Updated in April 2026
Impact Funds or Impact ETFs* are much like Sustainable ETFs: They invest in publicly traded shares of companies that drive the green transition or tick at least some sustainability boxes. The difference is, however, that an impact fund also actively engages the companies they invest in. When investing in the stockmarket, that’s pretty much the only way to create actual change in the world. And if that sounds surprising, you should definitely also read my dedicated post on the topic: Impact Investing in the Stock Market? Think Again.
*ETF is short for “Exchange-traded fund”, which means the fund can be bought and sold on a stock exchange. Since that is the case for most funds that are accessible to retail investors such as you or me, I will use “ETF” and “fund” interchangeably.
Disclaimer:
Please note that my evaluation of the options below are all based on my own personal experience and subjective assessment. I am not a finance professional, so none of it constitutes investment advice. Remember: It’s your money and you’re ultimately responsible for what you do with it. However, this list will definitely help you in getting a broader overview of what you CAN do to invest with a positive impact.
What are Impact ETFs?
The main difference between a run-of-the-mill “Sustainable Fund/ETF” and an “Impact Fund” is the idea of “active ownership”. Active ownership means an investor does not just passively hold the investment in his or her portfolio. Instead, he or she makes use of the rights that come with owning shares in a company, particularly voting rights. Active ownership could mean, for instance, challenging an advertising company about their marketing campaign for a fossil fuel firm. Or asking a car manufacturer why they don’t focus more on EVs. This is not something the investor does him- or herself, but the fund manager or other “activist investors”. Check out my dedicated post if you want to know more about how this works.
An alternative way of defining an Impact ETF is if it defines specific ways in which it wants to produce sustainable outcomes. This means that the fund manager sets quantitative targets that the fund aims to achieve, e.g. a reduction of carbon emissions across the investment portfolio. In the EU, the Sustainable Finance Disclosure Regulation (SFDR) requires “Impact” investments so set such targets. The SFDR also requires disclosure on how these goals are to be achieved through investment decisions. These disclosures must then be made available online and updated annually. Searching for “Art. 9 funds” (based on the SFDR article describing the requirements) can be a good way of finding Impact ETFs.
Sustainability Impact Potential
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The rule that a company don’t see a single cent when you buy their share also holds for Impact Funds. Same as with regular funds or when buying individual shares, you will almost always buy the shares from another investor. I’ve said it before and I will say it again: the stock market is not the best place to go looking for impact. But, through active ownership, you at least have an indirect way of influencing a company’s way of doing business.
Or, to potentially influence the company, I should say. Because asking a company to take action doesn’t mean they will actually do it. After a shareholder resolution is brought up, all shareholders can vote on it. And because most shareholders are still mostly looking for profit, the success of such an initiative is far from guaranteed. In 2025, a collective of Impact Investors asked Best Buy, an American retailer, to set up an action plan for climate action. Only 13% of investors voted in favour. That’s not a very good value, but still sufficient to create attention for climate action by showing that some investors care. Often, investor activists need to repeatedly push their initiatives before companies finally take real action. If repeated attempts don’t come to fruition, the managers of an Impact Fund may sell the shares in the company (as happened in the Best Buy case).
Impact ETFs are suitable for you if:
> You have a long investment horizon (5+ years) because, like individual shares, funds can fluctuate.
> You don’t know enough about individual companies or want to invest in many companies at once to achieve better diversification.
> You are willing to pay a small premium for the knowledge that your money actually works for good.
> You’re motivated enough to put in some extra time to find funds that actually pursue an active ownership approach, since it’s not always super obvious. I’m listing some examples below, but that doesn’t mean these are necessarily suitable for you.
Pros and Cons of Impact ETFs
Advantages
- Your capital can create (some) actual impact through the fund managers active ownership approach.
- Decent diversification. Unless you choose a thematic one, many impact funds are diversified enough to make it a fairly resilient long-term investment.
- Strong exposure to sustainability stars. Companies actively shaping a sustainable society and best placed to benefit from the shift, resulting in potentially higher returns.
Disadvantages
- Hard to find (see examples – I don’t know many). The best way is to start by looking for specifically green banks and see if they offer any investment products themselves.
- Can be pricey. Expect annual fees of at least 1% with traditional providers, more commonly 1.5% of your invested capital. That’s about 0.5%-1% more than with regular “Sustainable” funds.
- Often less diversification and thus somewhat higher risk than a regular ETF. The stock market has known only one direction for most of history and that’s up. But if you need to sell your fund-based investments to cover an urgent or important expense, you might have to sacrifice some return or even sell lower than your original investment if your timing is bad. This obviously holds for all stock-based investments. But impact funds are usually more focused (i.e. less diversified) and thus arguably less resilient than a broader ETF without engagement, especially when they just track an index.
Examples
- Some more traditional impact-oriented fund providers are GLS Bank in Germany, Triodos in the Netherlands and Ethos in Switzerland. You can also check for so-called “Art. 9 funds”, a name used because they follow article 9 of the European Union’s Sustainable Finance Disclosure Regulation (SFDR). By law, these need to measure and track their impact and, in return, can call themselves Impact Funds. All Triodos funds and some GLS funds are set up after Art. 9.
- Inyova is currently my favourite provider of active stock market investments (see my 2025 review here, including an analysis of the long-term performance of my portfolio). Up until 2025, an algorithm allowed you to create a portfolio tailor-made to your values. But in January 2026, they transformed their investment solution into a typical Impact ETF as I describe it above. Unfortunately, they’re currently only open to Swiss and German investors.
- Carbon Collective is active in the United States and often mentioned in green investor forums. I don’t know them myself yet, but on researching their offer noticed their very low fees of about 0.35%. They are, however, only open to investors with a United States residence according to my information.
- During my research, I found some additional options from smaller, specialised banks, but these often require an investment of several ten thousand Euros or even into the hundred thousands. Some of the funds I list above also need a minimum investment but it’s much lower.
Conclusion: Impact ETFs are the sweet spot between impact and accessibility
The impact you can have by investing in Impact ETFs is usually indirect and not guaranteed. Nevertheless, it’s the best you can hope for when investing in the stock market. Impact ETFs also retain most other advantages that come with stock market investments: easy access, quickly resellable, and at least reasonable degrees of diversification. The main drawback, in my opinion, is that it can be hard to tell if an ETF is really impact-oriented. While the fund provider will usually be keen to market such a feature, it’s best to check twice and look into their investment strategy or at least the investment factsheet. There, search for any indication that the fund manager uses ethical voting criteria and actively engages with portfolio companies. Alternatively, they may also have a list of quantitative targets (KPIs) that they want to achieve. If that’s the case, you’ve found yourself an Impact ETF!
Is the IMPACT in Impact ETFs still not capitalised enough for you? Then take a look at alternative investments that directly fund projects or companies needing capital. Or take a step back and get started with my Beginner’s Guide to help determine what investment suits your needs.