
- Investor Demand: Record inflows into ESG Funds show no signs of stopping as millennials and institutional investors lean towards ethical investing.
Criteria for Selecting ESG Funds
Understanding the top-listed ESG Funds requires evaluation. Thus, let’s explore:
- Historical Performance: Reliability is shown through consistent returns over multiple years.
- ESG Ratings: Credibility from third-party ratings, such as MSCI and Sustainalytics, strengthens a fund’s ESG claims.
- Expense Ratios: Lower fees result in greater returns over time, especially when they compound, so the initial costs are only a fraction.
- Investment Strategy: Clarifying how ESG values are implemented into the selection process is imperative.
- Diversification: Investments spanning multiple regions and sectors come with reduced risk.
Considering these criteria, let’s discuss the 10 highlighted ESG investment funds for 2025.
Top 10 ESG Investment Funds For 2025
Since early 2025, we have selected each fund for its standout features. The returns and data reflect this unique approach to ESG investing.
1. Invesco ESG NASDAQ 100 Index ETF (QQCE)
Region: US/Global
2024 Return: 32.89% (1-year), 18.74% (3-year)
Why Watch: A growth-oriented fund that tracks the Nasdaq-100 ESG Index and offers exposure to technological leaders like Microsoft and Nvidia, known for innovation and sustainability. Low fees paired with strong returns make it a must-watch fund.
2. RBC Vision QUBE Fossil-Free Canadian Equity Fund A
Area: Canada
Forecasted Return in 2024: 21% (1 year), 9.8% (3 years)
Reasons to Monitor: This fund does not invest in fossil fuels and guarantees transparency using the Carbon Underground 200 dataset. It is perfect for those looking for Canadian ESG investment solutions.
3. Franklin ClearBridge Sustainable International Growth Fund Series A
Area: International
Forecasted Return in 2024: 15.12 (1 year), 2.05% (3 years)
Reason to Monitor: This fund invests in international equities with long-term sustainable growth potential, focusing on companies in developed markets outside North America.
4. CI MSCI World ESG Impact Index ETF (CESG)
Area: Global
Forecasted Return in 2024: 0.3% (1 year), 8.2% (3 years)
Reasons to Monitor: Impact-only global companies are included due to strict screening based on ESG criteria. This fund practices responsible investing by excluding fossil fuels and ESG-focused investing globally.
5. iShares ESG Aware MSCI USA ETF (ESGU).
Region: USA
2024 Return: 10.25% (1-year), 12.78% (3-year)
Why Watch: It is widely used among US investors because this fund offers comprehensive access to large and mid-cap firms that practice good ESG. Furthermore, the fund avoids investing in unethical industries.
6. Vanguard ESG US Stock ETF (ESGV)
Region: USA
AUM: $6.5B (March 2025)
Why Watch: This fund offers a well-diversified portfolio of US companies with substantial ESG compliance, making it a solid long-term option for investors concerned with sustainable growth.
7. SPDR S&P 500 ESG ETF (EFIV)
Region: USA
Strategy: Investing in S&P 500 companies with the highest ESG scores while excluding those involved in tobacco, weapons, and other harmful sectors.
Why Watch: This is an efficient approach to capturing value in large-capitalization US stocks that meet ESG investment criteria and are favourable for growth-focused investors.
8. Calvert US Large-Cap Core Responsible Index Fund (CISIX)
Region: USA
2024 Return: 11.42% (1-year), 14.03% (3-year)
Why Watch: This fund aims at large-capitalization US firms with credible ESG ratings, offers reasonable returns, and has a clearly defined responsible investment policy.
9. FlexShares STOXX US ESG Impact Index Fund (ESG)
Region: USA
NAV: $84.56 (as of May 2025)
Why Watch: This fund focuses on companies’ ESG performance and maintains a 90% equity allocation. Its active management approach is ideal for investors seeking dynamic exposure to ESG leaders.
10. Parnassus Core Equity Fund (PRBLX)
Location: USA
2024 Return: 8.29% (1-year), 12.47% (3-year), 18.34% (5-year)
Why Watch: A longstanding ESG-focused fund, Parnassus emphasizes high-quality companies with sustainable practices, making it a favourite for long-term, socially responsible investors.
ESG Investment Funds 2025: Comparison Table at a Glance
| Fund Name | Region | 2024 Return (3y) | Tracks Nasdaq-100 ESG Index, tech leaders; low fees | Key Features / Strategy | Why Watch |
|---|---|---|---|---|---|
| Invesco ESG NASDAQ 100 Index ETF (QQCE) | US/Global | 32.89% | 18.74% | Large-cap US firms, credible ESG ratings, responsible investment policy | Growth focus, innovation, strong returns |
| RBC Vision QUBE Fossil-Free Canadian Equity Fund A | Canada | 21% | 9.8% | Fossil-free; exclusionary screening; Carbon Underground 200 dataset | Transparent, Canadian ESG exposure |
| Franklin ClearBridge Sustainable International Growth | International | 15.12% | 2.05% | Strict ESG screening, fossil fuel exclusion, and global companies | Global diversification, long-term growth |
| CI MSCI World ESG Impact Index ETF (CESG) | Global | 0.3% | 8.2% | Large-cap US firms, credible ESG ratings, and responsible investment policy | Responsible, impact-driven, broad exposure |
| iShares ESG Aware MSCI USA ETF (ESGU) | USA | 10.25% | 12.78% | Large/mid-cap US firms; avoids unethical industries | Widely used, comprehensive US ESG access |
| Vanguard ESG US Stock ETF (ESGV) | USA | N/A | N/A | Diversified US portfolio; strong ESG compliance | Large AUM, long-term sustainable growth |
| SPDR S&P 500 ESG ETF (EFIV) | USA | N/A | N/A | S&P 500 companies with high ESG scores; excludes tobacco, weapons, etc. | Efficient, growth-focused, large-cap ESG |
| Calvert US Large-Cap Core Responsible Index Fund (CISIX) | USA | 11.42% | 14.03% | High-quality US companies, longstanding ESG focus, and sustainable practices | Consistent returns, clear ESG policy |
| FlexShares STOXX US ESG Impact Index Fund (ESG) | USA | N/A | N/A | 90% equity allocation; active management; strong ESG performance | Dynamic exposure, active ESG management |
| Parnassus Core Equity Fund (PRBLX) | USA | 8.29% | 12.47% (3Y), 18.34% (5Y) | High-quality US companies, longstanding ESG focus, sustainable practices | Long-term track record, trusted by ESG-focused investors |
Key:
- 1y = 1-Year Return (2024)
- 3y = 3-Year Return (2024)
- N/A = Not Available or Not Disclosed
This table summarizes the top 10 ESG funds for 2025, highlighting their region, recent performance, core strategy, and what makes each fund notable for sustainable and responsible investors. Use this as a quick reference to compare options as you build your ESG-focused portfolio.
Steps to Take to Invest in ESG Funds
How do you make your first move into ESG investing? Here’s a step-by-step guide:
- Identify Goals: Determine if the emphasis is on returns or an environmental/social impact.
- Do Your Research: ESG ratings and performance history help evaluate the funds.
- Talk to your Financial Advisor: Ensure your selected funds match your timelines and risk appetite.
- Spread Investment Across Different Regions and Industries: This helps control risk.
Predicted Developments for ESG Investing by 2025
Looking ahead, what else is expected in ESG investing? Here’s some expert insight for 2025:
1. Thematic investments within clean energy and climate innovation.
2. Stronger global regulation will drive enhanced ESG reporting.
3. Real-time assessment for ESG risk analysis will be AI-driven.
4. Traditional financial analysis will integrate ESG factors seamlessly.
Take Action Towards a Sustainable Portfolio Today
With ESG investing in 2025, there is much room for financial returns and making an impact in the world. The top 10 listed funds, which range from global to regional leaders, give responsible investors a good start.
Start constructing a tailored ESG portfolio now, work towards a greener and more sustainable future, and consult a financial advisor to research your investment options.
Disclaimer: This blog does not serve as financial advice. Past performance does not guarantee future results.
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