Are you looking to invest in a way that aligns with your values? In 2025, ESG (Environmental, Social, and Governance) funds are more popular than ever, helping investors grow their money while supporting companies that care about the planet, people, and ethical practices. In this guide, we’ll show you how to find the best ESG funds for your portfolio step by step.

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Types of ESG Investment Funds

·         Equity ESG Funds: These funds invest in shares of companies with strong ESG ratings.

·         Fixed-Income ESG Funds: These target bonds aimed at supporting social or environmental goals, such as green bonds.

·         Thematic ESG Funds: These focus on specific ESG themes, like top green investments or funds centered on renewable energy.

·         Multi-Asset ESG Funds: These spread investments across different ESG-approved assets, including stocks, bonds, and more.

Why ESG Investment Funds Matter
As the world grapples with serious environmental and social challenges, ESG investment funds are becoming increasingly relevant. Their significance can be seen in several key areas:

·         Tackling Global Issues: With growing concerns like climate change and resource scarcity, there's a rising demand for investments in sustainable energy, resilient infrastructure, and companies that prioritize ESG principles.

·         Promoting Ethical Investing: ESG funds allow investors to support companies that align with their values—combining financial growth with ethical responsibility, making them appealing to socially aware investors.

·         Potential for Strong Returns: Companies that prioritize ESG standards are often better equipped to handle regulatory pressures and protect their reputation, which can lead to more stable long-term performance.

·         Backed by Policy and Industry Trends: Governments and industries are increasingly supporting ESG practices through favorable policies, boosting the growth and appeal of ESG-aligned investments

The Benefits of ESG Investing
Investing in ESG funds allows individuals to drive positive change. As Kenneth Chavis, a certified financial planner and Senior Wealth Manager at LourdMurray, explains: by directing our investments toward ESG-focused companies, we can influence powerful global corporations to act more responsibly—demonstrating the real impact everyday investors can have on society.

Even beyond the social and environmental impact, ESG investing offers two key financial advantages: the potential for strong returns and reduced risk.

Invest with Purpose
By choosing ESG funds, you can support causes you care about—like climate action or social justice—while also growing your wealth.

Research from organizations like JUST Capital and Arabesque Partners shows that ESG funds often perform as well as, or even better than, traditional funds. A study by the Morgan Stanley Institute for Sustainable Investing (2004–2018) also found that sustainable funds tend to carry lower downside risk, offering more resilience in both strong and weak markets—even for newer ESG funds, including many passive options.

Top ESG Investment Funds
With the growing popularity of ESG investing, numerous funds have emerged each offering a unique approach focused on ethics and sustainability. Below is a closer look at some of the leading ESG mutual and sustainable investment funds for 2025.

Vanguard FTSE Social Index Fund (VFTAX)

·         Focus: Excludes industries like tobacco, firearms, and fossil fuels.

·         Key Benefits: Low-cost fees and reliable performance.

Overview:
This fund aims to mirror the performance of the FTSE4Good US Select Index, which includes companies that meet strict ESG criteria. By steering clear of sectors such as tobacco, weapons, and fossil fuels, Vanguard positions this fund for socially and environmentally conscious investors. With a low expense ratio of just 0.14%, it’s among the most affordable ESG options globally—ideal for cost-conscious investors. Its steady track record of returns also makes it a strong pick for both beginners and seasoned investors alike.

Nuveen ESG Large-Cap Growth ETF (NULG)

·         Focus: High-ESG-rated large-cap companies.

·         Key Benefits: Combines growth potential with responsible investing.

Overview:
NULG targets large-cap firms that excel in ESG metrics while offering strong growth potential. Its portfolio includes top players from sectors like technology, healthcare, and communication services. Designed to align with future market trends, this fund offers investors a chance to achieve solid returns while supporting ethical business practices. With a competitive expense ratio and a history of strong performance, NULG is an appealing option for those looking to grow their wealth responsibly.

iShares MSCI KLD 400 Social ETF (DSI)

·         Focus: Companies included in the MSCI KLD 400 Social Index.

·         Key Benefits: Broad industry exposure with a strong emphasis on sustainability.

Overview:
DSI tracks approximately 400 companies recognized for strong ESG performance. Unlike funds that concentrate on a single sector, DSI offers a well-rounded portfolio spanning various industries—including tech, healthcare, and retail—while excluding those involved in fossil fuels and firearms. Its emphasis on firms making meaningful sustainability progress makes it ideal for values-based investors. With low management fees, it’s particularly attractive to passive investors seeking a socially responsible and diversified investment.

Shelton Green Alpha Fund (NEXTX)

·         Focus: Innovation-driven companies offering environmental solutions.

·         Key Benefits: Invests in businesses tackling the world’s most pressing challenges.

Overview:
The Shelton Green Alpha Fund centers on innovative companies developing solutions for critical global concerns like climate change, water shortages, and sustainable construction. Its portfolio includes pioneers in areas such as biofuels and green infrastructure. Aimed at forward-thinking investors, NEXTX stands out for its emphasis on emerging industries and groundbreaking technologies. With its progressive approach and long-term growth potential, it’s a unique and compelling addition to any ESG-focused investment strategy.

Invesco MSCI Sustainable Future ETF (ERTH)

·         Focus: Companies advancing renewable energy, energy efficiency, and sustainable building practices.

·         Key Benefits: Despite periods of underperformance, it remains a prominent option among green investment funds due to its breadth and relevance.

Overview:
ERTH targets businesses developing sustainable, cost-effective solutions in areas like clean energy, waste management, and energy-efficient technologies. With a thematic focus on industries leading the fight against climate change, the fund aligns well with current global sustainability trends. Its specialized strategy and exposure to rapidly expanding green sectors make it an appealing choice for investors aiming to support environmental innovation while capitalizing on the momentum of the green economy.

Calvert Equity Fund (CEYIX)

·         Focus: Strong governance and environmental responsibility.

·         Key Benefits: Known for its thorough screening process.

Overview:
The Calvert Equity Fund invests in countries that demonstrate solid governance practices and a commitment to reducing their environmental footprint. One of its key strengths is its rigorous screening process, which ensures that only companies with high ESG standards are included. The fund primarily targets sectors like technology, healthcare, and renewable energy, focusing on industries that contribute to global sustainability.