ESG (Environmental, Social and Governance) investing is gaining momentum as a way of responsible investing. ESG are non-financial factors and are not commonly reported with the usual financial reporting. Adherents to the ESG investing claim that companies which have a high standard of ethics and governance maximize the shareholder value over the long-term. As a result, ESG ETFs have been created.
The following are the three metrics of ESG reporting issued by the Nasdaq reporting guide:
| Environmental (E) | Social (S) | Corporate Governance (G) |
| GHG Emissions Emissions Intensity Energy Usage Energy Intensity Energy Mix Water Usage Environmental Operations Climate Oversight/Board Climate Oversight/Management Climate Risk Mitigation | CEO Pay Ratio Gender Pay Ratio Employee Turnover Gender Diversity Temporary Worker Ratio Non-Discrimination Injury Rate Global Health & Safety Child & Forced Labor Human Rights | Board Diversity Board Independence Incentivized Pay Collective Bargaining Supplier Code of Conduct Ethics & Anti-Corruption Data Privacy ESG Reporting Disclosure Practices External Assurance |
Exchange Traded Funds
To cater to the demand of the responsible investor community, various ETF funds have been created. We have evaluated them and selected the top 3 ESG ETFs based on their expense ratio and Assets Under Management (AUM).
Top 3 ESG ETFs
| Ticker | SUSA | ESGU | DSI |
| Fund Name | iShares MSCI USA ESG Select ETF | iShares ESG MSCI USA ETF | iSharesMSCI KLD 400 Social ETF |
| Issuer | Blackrock | Blackrock | Blackrock |
| AUM | $1.64B | $7.02B | $1.94B |
| Expense ratio | 0.25% | 0.15% | 0.25% |
| 3-year return | 11.15% | 11.37% | 11.44% |
| Top 10 holdings | Apple Inc Microsoft Corp Accenture PLC Class A Alphabet Inc A Salesforce.com Inc 3M Co The Home Depot Inc BlackRock Inc Cummins Inc Expeditors International of Washington Inc | Apple Inc Microsoft Corp Amazon.com Inc Facebook Inc A Alphabet Inc Class C Alphabet Inc A Johnson & Johnson Visa Inc Class A Procter & Gamble Co The Home Depot Inc | Microsoft Corp Facebook Inc A Alphabet Inc Class C Alphabet Inc A Visa Inc Class A Procter & Gamble Co The Home Depot Inc Mastercard Inc A Intel Corp NVIDIA Corp |