Socially responsible ETFs, including those holding bonds, represent the convergence of two different and highly popular areas of the financial world. On the one hand, socially responsible investing (SRI) gained interest among many investors, particularly millennials. Investors focused on SRI tend to maintain sensitivity to environmental, social, and governance (ESG) factors. They select investments based in part on the extent to which they agree with a company's motives and practices.

Key Takeaways

  • Socially responsible ETFs, including those holding bonds, represent the convergence of two different and highly popular areas of the financial world.
  • Investors focused on socially responsible investing tend to maintain sensitivity to environmental, social, and governance (ESG) factors.
  • ETFs offer investors exposure to portfolios of securities, such as bonds, at low cost and include all varieties of specialization.
  • The top socially responsible bond ETFs for 2021 include NUBD, EAGG, BGRN, GUDB, and SUSB.

Exchange traded funds (ETFs) are a multi-trillion-dollar industry with thousands of competitors. These funds offer investors exposure to portfolios of securities, such as bonds, at low cost and include all varieties of specialization. It's no surprise, then, that socially responsible ETFs have become highly popular in recent years.

Although different investors categorize socially responsible ETFs by several metrics, these funds all focus on companies that meet issuer qualifications for sustainability. Comparing socially responsible ETFs means comparing funds that focus on many different sectors, company sizes, and more. In 2020, socially responsible bond ETFs with longer terms to maturity generally did better because of declining interest rates.

Below, we'll take a look at some of the best bond ETFs that emphasize social responsibility. We'll compare their overall performance to one another during the first 10 months of 2020. We'll also take a look at some of the rules used to determine which bonds make it into the ETFs.


Bond ETFs are usually passively managed, so performance is mostly driven by maturity and interest rate changes. That means one year's winners are often the next year's underperforming ETFs.

1. NuShares ESG U.S. Aggregate Bond ETF (NUBD)

Performance for 2020 (through early November): +6.95%

The NuShares ESG U.S. Aggregate Bond ETF (NUBD) focuses on bonds from the Bloomberg Barclays MSCI US Aggregate ESG Select Index. In order to select constituents, NUBD evaluates bonds based on ESG criteria. Bonds that have successfully passed the screening process are weighted by market value within sectors. NUBD was launched in September of 2017 and carries an expense ratio of 0.20%. 

2. iShares ESG Aware U.S. Aggregate Bond ETF (EAGG)

Performance for 2020 (through early November): +6.78%

The iShares ESG U.S. Aggregate Bond ETF (EAGG) came in second on the list of socially responsible bond ETFs for 2020, returning roughly 6.78% for the first 10 months. This fund focuses on the aggregate bond market, tracking a market value-weighted index of bonds denominated in U.S. dollars. In order to be in EAGG's portfolio, bond issuers must meet sponsor iShares' ESG criteria, including stipulations regarding pollution, anti-competitive practices, and more. Involvement in civilian firearms, tobacco, and other select industries will also preclude an entity from inclusion in the portfolio. EAGG was launched in October of 2018 and carries an expense ratio of 0.10%. 

3. iShares Global Green Bond ETF (BGRN)

Performance for 2020 (through early November): +6.00%

The third socially responsible bond ETF on our list is the iShares Global Green Bond ETF (BGRN). BGRN focuses on bonds meeting MSCI's Green Bond Principles. In order to be included, bonds must be used to fund projects related to climate adaptation, green building, water sustainability, energy efficiency, pollution control, and similar focuses. The issuers of bonds included in the portfolio must also maintain independent procedures used to evaluate, select, and report on green projects. BGRN was launched in November of 2018 and carries an expense ratio of 0.20%. 

4. Sage ESG Intermediate Credit ETF (GUDB)

Performance for 2020 (through early November): +5.52%

The Sage ESG Intermediate Credit ETF (GUDB) tracks a group of U.S. dollar-denominated, intermediate-term, investment-grade bonds. The fund's advisors created a framework to assign each issuer an ESG score. Only those issuers that place in the top third of their peer group are considered for inclusion in the portfolio. GUDB was founded in October of 2017 and carries an expense ratio of 0.35%. 

5. iShares ESG Aware 1-5 Year USD Corporate Bond ETF (SUSB)

Performance for 2020 (through early November): +4.33%

The iShares ESG 1-5 Year USD Corporate Bond ETF (SUSB), like EAGG, tracks an index of bonds based on issuer sustainability practices. Unlike EAGG, however, SUSB focuses on short-term corporate debt. SUSB does not hold bonds related to companies involved in certain weapons, tobacco, or business controversies that have occurred in the previous three-year period. SUSB was launched in July of 2017 and carries an expense ratio of 0.12%.