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Compare Ethical ISAs

Find the best ethical stocks and shares ISA to invest this year's tax free allowance.

Investment ISAs put your capital at risk & you may get back less than you originally invested

Socially Responsible Portfolio

from Nutmeg

Allows ISA Transfers
  • Fund Choice: Nutmeg allow you to align your investments with your values. With continuous oversight from the Nutmeg in-house investment team, their SRI portfolios place an emphasis on environmental, social and governance factors. Capital at risk.
  • Invest From: Min. £500 single

Sustainable Stocks & Shares ISA

from Shepherds

Allows ISA Transfers
Regular Savings
  • Fund Choice: Invest in a brighter future for you and the world, with Shepherd's sustainable ISA. The fund aims to invest in innovative, sustainable companies that offer both the potential for long-term growth and a positive benefit to society. Capital at risk.
  • Invest From: £30 pm

Future World ESG UK Tracker

from Legal & General

Allows ISA Transfers
Regular Savings
  • Fund Choice: The Fund aims to track the performance of the Solactive L&G Enhanced ESG UK Index. Capital at risk.
  • Invest From: £25

Sustainable Leaders

from Royal London

Allows ISA Transfers
Regular Savings
  • Fund Choice: Invests in companies that are likely to benefit from measures taken to improve the environment, human welfare and quality of life. Capital at risk.
  • Invest From: £25 pm

Responsible Global Equity

from BMO

Allows ISA Transfers
Regular Savings
  • Fund Choice: Invests in companies whose operations are considered to be making a positive contribution to society and seeks to avoid companies which, on balance, are felt to be harming the world, its people or its wildlife. Capital at risk.
  • Invest From: £25 pm

Positive Change

from Baillie Gifford

Allows ISA Transfers
Regular Savings
  • Fund Choice: Actively managed fund that invests in global company shares where products or services make a positive impact on society or the environment. Capital at risk.
  • Invest From: £25 pm

Environmental Markets

from Impax

Allows ISA Transfers
Regular Savings
  • Fund Choice: Investment trust that invests predominantly in companies that provide, utilize, implement or advise upon technology-based systems, products or services in environmental markets, particularly those of alternative energy and energy efficiency, water treatment and pollution control, waste technology & resource management. Capital at risk.
  • Invest From: £25 pm

Better World

from Montanaro

Allows ISA Transfers
Regular Savings
  • Fund Choice: Actively managed Fund that seeks to invest in high quality companies whose products, services or behaviour are deemed to make a positive impact on society and which emphasize sound environmental, social and governance (ESG) practices. Capital at risk.
  • Invest From: £25 pm

Global Clean Energy ETF Tracker

from iShares

Allows ISA Transfers
Regular Savings
  • Fund Choice: Tracks companies in the clean energy sector. Capital at risk.
  • Invest From: £25 a month or any lump sum

ii ACE 40 investments

from Interactive Investor

Allows ISA Transfers
Regular Savings
  • Fund Choice: 140+ Ethical Investments. Capital at risk.
  • Invest From: £25 a month or any lump sum
  • Investment Options: A selection of 140+ funds, investment trusts and ETFs that they believe offer high-quality ethical investment choices, across a range of markets.

My Ethical Choice ISA

from Scottish Friendly

Allows ISA Transfers
Regular Savings
  • Fund Choice: International Ethical Fund which has been designed to invest in shares of global companies that have been assessed to meet ethical criteria.
  • Invest From: £10pm

What is an ethical ISA?

An ethical ISA is a Stocks and Shares ISA account that invests in funds that are managed in line with a particular ethical investment strategy.

They do this by excluding certain companies and industries from its underlying investments, such as gambling or tobacco production companies.

If you invest in individual shares that you pick yourself, then you just need to avoid companies in industries that you are not comfortable with.

However, if you are investing in managed or passive funds then this becomes more difficult. Your investment is controlled by a fund manager and your money is spread across many different companies that they choose.

Therefore, the term ethical ISA, or ethical Stocks and Shares ISA, usually refers to an ISA that specifically consists of ethical funds.

These are funds that are put together with certain ethical principles in mind. They will refrain from investing in certain industries or companies while still competing for the best returns in their sector.

The best ethical Stocks and Shares ISA for you will depend on several factors from performance to charges, and this guide will give you the need-to-know information before you invest.

What do ethical ISAs invest in?

Ethical funds often invest the same way as standard managed funds, with the exception of certain ethically questionable assets. Perhaps a better question to ask is: what do ethical investment ISAs not invest in?

The main industries in which ethical Stocks and Shares ISAs will avoid investing in are:

  • Gambling
  • Armaments
  • Fur trade
  • Alcohol
  • Tobacco
  • Pornography

Some additional factors that they will take into consideration are:

  • Is the company environmentally responsible?
  • Is the company socially responsible?
  • Does the company treat its employees, customers and suppliers fairly and ethically?

Some funds exclude all of the above, some only a few, and what is excluded depends on the strategy of each fund.

Some ethical funds also avoid investing in industries such as oil and mining, due to the environmental impact these companies can be responsible for.

Additionally, ethical funds also exclude companies guilty of human rights violations for its employees or any other people affected by its practices.

What are some other examples of ethical investing?

Another way to identify an ethically managed fund is by the ESG (Environmental, Social and Governance) term.

An ESG fund will invest in companies that respect these three core values. Essentially, the underlying companies they invest in need to be environmentally friendly, socially responsible, and run fairly and ethically.

ESG funds usually have ‘ESG’ in the fund name so they are easily identifiable.

Do ethical ISAs perform well?

An ethical investment ISA has just as much potential to perform as well as a standard ISA investment.

While fund managers may be more limited in the companies they invest in due to their ethical requirements, there are several benefits of investing in companies that operate with ethical responsibilities in mind:

  • Less likely to face regulatory fines

Government bodies and industry regulators can levy huge fines against corporations breaching ethical, social or governance rules.

Some of these fines are not to be taken lightly. They can seriously damage a company’s longevity and its reputation once the fines are made public.

A company that practices ethically as a priority is less likely to get into this kind of trouble.

  • Ahead of regulatory changes

With global issues such as climate change becoming more and more of a threat every day, legislation is constantly being introduced to keep businesses operating responsibly. This includes due care for the environment and the social cultures that they affect.

The companies that are already ahead of this curve have less catching up to do. They could be the ones that thrive in their industry in the long run.

  • Social Considerations

If a company treats their employees, customers or suppliers poorly, the repercussions could be detrimental to its overall success.

The media can expose unethical social practices and seriously damage the reputation of big businesses. For example, Amazon has faced intense scrutiny over the treatment of their employees and have had to take serious action to make reparations.

If customers are treated poorly, the industry regulator can step in and conduct a wide-scale review of their practices and enforce compensation where applicable.

These are the types of issues that ethical ISA funds will look to avoid. They will do this via their stock selection, and also via their own stewardship with regards to the companies they invest in.

Many fund managers will use their shareholder power to influence a company’s behaviour at shareholder votes and meetings towards an ethical and sustainable code of practice.

What are the negatives of an ethical ISA?

If you are looking for an ethical Stocks and Shares ISA then you will have less choice than with a standard investment ISA.

Although there are plenty of ethical ISA funds and investment options out there, there are no doubt fewer options than there are with standard investments.

Finding the best ethical ISA for you will depend on the underlying investments that you choose and the ongoing charges that your ISA provider will take from your portfolio.

Oliver Roylance-Smith
Edited by Oliver Roylance-Smith - ISA.co.uk

Frequently Asked Questions

If you have a Stocks and Shares ISA already then you will just need to sell your investments and purchase ethical investments instead.

If you need to transfer to another provider for access to a wider range of ethical funds, you can do so by completing a form with your new ISA provider.

You can also easily transfer a Cash ISA into an ethical ISA using this same method.

Ethical ISAs are completely tax-free as they have the ISA wrapper applied to them. This means that capital gains, income and dividend tax will not apply to your investments.

Yes, you can withdraw money at any time from your ethical ISA investment.

Yes, you can. The value of your underlying ethical investments will go up and down, so you could lose money, particularly over the short term.

You can open most ethical ISAs online, over the phone or by post. You will need to make a debit card contribution or set up a Direct Debit to start your account.

You have an annual allowance of £20,000 for Stocks and Shares ISAs in the 2021/22 tax year.

Your ethical ISA provider will take ongoing and ad hoc charges from your account. These will be outlined in the provider’s terms and conditions. You should consider this when you compare ethical ISAs to invest in.

Important Risk Information:

The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website aims to provide information to help you make your own informed decisions. It does not provide personal advice based on your circumstances. If you are unsure of how suitable an investment is for you, please seek personal advice.