What is the best performing ESG ASX ETF in 2026?

Investors are becoming increasingly conscious about where they invest their money. This has led to a boom in something called ESG investing.

“ESG” stands for environmental, social, and governance considerations. 

It is becoming increasingly important for investors who are looking not only for financial returns but also to positively impact the world through their investment choices.

In a practical sense, this might involve investing in specific companies that align with personal beliefs. 

It can also mean investors actively avoid certain companies or sectors involved in industries or practices that are not ethical. 

This could be (for example) weapons manufacturers, or companies causing significant harm to the environment. 

One of the simplest ways for investors to target ESG principles is through an ASX ETF. 

There are plenty of funds that now use screening processes to target companies that align with ethical considerations. 

Of course, alongside these decisions, is the underlying goal of building wealth. 

WIth that in mind, here are how some of the most popular ESG ASX ETFs are performing this year. 

Betashares Capital Ltd – Betashares Climate Change Innovation ETF (ASX: ERTH)

Geopolitical conflict has sent many ASX ETFs into the red this year. 

However this Betashares fund has been beating indexes like the S&P/ASX 200 Index (ASX: XJO). 

It is up approximately 5% year to date. 

This ASX ETF is made up of a portfolio of roughly 100 leading global companies that derive at least 50% of their revenues from products and services that help to address climate change and other environmental problems through the reduction or avoidance of CO2 emissions. 

This covers clean energy providers, along with leading companies tackling green transport, waste management, sustainable product development, and improved energy efficiency and storage.

Betashares Australian Sustainability Leaders ETF (ASX: FAIR)

It has been a different story in 2026 for this ASX ETF. 

This fund from Betashares is down roughly 8% year to date. 

It includes Australian companies that have passed screens to exclude companies with direct or significant exposure to fossil fuels or engaged in activities deemed inconsistent with responsible investment considerations.

The Fund’s methodology also prefers companies classified as ‘Sustainability Leaders’ based on their involvement in business activities aligned to the United Nations Sustainable Development Goals.

BetaShares Global Sustainability Leaders ETF (ASX: ETHI)

This ethical ASX ETF has also fallen in 2026. 

At the time of writing, it is down 6% year to date. 

Unlike the previous fund mentioned above, this ASX ETF focusses on global companies rather than just Australian ones. 

It holds a diversified portfolio of large, sustainable, ethical companies from a range of global locations. 

Ishares Core MSCI Australia Esg Leaders ETF (ASX: IESG)

This fund from iShares aims to provide exposure to large, mid and small cap segments of the Australian market with better sustainability credentials relative to their sector peers.

It has proven relatively resilient in a volatile market this year, falling roughly 3% in that span. 

The post What is the best performing ESG ASX ETF in 2026? appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Bell has positions in BetaShares Global Sustainability Leaders ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.