3 top ETFs that will give your investments a climate-friendly impact

Climate change will continue to have a profound impact on the planet, its people, economies and companies across the world, E-Trade says on its Climate Sustainability page. Decarbonization will be key to addressing those impacts and rising demand as it promises to be one of the most powerful themes in the market in coming decades, its analysts believe.

In fact, the Energy Information Administration forecasts renewable energy consumption in the U.S. could grow six percentage points by 2050 — notably while shares of other sources decline or remain largely stable.

Exchange-traded funds are a convenient way to invest in these climate-related trends. E-Trade’s ETF screener shows 18 nonleveraged funds that contain the word “climate.”

The ETFs invest in companies that are proactively addressing climate change and decarbonization in fields such as alternative energy, sustainable agriculture and pollution prevention/mitigation.

Here are the online brokerage platform’s top 3 picks:

1. Amplify Etho Climate Leadership U.S. ETF

Amplify’s climate-centered fund ETHO seeks investment results that generally correlate (before fees and expenses) to the total return performance of the Etho Climate Leadership Index – U.S. The index tracks the performance of the equity securities of a diversified set of U.S. companies that are leaders in their industry with respect to their carbon impact.

Among the fund’s top 10 holdings at the end of 2023 were Telephone and Data Systems TDS , Nvidia NVDA , Splunk SPLK , Lennox International LII and Akamai Technologies AKAM .

ETHO has traded from a low of $46 to a high of $58 per share over the last 12 months. The fund charges a 0.45% expense fee. Its estimated annual dividend yield is 1.33% and it pays out quarterly. The fund is rated just 2 stars overall by Morningstar but gets a 3-star rating over the past 5 years.

2. SPDR MSCI ACWI Climate Paris Aligned ETF

From the suite of SPDR ETFs, this fund NZAC seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the MSCI ACWI Climate Paris Aligned Index.

The index is designed to exceed the minimum standards for a “Paris-Aligned Benchmark” under the EU BMR. A Paris-Aligned Benchmark is designed to align with a principal objective of the Paris Agreement to limit the increase in the global average temperature to well below 2 degrees Celsius above pre‑industrial levels.

The top holdings for the fund currently are Microsoft MSFT , Apple AAPL , Nvidia, Amazon AMZN and Alphabet GOOG .

NZAC was recently trading at a 52-week high just above $34 a share. It’s expense ratio is 0.12% and its estimated yield is 1.5%, paid semiannually. The fund has a 3-star Morningstar rating overall and in the 3- and 5-year periods.

3. U.S. Vegan Climate ETF

The Vegan Climate fund VEGN seeks to track the performance, before fees and expenses, of the Beyond Investing U.S. Vegan Climate Index. The fund tracks the index in order to invest in companies that offer a humane approach, are animal-friendly and are “good for the environment and good for people.”

Top holdings include Nvidia, Tesla TSLA , Broadcom AVGO , United Healthcare Group {symbol link=UNH] and Visa .

VEGN has traded in a range of $34 to $47 per share over the past year and recently was just off its 52-week high. The expense ratio for this fund is 0.6% and estimated distribution yield is 0.6%. Morningstar rates the fund as 3 stars overall and for the 3-year period.

Read more: 7 stock picks for ESG-conscious investors