{"menuItems":[{"label":"ASX ethical ETFs","anchorName":"#asx-ethical-etfs"},{"label":"How do ethical ETFs work in Australia?","anchorName":"#how-do-ethical-etfs-work-in-australia"},{"label":"1. BetaShares Global Sustainability Leaders ETF (ETHI)","anchorName":"#1-betashares-global-sustainability-leaders-etf-ethi"},{"label":"2. eInvest Better Future Fund (IMPQ)","anchorName":"#2-einvest-better-future-fund-impq"},{"label":"3. BetaShares Australian Sustainability Leaders ETF (FAIR)","anchorName":"#3-betashares-australian-sustainability-leaders-etf-fair"},{"label":"4. VanEck Vectors MSCI Australian Sustainable Equity ETF (GRNV)","anchorName":"#4-vaneck-vectors-msci-australian-sustainable-equity-etf-grnv"},{"label":"5. InvestSMART Ethical Share Fund Managed Fund (INES)","anchorName":"#5-investsmart-ethical-share-fund-managed-fund-ines"},{"label":"6. Russell Investments Australian Responsible Investment ETF (RARI)","anchorName":"#6-russell-investments-australian-responsible-investment-etf-rari"},{"label":"7. VanEck Vectors MSCI International Sustainable Equity ETF (ESGI) ","anchorName":"#7-vaneck-vectors-msci-international-sustainable-equity-etf-esgi"},{"label":"8. Vanguard Ethically Conscious International Shares Index ETF (VESG)","anchorName":"#8-vanguard-ethically-conscious-international-shares-index-etf-vesg"},{"label":"9. BetaShares Sustainability Leaders Diversified Bond ETF (GBND)","anchorName":"#9-betashares-sustainability-leaders-diversified-bond-etf-gbnd"},{"label":"10. Vanguard Ethically Conscious Global Aggregate Bond Index ETF (VEFI)","anchorName":"#10-vanguard-ethically-conscious-global-aggregate-bond-index-etf-vefi"},{"label":"Compare online platforms to buy ethical ETFs","anchorName":"#compare-online-platforms-to-buy-ethical-etfs"}]}
For those looking to align their values with their money, an ethical exchange-traded fund (ETF) is a good place to start.
Australia has more than a dozen ethical-themed ETFs listed on the Australian Securities Exchange (ASX). Each follows its own set of environmental, social and governance (ESG) criteria, but it is important to note that there is no universal definition for ESG investing. This means that different funds focus on different metrics. While some focus on sustainable practices, others prioritise social impact such as weapons, tobacco or gambling.
This guide explains how 10 popular ESG funds work, how they've performed and what their fees are. If you're looking to invest directly in stocks, check out some of the companies on our guide on renewable energy stocks.
ASX ethical ETFs
Environmentally conscious ETFs
ASX code
Fund name
Fees (% p.a)
1-year return
Sector
IMPQ
eInvest Better Future Fund (managed fund)
0.99
-8.56%
Australian small/mid-cap shares
FAIR
BetaShares Australian Sustainability Leaders ETF
0.49
-0.18%
Australian shares
GRNV
VanEck Vectors MSCI Australian Sustainable Equity ETF
0.35
5.08%
Australian shares
INES
Intelligent Investor Ethical Share Fund (managed fund)
0.97
-0.86%
Australian shares
RARI
Russell Australian Responsible Investment ETF
0.45
9.42%
Australian shares
ESGI
VanEck Vectors MSCI International Sustainable Equity ETF
0.55
-3.20%
Global shares
ETHI
BetaShares Global Sustainability Leaders ETF
0.59
-9.97%
Global shares
VESG
Vanguard Ethically Conscious International Shares Index ETF
0.18
-11.15%
Global shares
GBND
BetaShares Sustainability leaders Diversified Bond ETF – Currency Hedged
0.49
-11.59%
Global fixed income
VEFI
Vanguard Ethically Conscious Global Aggregate Bond Index ETF (hedged)
0.26
-10.45%
Global fixed income
E200
SPDR S&P/ASX 200 ESG Fund ETF (hedged)
0.13
17.17%
Global fixed income
VETH
Vanguard Ethically Conscious Australian Shares ETF
0.17
8.87%
Australian shares
ERTH
BetaShares Climate Change Innovation ETF
0.65
-12.80%
Global shares
HETH
BetaShares Global Sustainability Leaders ETF – Currency Hedged
0.62
-10.34%
Global shares
DBBF
BetaShares Ethical Diversified Balanced ETF
0.39
-7.98%
Mixed asset
DGGF
BetaShares Ethical Diversified Growth ETF
0.39
-7.77%
Mixed asset
DZZF
BetaShares Ethical High Growth ETF
0.39
-6.60%
Mixed asset
AEAE
Australian Ethical High Conviction Fund (managed fund)
For our top picks, we compared our Finder partners using a proprietary algorithm beginning in August 2022. We update the list every 3 months. Keep in mind that our top picks may not be the best for your individual circumstances and we encourage you to compare for yourself. Read our full methodology here to find out more.
How do ethical ETFs work in Australia?
Ethical ETFs are investment funds that track companies based on ESG criteria.
Crucially, there are no hard rules around which companies should be added or excluded or what ethical criteria to follow.
In some instances, ESG is based on exclusion. In other cases, it is about working with businesses to reduce their impact.
For example, most ethical funds screen companies that directly engage in the production of fossil fuels. However, as of 2019, there are around half a dozen listed funds in Australia that ignore this factor (Update: These funds have since been delisted from the ASX).
How much exposure a company should be allowed to have to fossil fuels is also up for debate. Some funds such as FAIR and IMPQ exclude Australia's major banks because they finance the oil and mining sector, but most ethical funds do not.
In no particular order, below is a description of the strategies taken by each of the ESG-focused ETFs listed above along with their top stock holdings to help you decide which is right for you.
How to choose a sustainable ETF
Pat Garrett, co-CEO of Six Park online investment management service
When you're looking at sustainable ETFs, you need to be clear on what sustainability criteria or frameworks have been applied. What are the filters being used to construct the ETFs?
There are both negative filters, which screen out investments that don't meet sustainability criteria (for example, tobacco companies or fossil fuel producers) and also positive filters which include companies that are, for example, committed to having more women involved at the board level.
Depending on how the ETF is being managed, these filters can become quite subjective and actively managed, which is something to bear in mind when making any decisions. Consider diversification too.
1. BetaShares Global Sustainability Leaders ETF (ETHI)
This holds global company stocks that it identifies as "climate leaders" based on their low carbon footprint. It excludes companies with significant exposure to the fossil fuel industry and screens for those engaged with gambling, tobacco, weaponry, nuclear energy, animal cruelty, pornography, environmental destruction and human rights concerns.
Top holdings: Visa, NVIDIA, Home Depot, Apple, Mastercard
Green ETF of the Year 2022: BetaShares Global Sustainability ETF
The Finder Green Awards identify the companies leading the way on sustainability in the sectors that we compare. The BetaShares Global Sustainability ETF (ETHI) won the ETF category through a proactive approach to identifying sustainable investments as well as offering strong financial returns in the judging period.
Compared to some funds that only screen out companies that are bad for the environment, this BetaShares ETF looks for companies that are "climate leaders" who have passed screens. It excludes businesses with direct or significant exposure to fossil fuels or engaged in activities deemed inconsistent with responsible investing.
The finalist in this category was eInvest Better Future Fund.
2. eInvest Better Future Fund (IMPQ)
It's an actively managed fund that invests in small Australian and New Zealand companies (less than $50 million cap) that are contributing positively to the environment and society, such as renewable energy and health foods. It filters out any companies engaged with fossil fuels, alcohol, tobacco, weapons, deforesting, gambling and unhealthy fast food.
This fund also won our Green ETF of the Year award in 2021's Finder Green Awards so it's a great option if climate change is a major concern for you.
Top holdings: Meridian Energy, Spark New Zealand Ltd, Chorus, NIB Holdings, KMD Brands
3. BetaShares Australian Sustainability Leaders ETF (FAIR)
This is a diverse portfolio of Australian companies involved in sustainable business activities. Exclusions are companies exposed to fossil fuels, tobacco, alcohol, junk foods, gambling, weaponry, nuclear energy, animal cruelty, environmental destruction, pornography, recent significant fines or convictions, human rights concerns and lack of gender diversity at the board level.
Top holdings: Telstra, Brambles, CSL, Goodmans, Suncorp
4. VanEck Vectors MSCI Australian Sustainable Equity ETF (GRNV)
It's a broad mix of large Australian companies excluding any that own fossil fuel reserves or are engaged in the mining of coal, oil and gas (although it includes mineral miners such as gold). It prioritises those with high ESG ratings in line with global research agency MSCI ESG Research.
Top holdings: Telstra, CSL, Fortescue Metals, Westpac, Transurban
5. InvestSMART Ethical Share Fund Managed Fund (INES)
This actively managed fund screens companies based on a list of problematic industries including non-renewables such as nuclear, coal and oil, as well as gambling, alcohol, tobacco, pornography, junk food, weapons and payday lending. It primarily invests in Australian companies and cash.
Top holdings: (must request from the provider)
6. Russell Investments Australian Responsible Investment ETF (RARI)
Primarily weighted towards dividend-paying companies that show positive ESG characteristics, it says it also excludes companies that manufacture or distribute alcohol, tobacco, gambling, weapons and pornography. Companies with direct exposure to fossil fuel production may also be removed. The fund invests in Australian shares and trusts.
Top holdings: Commonwealth Bank, CSL, NAB, Westpac, ANZ
7. VanEck Vectors MSCI International Sustainable Equity ETF (ESGI)
It's a diversified portfolio of sustainable international companies from developed markets, excluding Australia. It excludes companies that own fossil fuel reserves or earn revenue from oil and gas activities.
Top holdings: Novo Nordisk, Adobe, Home Depot, Amgen, AIA Group
8. Vanguard Ethically Conscious International Shares Index ETF (VESG)
This fund holds stocks in some of the world's biggest companies listed in major developed markets. Stocks are diversified across a range of sectors but it excludes those with significant exposure to fossil fuels, alcohol, gambling, tobacco, weaponry, nuclear power and pornography.
Top holdings: Apple, Microsoft Corp, Amazon, Alphabet, NVIDIA
9. BetaShares Sustainability Leaders Diversified Bond ETF (GBND)
A diversified portfolio of global and Australian bonds, it includes a significant portion of green bonds used to fund environmental projects. Company bonds are screened to avoid the fossil fuel industry.
Top holdings: French Republic Government, European Union, Treasury Corp of Victoria, Netherlands Government Bonds, Western Australia Treasury Corp
10. Vanguard Ethically Conscious Global Aggregate Bond Index ETF (VEFI)
Bonds issued by global governments and investment-grade companies. It excludes companies with significant exposure to fossil fuels, tobacco, gambling, alcohol, weapons, nuclear power and pornography.
Top holdings: United States Treasury, Japan, France, Germany, Canada
Compare online platforms to buy ethical ETFs
Did you know?
You could save $1,046 a year on average in brokerage fees by switching to a more suitable online broker, according to Finder research. You might even save money by having more than one platform, especially if you are investing both in Australia and internationally.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
Important: The standard brokerage fee displayed is the trade cost for new customers to purchase $1,000 of either Australian or US shares. Where a platform charges different fees for both US and Australian shares we show the lower of the two. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.
Kylie Purcell is the senior investments editor and analyst at Finder. She has completed a Certificate of Securities and Managed Investments (RG146) and specialises in investment products including online brokers, robo-advisors, stocks and ETFs.
Looking for alternative investments? With a ROI of up to 3,593% lego may be worth considering. Read on to find out which lego sets are worth the investment.
Equity crowdfunding offers a unique opportunity for investors and for Australian startups, but Australia’s regulatory framework surrounding crowdfunding still lags behind the rest of the world.
How likely would you be to recommend finder to a friend or colleague?
0
1
2
3
4
5
6
7
8
9
10
Very UnlikelyExtremely Likely
Required
Thank you for your feedback.
Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.
Important information about this website
finder.com.au is one of Australia's leading comparison websites. We are committed to our readers and stands by our editorial principles
We try to take an open and transparent approach and provide a broad-based comparison service. However, you should be aware that while we are an independently owned service, our comparison service does not include all providers or all products available in the market.
Some product issuers may provide products or offer services through multiple brands, associated companies or different labeling arrangements. This can make it difficult for consumers to compare alternatives or identify the companies behind the products. However, we aim to provide information to enable consumers to understand these issues.
We make money by featuring products on our site. Compensation received from the providers featured on our site can influence which products we write about as well as where and how products appear on our page, but the order or placement of these products does not influence our assessment or opinions of them, nor is it an endorsement or recommendation for them.
Products marked as 'Top Pick', 'Promoted' or 'Advertisement' are prominently displayed either as a result of a commercial advertising arrangement or to highlight a particular product, provider or feature. Finder may receive remuneration from the Provider if you click on the related link, purchase or enquire about the product. Finder's decision to show a 'promoted' product is neither a recommendation that the product is appropriate for you nor an indication that the product is the best in its category. We encourage you to use the tools and information we provide to compare your options.
Where our site links to particular products or displays 'Go to site' buttons, we may receive a commission, referral fee or payment when you click on those buttons or apply for a product. You can learn more about how we make money.
When products are grouped in a table or list, the order in which they are initially sorted may be influenced by a range of factors including price, fees and discounts; commercial partnerships; product features; and brand popularity. We provide tools so you can sort and filter these lists to highlight features that matter to you.
Please note that the information published on our site should not be construed as personal advice and does not consider your personal needs and circumstances. While our site will provide you with factual information and general advice to help you make better decisions, it isn't a substitute for professional advice. You should consider whether the products or services featured on our site are appropriate for your needs. If you're unsure about anything, seek professional advice before you apply for any product or commit to any plan and read any disclosure documents (such as any Target Market Determination (TMD) and/or Product Disclosure Statement (PDS)) issued by the provider before making a decision.
Providing or obtaining an estimated insurance quote through us does not guarantee you can get the insurance. Acceptance by insurance companies is based on things like occupation, health and lifestyle. By providing you with the ability to apply for a credit card or loan, we are not guaranteeing that your application will be approved. Your application for credit products is subject to the Provider's terms and conditions as well as their application and lending criteria.
Please read our website terms of use and privacy policy for more information about our services and our approach to privacy.
