ESG (Environmentally-Conscious) ETFs Up +15% YTD

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33 ETFs that trade on Canadian and/or American stock exchanges consist of companies that exhibit good environmental, social, and governance practices (ESG). This article identifies the top 16 ESG ETFs, their ESG scores, and their performances YTD.

More and more people want their money to reward companies that have a positive impact on the environment and society and investing in ETFs that channel dollars to companies that meet stringent environmental, social and governance standards can help you support responsible corporate behavior without sacrificing performance or incurring excessive fees.

ESG investing is a strategy where people put their money to work in companies that have a positive net impact on the environment and society, led by a management team that achieves these goals via better corporate governance. While ESG investing alone cannot solve the problems of climate change, social injustice, and income inequality, backing companies that actively work to address these challenges is a great place to start.

As mentioned in the introductory paragraph, the acronym ESG stands for environmental, social, and governance and the three core pillars of this investing philosophy are:

  • Environment. How does a company manage its environmental impact? How much progress has it made in utilizing renewable energy sources? Is it attempting to minimize its carbon footprint? How does it handle air or water pollution arising from its operations? What is its attitude toward climate change? What about sustainability efforts in its supply chain?
  • Social. How does the company improve its social impact? Does it offer fair levels of compensation for employees? What are its policies regarding LGBTQ+ equality, racial diversity and inclusive hiring practices? How does a company advocate for social good in the wider world, beyond its limited sphere of business?
  • Governance. How do management and the board of directors address the interests of the company’s employees, shareholders, and customers? Is executive compensation balanced compared to pay for other employees? How does the company’s board and management drive positive change? Does the board foster diversity in leadership? Are its interactions with shareholders positive?

Each ESG ETF has an ESG score; a  good ESG rating (the higher the better) means a company is managing its environment, social, and governance risks well relative to its peers. Investors who use ESG ratings to supplement financial analysis can gain a broader view of a company's long-term potential.

The list of the top 16 ESG ETFs below has hyperlinks to 3 areas of additional information which are imperative for any individual considering investing in the ESG sector.

  • The fund name is hyperlinked to provide you with a description of the fund and an analysis of its stock.
  • The trading symbol is hyperlinked to additional financial data and commentary on the company (where available).
  • The percentage increase YTD is hyperlinked to a chart of the company's stock performance YTD.  

Below are their performances YTD and respective ESG scores:

  1. SPDR® S&P 500® ESG ETF (EFIV): +29.7% YTD; ESG score: 8.4

  2. Xtrackers S&P 500 ESG ETF (SNPE): +29.0% YTD; ESG Score: 6.5

  3. Xtrackers MSCI USA ESG Leaders Equity ETF (USSG): +28.9% YTD; ESG Score: 6.4

  4. iShares ESG MSCI USA Leaders ETF (SUSL): +28.8% YTD; ESG Score: 7.5 

  5. Nuveen ESG Mid-Cap Value ETF (NUMV): +28.0% YTD; ESG Score: 7.2 

  6. MSCI USA ESG Select ETF (SUSA): +27.8% YTD; ESG Score: 6.6

  7. IQ Candriam ESG US Equity ETF (IQSU): +27.5% YTD; ESG Score: N/A

  8. Nuveen ESG Large-Cap Growth ETF (NULG): +26.5% YTD; ESG Score: 6.0 

  9. FlexShares STOXX US ESG Select ETF (ESG): +25.8% YTD; ESG Score: N/A

  10. iShares ESG MSCI USA ETF (ESGU): +25.2% YTD; ESG Score: 6.5

  11. iShares ESG Advanced MSCI USA ETF (USXF): +24.6% YTD; ESG Score: N/A

  12. WisdomTree U.S. ESG ETF (RESP): +24.2% YTD; ESG Score: N/A

  13. Vanguard ESG U.S. Stock ETF (ESGV): +24.0% YTD; ESG Score: 6.8
  14. Nuveen ESG Large-Cap ETF (NULC): +23.6% YTD; ESG Score: 8.4

  15. ClearBridge Large Cap Growth ESG ETF (LRGE): +22.8% YTD; ESG Score: N/A

  16. Nuveen ESG Large-Cap Value ETF (NULV): +20.1% YTD; ESG Score: 7.7

The above 16 ESG ETFs are UP +26.0% YTD (as of Dec.09/21), on average, with an average ESG score of 7.1.

In addition to the 16 ESG ETFs analyzed above there are 17 other ESG ETFs with YTD performances of less than 20%, namely, by trading symbol: ESML (+16.9%), NUSC (+16.4%), NUMG (+11.8%), IQSI (+10.6%), ESGD (10.1%), DMXF (+9.5%), NUDM (+8.9%), VSGX (+6.3%), EMXF (+5.0%), RESE (+1.6%), LDEM (N/C), NUEM (N/C), SUSC (N/C), ESGE (-2.1%; ESG Score of only 3.7), KESG (-8.6%), SDG (-9.9%; ESG Score of only 3.0) and ICLN (-20.1%; ESG Score of only 2.6 ). On average, these 17 ETFs are UP 4.1%, on average, and have an average ESG score of only 5.0. All 33 ESG ETFs are UP +15.3% YTD, on average.

*In addition to the 33 ESG ETFs there are 9 fossil-free ETFs, 7 low carbon and climate transmission ETFs, and 23 clean energy ETFs but none of them incorporate social or governance factors, so, as such, they were excluded from consideration in this analysis.

At the end of December, I will be incorporating the above information into a new non-tradable index called the Environmentally Conscious ETF Index. Stay tuned! 

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