Best ESG ETFs in Canada (2026): XESG, ESGA, GEQT and Other Sustainable ETFs Compared

“ESG” is not one rule. The Ontario Securities Commission notes that fund names with words like sustainable, socially responsible, ethical or green have no standard definition, and that ESG funds reach their goals through different strategies. Two funds with ESG in the name can hold different companies, even with the same objective. This page sorts the main Canadian-listed ESG ETFs by the approach each issuer describes, sets out what Canada’s securities regulators expect from a fund with an ESG name, and compares the funds in one dated table from the issuers’ own figures. It doesn’t recommend a fund.

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What makes an ETF “ESG”, and how do the approaches differ?

ESG stands for environmental, social and governance. The OSC’s investor site lists the strategies ESG funds commonly use, and a fund may combine more than one:

• Negative screening (exclusions). The fund leaves out securities or companies that fail its ESG standards; some, for example, leave out fossil fuel companies. BMO says the index behind ESGA, the MSCI Canada Selection Index, drops companies with significant revenue from tobacco, alcohol, gambling, conventional weapons and civilian firearms.
• Best-in-class (positive screening). The fund buys companies that score well, or better than their peers, on ESG measures. BMO describes ESGA this way: it holds Canadian companies rated higher by MSCI than their peers, and its index aims for half the market value of each sector.
• Minimum standard plus screens. iShares says XCSR, which follows the MSCI Canada IMI Choice ESG Screened 10% Issuer Capped Index, holds Canadian companies that clear a minimum ESG standard set by the index provider, and that it cuts exposure to fossil fuel production and other industries with high sustainability risk.
• Tilted (“optimized”) indexes. XESG follows the MSCI Canada IMI Extended ESG Focus Index. iShares describes it as an optimized index that leans toward companies with favourable ESG characteristics, as MSCI judges them, while keeping risk and return close to its parent, the MSCI Canada Investable Market Index.
• ESG integration. Here the manager weighs ESG factors that matter to risk and return alongside the usual financial ones when choosing investments. NBI says NSCE aims for long-term growth while following a sustainable approach, and its ETF Facts describes an actively managed portfolio that differs from market indexes.
• Thematic funds. These buy into an ESG-related trend, such as one tied to climate change. Clean and renewable energy funds are compared on our energy ETFs page; other themes are in sector and thematic ETFs.

The ESG scores behind these choices come from research firms, and the OSC notes that each firm may use slightly different criteria. One fund may not cover every issue a reader cares about.

What do Canadian regulators expect from a fund with an ESG name?

The Canadian Securities Administrators set out their staff’s view in CSA Staff Notice 81-334 (Revised) ESG-Related Investment Fund Disclosure, first issued January 19, 2022 and revised March 7, 2024. It gives guidance on how investment funds describe and market their ESG features. Its main point on names, in the CSA’s words: “the name and investment objectives of a fund should accurately reflect the extent to which the fund is focused on ESG”. In staff’s view, a fund with ESG in its name should mainly hold assets that meet its own ESG criteria. For a fund that tracks an index, the index’s ESG focus should match the one in the fund’s name, and a fund that holds other funds should hold ones whose focus matches its own. The notice is guidance: the CSA says it adds no new legal requirements. Its aim includes reducing greenwashing, which it describes as disclosure or marketing that misleads investors about a fund’s ESG features, whether on purpose or not.

The main ESG ETFs compared

The table lists Canadian-listed ESG stock and all-in-one ETFs from iShares, BMO and NBI that publish an MER, grouped by where their holdings are and set out in the order of the net assets each issuer publishes. US-listed ESG funds are left out; US-listed vs Canadian-listed ETFs compares the two kinds of listing. Clean-energy funds are on the energy page.

Issuer-published figures. Holdings counts are each as of the date shown under them. MER as of BMO: the latest audited year (fact sheet of September 30, 2026); NBI: December 31, 2025; iShares: June 30, 2026 (each issuer's latest reported MER). Each ticker links to the issuer's page, which has the current price, holdings, distributions and performance.

The approach column is a short paraphrase of how the issuer describes the fund or its index; the index methodology and the prospectus hold the full rules. There are no return or yield columns: how an ETF did in the past can’t tell you how it will do next, and each ticker links to the issuer’s page, where its ETF Facts are posted. An ETF Facts document also says who the fund is meant for.

How do the funds differ?

Approach. In one region, an issuer can offer two methods side by side: iShares runs XESG on a tilted index and XCSR on a minimum standard with screens.

How many companies. ESGA, whose index aims for half of each sector, holds 39 companies, fewer than the 129 in XESG and 134 in XCSR. NSCE holds 30. A fund holding a few names can swing more over short periods than a broader one.

Region and form. ESGG holds 3 ETFs rather than stocks directly, and so do the all-in-one funds: GEQT holds 3 iShares ETFs that generally use ESG strategies, and BMO says ZESG picks its stocks and bonds using the ESG ratings of its underlying ETFs’ index providers. All-in-one ETFs explains how those portfolios work.

Fees. The Canadian index funds charge 0.16% (ESGA) and 0.17% (XESG and XCSR); the US funds 0.22% to 0.23%; the international ones 0.28% to 0.33%. NSCE, the actively managed fund, charges 0.69%.

Distributions. XSEM, XDSR and XSEA pay twice a year; the table shows the rest.

What does the ESG version cost next to the plain index fund?

Each pair below is from one issuer. XESG’s index starts from the MSCI Canada Investable Market Index and ESGA’s from the MSCI Canada Index, so each ESG fund’s starting list of companies comes from an MSCI index.

XESG vs XIC. XESG’s MER is 0.17% and XIC’s is 0.06%, a gap of 0.11 percentage points a year. XIC tracks the S&P/TSX Capped Composite Index, while XESG’s index starts from the MSCI Canada Investable Market Index.

ESGA vs ZCN. ESGA charges 0.16% against 0.06% for ZCN, 0.10 points apart. ZCN follows the S&P/TSX Capped Composite Index; BMO says ESGA’s index is built from the MSCI Canada Index.

GEQT vs XEQT. Both are iShares all-equity portfolios of ETFs. GEQT’s MER is 0.25% and XEQT’s 0.19%, 0.06 points apart; GEQT’s underlying ETFs generally use ESG strategies. XEQT is compared with its rivals on the all-in-one page.

An MER comes out of the fund’s returns, so a gap adds up over time; the MER calculator shows how much.

Can an ESG fund still hold oil, gas or other companies you’d not expect?

Yes. The CSA notes that funds with ESG objectives may invest in companies that appear inconsistent with ESG values, where the fund’s stated objectives and strategies allow it.

XESG is one example. On its fund page, iShares showed 7.60% of the fund in oil sands as of October 9, 2026, with 0.00% in thermal coal and 0.00% in tobacco. iShares counts a company in the oil sands and thermal coal figures when it earns more than 5% of its revenue from that activity, as MSCI ESG Research defines it, and works the figures out from MSCI’s data. The figures are updated monthly. On XCSR’s page, which follows a screened index, iShares showed 0.00% in oil sands as of October 9, 2026.

To check a fund yourself, the issuer’s page lists the holdings, and iShares notes that an index provider’s screens can use revenue thresholds, described in the prospectus, other fund documents and the index methodology. The OSC points ESG investors to the prospectus and the ETF Facts, where a fund states its objectives and strategies. iShares adds that corporate actions can leave a fund or index holding a security that doesn’t meet its ESG criteria for a time.

What don’t ESG ETFs do?

• The label doesn’t set the exclusions. There’s no standard definition of the names, and each fund’s own objectives and strategies decide what it may hold.
• Ratings differ. ESG scores depend on the research firm behind them.
• A narrower fund can move more. A fund holding fewer companies may be more volatile over short periods than a broad one.
• Foreign stocks still face withholding. Canadian-listed ETFs holding international stocks are generally subject to foreign withholding tax; see international ETFs and withholding.
• Fees and taxes apply. The MER is paid whether the fund gains or loses. In a non-registered account, a fund set up as a mutual fund trust sends a T3 slip; see how ETFs are taxed.
• They aren’t covered by deposit insurance and can lose money.

Where to go next

• Energy ETFs, including clean energy funds
• All-in-one ETFs
• Sector and thematic ETFs
• Robo-advisors in Canada, some of which offer ESG portfolios
• MER calculator
• Where to buy ETFs: compare brokers
• All ETF guides