What is an ESG ETF?

ESG ETFs incorporate environmental, social, and governance criteria into portfolio construction. Some exclude certain industries, others tilt toward companies with higher ESG scores, and some combine ESG with factor strategies.

Because methodologies differ, two ESG ETFs can look very different even if they both claim to be "ESG." They may have different exclusions, scoring systems, and sector tilts.

If you're choosing an ESG ETF, review holdings and methodology, not just the label. Also check tracking to the broad market and fees, because ESG screens can change exposure and performance characteristics.