Compare ESG ISA
Select the best ESG ISA to make the most of your tax free allowance this year.
Investment ISAs put your capital at risk & you may get back less than you originally invested
- Fund Choice: Choice of more than 200 sustainable investment options
- Invest From: £25 a month or any lump sum
Why we like it: The UK’s first rated list of ethical investments to help you align investments with your personal values. Building your investment portfolio can be tough – and it is even more difficult when you want to choose ethical investments. That can mean a lot of research. The ii ACE 40 makes the job easier for you. Interactive Investor select over 200 sustainable investment options to help you identify the socially responsible and environmental funds, investment trusts and exchange-traded funds (ETFs) that best reflect your own values.to help you identify the socially responsible and environmental funds, investment trusts and exchange-traded funds (ETFs) that best reflect your own values. Capital at Risk. *Open to new customers opening an ISA or GIA between 1st and 31st July (and existing customers adding an ISA only, so not available to existing customers opening a GIA. No minimum deposit required
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- 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: £20 pm
Good to know: An investment linked to an index that includes global companies but minimal, if any, direct exposure to non-renewable energy, adult entertainment, alcohol, gambling, tobacco or weapons and companies that do not meet the UN Global Compact Principles. Winner of ‘Leading Mutual Insurer’ and ‘Best Tax Efficient Products Provider UK’ at the World Business Outlook Awards 2023. Capital at Risk
- 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
Why we like it: This fund works on a “best ideas” basis with 40 to 50 company holdings. The fund applies both negative and positive screening. There is also a focus on long-term themes and trends such as infrastructure and changing demographics. The fund has reasonable ongoing charges of 0.76% pa for an actively managed fund.
- Fund Choice: The Fund aims to track the performance of the Solactive L&G Enhanced ESG UK Index. Capital at risk.
- Invest From: £25
Tracks shares in companies that demonstrate good environmental, social and governance efforts and are incorporated or headquartered or which have their principal business activities in the UK.
- 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
Why we like it: This fund works on a “best ideas” basis with 40 to 50 company holdings. The fund applies both negative and positive screening. There is also a focus on long-term themes and trends such as infrastructure and changing demographics. The fund has reasonable ongoing charges of 0.76% pa for an actively managed fund.
- 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
Why we like it: Launched in 2002 Impax Environmental Markets is one of the UK’s largest environmental focused investment trusts which aims to enable investors to benefit from growth of more efficient delivery of services such as energy, water and waste.
- 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
Why we like it: The fund manager seeks to identify profitable and well managed businesses that make a positive impact on society operating in markets that offer attractive structural growth opportunities.
- Fund Choice: Tracks companies in the clean energy sector. Capital at risk.
- Invest From: £25 a month or any lump sum
Good to know: A member of the Interactive Investor ACE 40 ,this fund is passively managed by BlackRock and reflects the return of the S&P Global Clean Energy Index (the benchmark). The Index is designed to provide exposure to the leading publicily listed companies in the global clean energy business from both developed and emerging markets. The fund has reasonable ongoing charge of 0.65% pa.
Show MoreWhat is a ESG ISA?
A ESG ISA is an ISA where your money is used to invest in assets that come under the umbrella of investments that seek positive returns and a long term impact on the Environment, Social issues and business Governance.
Basically ESG funds seek to have a positive impact on the world.
Investing within an ISA wrapper allows any investment returns to be generated tax efficiently.
ESG funds typically invest in the companies involved in activities that deal with mitigating climate change and new technologies that seek to provide better prospects for the environment.
They are suitable for people who are willing to leave funds in their ISA for long periods such as five years. They are also good for people who are willing to withstand a bit more fluctuation in the value of their fund.
What investments are likely to be considered for ESG investment?
A fund manager taking into account ESG principles means that environmental, socials and governance criteria will be at the top of the list when connsidering what to invest in.
For example when assessing a company to invest in a fund manager will look at:
- Environmental track record
- Energy consumption
- Policy on climate change
- Waste management
- Community engagement
- Human rights record
- Employee relations policy
- How the business is run
- Diversity of the management team
- Quality of the management team & potential conflicts of interest
ESG investing puts on a more even footing investing responsibly with the need to deliver investment returns for investors.
Why is ESG investing important?
According to the United Nations the world’s population is growing at a rate of 83 million people per year. By the year 2050 it is calculated that there will be 9.9 billion people on our planet with over 25% aged 65+.
The need to ensure that the planet can cope with this increasing dynamic on our finite resources is more important than ever.
ESG investing is becoming increasingly popular with a greater awareness by investors for the need to invest sustainably. There is now more than $21.4 trillion invested sustainably.
In the UK sustainable investment for 85% of 18 to 36 year olds sustainable investment is seen as an important factor when investing.
What is the difference between Ethical and ESG Investing?
Ethical investing tends to avoid companies that have a negative impact on the environment or society. In an ethical fund the manager will typically screen out companies involved in certain activities or industries e.g. oil and gas, tobacco.
With ESG investing fund managers typically focus on companies that are having a positive impact on the world, so its less black and white when it comes to the types of companies that might be included in a fund.
This approach means that a company in the oil and gas sector for example which has a progressive approach to clean energy might be included.
Frequently Asked Questions
Can I lose money in an ethical ISA?
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.
Can I transfer an existing JISA into an Ethical JISA?
Yes, you can transfer any existing Cash or Stocks and Shares JISA into a new Ethical Stocks and Shares JISA.
You will need to complete a transfer form with your new JISA provider.
You also need to transfer 100% of any previous JISAs because you can only have one JISA open per child at any time.
You can also transfer a Child Trust Fund (CTF) into an Ethical Junior ISA in the same way.
Can I transfer my ISA into an Ethical ISA?
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.
How do I open an ethical ISA?
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.