ESG investing sounds simple enough. Buy an ETF that focuses on companies with stronger environmental, social and governance practices, get broad diversification, and hopefully feel a little better about where your money is going. The problem is that once you start digging into the actual ETFs, things get messy.
Some ESG funds simply tilt toward companies with better ratings than their industry peers. Others remove entire industries. Some still own oil producers. Others avoid fossil fuels almost completely. And then there are the fees, which can range from barely more than a traditional index ETF to several times as much. For a closer look at the differences, compare ESG screening approaches and fund structures in our separate guide.
That’s why I think the better question in 2026 isn’t whether ESG investing is “good” or “bad.” It’s whether you’re actually getting enough in return for the extra screening. I looked at cost, diversification, portfolio construction and what each fund actually owns. These are the five that stand out to me.
Prices and fund data are approximate as of September 2026.
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#5 BMO MSCI Canada Selection Equity Index ETF (ESGA)
Approx. share price: $56–$57
Assets under management: About $141 million
Focus: Canadian equities with higher ESG ratings relative to industry peers
MER: 0.16%
ESGA holds roughly 41 securities and tracks an MSCI index designed around Canadian companies with stronger ESG characteristics relative to their peers.
Why It Made My List
What I like about ESGA is that it doesn’t try to reinvent Canadian investing. You’re still getting exposure to the Canadian market. The difference is the screening process. That matters because Canada presents a unique problem for ESG investors. Financials, energy and materials make up a large part of our market. Remove too much of those sectors and suddenly your “Canadian ETF” doesn’t look much like Canada anymore. ESGA takes more of a best-in-class approach instead.
What I Like
The 0.16% MER immediately gets my attention. That’s inexpensive enough that ESG screening isn’t creating a huge drag on returns. I also like the simplicity. For someone who already has U.S. and international exposure elsewhere and wants an ESG-focused Canadian allocation, ESGA is easy to understand.
One Thing I’d Watch
Forty-one holdings isn’t particularly broad. That concentration can make individual companies and sector allocations matter more than they would in a broader Canadian index.
Would I Buy Today?
I like ESGA as a Canadian component, but I wouldn’t build an entire portfolio around it. For me, it makes more sense alongside broader global exposure.
#4 BMO Balanced ESG ETF (ZESG)
Approx. share price: $15
Assets under management: About $106 million
Focus: Global 60/40 ESG portfolio
MER: 0.20%
ZESG holds a portfolio of BMO ETFs and targets roughly 60% equities and 40% fixed income, with quarterly rebalancing. As of August 31, the actual mix was about 61% equities and 38% bonds.
Why It Made My List
Not everybody wants 100% stocks. That sounds obvious, but ESG ETF discussions tend to focus almost entirely on equities. ZESG gives investors a one-ticket option with stocks and bonds while still applying ESG considerations across much of the portfolio. With interest rates still an important factor for markets, the bond allocation also gives this fund a completely different risk profile from the others on this list.
What I Like
The biggest advantage is convenience. You get Canadian, U.S. and international equities plus government and corporate bonds without having to rebalance everything yourself. And at a 0.20% MER, BMO isn’t charging much for doing it.
One Thing I’d Watch
That 40% bond target can also become the fund’s biggest weakness if you have a long time horizon and want maximum equity growth. A 30-year-old investor and a recently retired investor probably shouldn’t look at ZESG the same way.
Would I Buy Today?
I’d consider ZESG for someone who values a smoother ride more than maximum long-term growth. Personally, with a long enough horizon, I’d lean toward more equity exposure.
#3 Global X Global Sustainability Leaders Index ETF (ETHI)
Approx. share price: $62
Assets under management: About $99 million
Focus: Global sustainability leaders
MER: 0.65%
ETHI is the most aggressive ESG strategy on this list. It tracks a global sustainability index with low-carbon and responsible-investing screens. As of August 31, technology represented roughly 35% of the portfolio, with NVIDIA, Visa, Apple, Broadcom and Mastercard among its largest holdings.
Why It Made My List
ETHI is interesting because the ESG screening actually changes the portfolio. This isn’t simply a broad index with a slightly different label attached to it. You’re getting significant exposure to technology, financial services, healthcare and consumer businesses while deliberately avoiding companies that fail its sustainability criteria. That also means trends like AI spending, semiconductors and digital payments can have a meaningful impact on performance.
What I Like
I like that investors can clearly see what ETHI is trying to accomplish. If sustainability screening is genuinely important to you, that matters.
One Thing I’d Watch
The 0.65% MER is difficult for me to ignore. That’s a meaningful annual cost compared with broad-market ETFs and even most of the ESG funds on this list. The portfolio is also fairly concentrated in technology and financial services.
Would I Buy Today?
I like the strategy more than I like the fee. ETHI would stay on my watchlist, but I’d want the ESG mandate itself to be very important to me before paying that premium.
#2 iShares ESG Aware MSCI Canada Index ETF (XESG)
Approx. share price: $44
Assets under management: About $655 million
Focus: Broad Canadian ESG equities
MER: 0.17%
XESG holds around 130 Canadian companies and is designed to maintain a risk-and-return profile relatively close to the broad Canadian market while emphasizing stronger ESG characteristics.
Why It Made My List
This might be the ETF that best demonstrates how misunderstood ESG investing can be. XESG screens for ESG characteristics—but that doesn’t mean it eliminates Canadian energy. BlackRock reported that companies generating more than 5% of revenue from oil sands represented about 7.5% of the portfolio in September. That surprised me, but I actually think the transparency is useful.
What I Like
The 0.17% MER is excellent, the fund is reasonably broad, and roughly $655 million in assets gives it considerably more scale than several alternatives. For someone who wants Canadian equities with an ESG tilt without completely abandoning the structure of the Canadian market, XESG makes sense to me.
One Thing I’d Watch
Investors need to understand what “ESG aware” actually means. If your goal is zero fossil-fuel exposure, this probably isn’t what you think you’re buying.
Would I Buy Today?
Yes, I could see myself owning XESG as the Canadian portion of a diversified portfolio. I just wouldn’t mistake it for a fossil-fuel-free fund.
#1 iShares ESG Equity ETF Portfolio (GEQT)
Approx. share price: $90
Assets under management: About $304 million
Focus: Globally diversified 100% equity ESG portfolio
MER: 0.25%
GEQT combines ESG-oriented Canadian, U.S. and international equity ETFs into one portfolio and targets 100% equities. It currently provides exposure to roughly 800 underlying securities and automatically handles the portfolio construction and rebalancing.
Why It Made My List
For me, GEQT solves the biggest problem with many ESG ETFs: they’re pieces of a portfolio rather than the portfolio itself. With GEQT, a Canadian investor can buy one ETF and get exposure across Canada, the United States and developed international markets.
That simplicity matters.
What I Like
I think 0.25% is reasonable for a globally diversified, automatically rebalanced ESG portfolio. It also avoids some of the concentration problem you get from buying a Canadian-only ESG fund. And because it’s 100% equities, it makes more sense to me for investors with long horizons who can handle market swings.
One Thing I’d Watch
The screening comes with a diversification cost. For comparison, BlackRock’s conventional XEQT holds exposure to more than 8,000 underlying securities and currently carries a 0.19% MER, while GEQT has roughly 800 underlying holdings and a 0.25% MER. That doesn’t automatically make GEQT worse. But you should know what you’re giving up.
Would I Buy Today?
Of the ESG ETFs on this list, GEQT is the one I’d be most comfortable using as a core long-term holding. Not because I expect it to outperform. Because it gives me the combination I care about most: global diversification, reasonable fees, simplicity and a clearly stronger ESG screen than a traditional all-equity portfolio.
Final Thoughts: Are ESG ETFs Actually Worth It?
After looking through these funds, I don’t think there’s a universal answer. If your only objective is to own as much of the global market as possible at the lowest possible cost, traditional broad-market ETFs still have a major advantage. But ESG investing has improved. Funds like XESG charge only a small premium. GEQT can now provide an entire globally diversified ESG-oriented equity portfolio for a 0.25% MER. That’s a long way from the expensive, highly specialized products investors used to associate with responsible investing.
The bigger issue is understanding what the ESG label actually means. XESG still has oil-sands exposure. ETHI applies much stronger sustainability screens but charges significantly more. ZESG includes bonds. GEQT sacrifices some market breadth in exchange for stronger screening. Those differences matter far more to me than the three letters on the ETF name.
Over the next year, I’d watch energy prices, interest rates, the continued dominance of large technology companies and—most importantly—whether fund providers continue lowering ESG fees. If they do, the argument against ESG investing becomes less about cost and more about portfolio construction. And that’s probably the most important takeaway here:
Don’t buy an ESG ETF because it says ESG. Buy it only after you understand what it actually owns.
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