3 Magnificent Green ETFs to Buy in 2026

A green exchange-traded fund (ETF) invests specifically in assets tied to environmentally beneficial activities, such as clean-energy stocks or green bonds. The way it works is quite straightforward: The green ETF pools your money with other investors to purchase a basket of environmentally focused investments that are then traded on the exchange like stocks.

These three ETFs offer different ways to marry equity investing with clean energy and sustainability. The first provides broad global exposure to clean energy. The next one concentrates on the solar industry, and the final ETF on the list keeps you near the S&P 500 (SNPINDEX: ^GSPC) while standing by stocks that focus on environmental, social, and governance (ESG) issues.

1. iShares Global Clean Energy ETF (NASDAQ: ICLN)

The iShares Global Clean Energy ETF tracks the S&P Global Clean Energy Transition Index, which comprises global equities across solar, wind, hydro, and other renewable energy sources. With a portfolio of 105 holdings (as of June 8), the fund is one of the oldest and most widely purchased clean energy ETFs.

With a relatively attractive expense ratio of 0.39%, this ETF provides you instant access to leaders in the clean energy sector. Recent top holdings include:

• Bloom Energy Class A shares
• First Solar
• NextPower Class A shares global select market

The fund may be right for you if:

• You're seeking broad, diversified exposure to global clean energy.
• You're looking for an investment that's generally less volatile than a solar-only ETF.
• You're willing to hold it for the long term.

If you're uncomfortable with the higher volatility often associated with emerging sectors, such as clean energy stocks, this may not be right for you. And if you're seeking income, this ETF probably won't be ideal, as many clean energy companies reinvest profits for growth rather than paying regular dividends.

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2. Invesco Solar ETF (NYSEMKT: TAN)

The Invesco Solar ETF is a highly focused, industry-specific fund that tracks the MAC Global Solar Energy Index. Specifically, Invesco Solar is interested in solar power equipment, solar project development and installation, and related solar technology and components.

Unlike the much broader ETF discussed previously, Invesco Solar has a much narrower scope, holding only 32 stocks (as of June 5). Rather than act as a broad clean-energy fund, this ETF is laser-focused on the solar industry. At 0.70%, the fund has the highest expense ratio of the three ETFs mentioned here. Still, with a gain of about 25% this year, you may find the expense ratio acceptable.

A significant share of the fund's capital goes to big players, such as:

• First Solar
• NextPower
• Enphase Energy

This ETF offers heavy representation of U.S., Asian, and European solar companies and may be a good fit if you're specifically seeking targeted exposure to solar. However, keep in mind that the solar industry is highly sensitive to factors beyond your control, such as policy changes, interest rates, and component pricing, and may be more volatile than you initially expected.

Invesco Solar typically fits best as a single spoke in a well-balanced portfolio.

3. SPDR® S&P 500 ESG ETF (NYSEMKT: EFIV)

This ETF tracks the S&P 500 Scored & Screened Index (formerly known as the S&P 500 ESG Index). The fund starts with the traditional S&P 500 and excludes companies that don't meet certain ESG criteria. The index goes further by tilting its weighting toward higher-scoring ESG companies.

Because the fund aims to maintain a sector and risk profile similar to the S&P 500, it's not necessarily a clean-energy or climate-only product but rather a broad, large-cap U.S. equity fund.

With an attractive expense ratio of 0.10%, you will have exposure to technology, financials, healthcare, consumer goods, industrials, and communication services. Still, it's considered ESG-friendly because it excludes companies engaged in activities you may consider controversial, such as tobacco, certain fossil fuel-related companies, and some weapons makers.

The top three of the fund's 330 holdings (as of June 5) are names you'll easily recognize, including:

• Nvidia
• Microsoft
• Alphabet CL A (NASDAQ: GOOGL)

If you're hoping to balance your portfolio with ESG-minded investments, this ETF might be what you're looking for -- particularly if you want the potential profit of broad market exposure aligned with ESG sensibility.

If you're bothered by the fact that clean-energy concerns do not entirely drive the fund, you still have the comfort of knowing that there are clean-energy ETFs. However, if you're just beginning to focus on ESG-conscious companies, the fund can serve as a base that you selectively layer with other, more targeted ESG-friendly ETFs.

Dana George has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Bloom Energy, First Solar, Microsoft, Nextpower, and Nvidia. The Motley Fool recommends Enphase Energy. The Motley Fool has a disclosure policy.