Sustainable Investing: How to Find Green ETFs and Stocks

Sustainable investing is much more than a trend—it’s a way to combine financial returns with responsible decisions. Green ETFs and stocks provide investors the opportunity to invest in companies that are not only financially successful but also take ecological and social responsibility seriously.

This article explains what sustainable investments are all about, how to find green ETFs and stocks, and what to look for when making your selection.

What Does Sustainability Mean in Investments?

In general, sustainable investing refers to investments in companies and funds that meet environmental, social, and ethical standards. The ESG analysis plays a central role here, as it sets the framework for evaluating the sustainability of companies.

ESG Criteria: Environmental, Social, and Governance

The ESG criteria (Environmental, Social, Governance) are the standard for assessing companies based on their sustainability. These criteria encompass three main areas:

Environmental: Evaluates how well a company addresses environmental factors such as climate protection, energy consumption, waste management, and resource conservation.

Social: Examines how a company interacts with employees, suppliers, and society. This includes fair working conditions, human rights, and social responsibility.

Governance: Assesses the quality of corporate governance, including transparency, ethics, diversity, and anti-corruption measures.

Companies that perform well in ESG criteria are often considered sustainable because they take responsibility for the environment and society.

Differences Between Sustainable and Traditional Investments

The main difference between sustainable and traditional investments lies in the way companies are selected. Traditional investments focus primarily on financial metrics and returns. Sustainable investments, on the other hand, consider both financial performance and the ecological and social impacts of companies.

The goal of sustainable investments is to achieve financial returns as well as positive impacts on society and the environment. By adhering to ESG criteria, companies with negative impacts, such as fossil fuels, weapons, or tobacco, are excluded, while companies in sustainable areas like renewable energy, fair labor practices, or eco-friendly production are favored.

How to Find Sustainable ETFs

Sustainable ETFs provide a simple way to invest diversely and responsibly. But how can you find the right ETFs that align with your ethical and financial goals?

What to Consider When Choosing Sustainable ETFs

When selecting a sustainable ETF, you should consider several criteria to ensure that your investments meet your sustainability requirements and are also financially attractive:

ESG Criteria: Make sure the ETF only includes companies with high ESG ratings. Navigating all these ratings can be challenging as a retail investor. That’s exactly why we created our Impact Check—you’ll find stocks and ETFs that you can filter according to your specific values.

Exclusion Criteria: Check whether the ETF excludes companies from controversial industries, such as fossil fuels, arms manufacturing, or tobacco. ETFs that take these criteria into account are often referred to as SRI (Socially Responsible Investing) ETFs.

Fund Size and TER (Total Expense Ratio): As with all ETFs, pay attention to the fund size and the expense ratio (TER). Larger funds are often more stable and liquid, while a low TER ensures that more of your returns remain with you. You can also find this information in our ETF Search tool.

How to Select Sustainable Stocks

If you prefer to invest in individual companies rather than ETFs, there are also many sustainable stocks you can add to your portfolio. However, selecting the right companies requires careful analysis.

Criteria for Selecting Sustainable Companies

To find the best sustainable stocks, choose companies that demonstrate environmental and social responsibility. Here are some key criteria:

Business Model: Invest in companies whose business model is based on sustainable products or services. Examples include companies in renewable energy, green technology, or sustainable agriculture.

ESG Ratings: As with ETFs, pay attention to the ESG ratings of the company. Companies with high ESG scores have demonstrably implemented environmentally friendly and socially responsible practices. You can also use our Impact Check here.

Transparency and Reporting: Do you prefer companies that openly report on their environmental impacts and social initiatives? Regular sustainability reports are a good sign that the company takes responsibility and acts transparently. These details are available in our Impact Check as well. Each company’s dashboard displays how well they report and includes access to all sources.

Future Prospects: Sustainable companies are often active in forward-looking industries that benefit from global trends such as climate protection, sustainable energy, and social justice. Ensure the company operates in a sector with long-term growth potential.

Avoiding Greenwashing: How to Recognize Genuine Sustainability

Greenwashing refers to companies’ attempts to falsely present themselves as eco-friendly or sustainable to improve their image with consumers and investors without truly adopting sustainable practices.

With our Impact Check and our transparent sustainability evaluation methodology, we strive to eliminate greenwashing. Additionally, here are some tips to help you recognize it:

Independent Assessments: Don’t rely solely on a company’s marketing claims.

Check for Exclusion Criteria: Look at whether the company engages in controversial business practices, such as investing in environmentally harmful industries or supporting human rights abuses. Genuine sustainable companies avoid such practices.

Long-term Initiatives: Companies that invest in long-term sustainability initiatives are often more credible than those that implement only short-term measures. Review the company’s long-term plans for reducing CO2 emissions or transitioning to renewable energy.

Conclusion

Sustainable investing allows you to put your money into companies that strive for financial success as well as ecological and social responsibility. By carefully selecting sustainable ETFs and stocks, you can ensure that your investments contribute to a better future while also generating returns. Look for transparent ESG ratings, such as the money:care Impact Check, to avoid greenwashing and support genuine sustainability.