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Investing in companies that are socially responsible, sustainable and deemed not to be contributing to climate change – so-called ‘ethical’ investing – is rising up the list of priorities for many consumers.
Sometimes referred to as environmental, social and governance (ESG) investing, this ethics-based approach was once a niche sector, but it is fast becoming mainstream. ESG funds in the UK grew by 64% during 2021, according to the Financial Conduct Authority (FCA) to reach £79 billion. The UK regulator also says the figure for ESG investments globally stands at £18.4 trillion.
But knowing where to invest can feel confusing, with different labels used to describe a broad range of ethical and sustainable investment funds.
The FCA has recently introduced measures to minimise ‘greenwashing’ – the practice of making something appear environmentally responsible when in fact it isn’t. The rules require investment funds to be clearer about their ethical credentials and not mislead investors in their product labelling and marketing.
We analysed a range of stocks and shares ISA providers and investment platforms to find our pick of the best ethical ISA providers (November 2023). We looked for providers who gave consumers a broad choice of ‘responsible’ or ethical investment funds, as well as comparing the charges on ISAs and customer experience scores. There is more detail about our methodology below.
