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25th
Feb 2020
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Choosing Ethical Stocks and Shares ISAs

Choosing Ethical Stocks and Shares ISAs

Choosing ethical Investment ISAs mean you can put your money where your mouth is, by investing your cash in line with your principles. But how do you choose the best place for your investment? 

ISAs are accounts with a tax-free wrapper allowing you to enjoy tax-free returns from investments. Ethical ISA funds are used to invest in unit trusts, gilts, the stock exchange, life assurance and other ventures along those lines.

With the advent of the climate change crisis dominating the headlines, more and more people are trying to live the most ethical, eco-friendly way possible to minimise their impact on the planet. This includes the type of unit trusts, gilts, stocks and ventures that people are looking to invest in.

What makes the ISA “Ethical”?

Ethical Investment ISAs are accounts which specifically invest your money in socially responsible stocks and shares.

By choosing an ethical investment ISA, you can enjoy tax-free returns on your investments which align with your principles.

Depending on the provider you choose for your Ethical Investment ISA, the following industries will generally be excluded from investment opportunities:

  • Tobacco
  • Alcohol
  • Pornography
  • Gambling
  • Fur trade
  • Armaments
  • Oil companies
  • Mining companies
  • Fire arms manufacturers

This is due to a variety of concerns about these industries and companies ranging from environmental and human rights considerations. These are considered to be harmful for the environment or society, so they’re excluded from investments from Ethical Stocks and Shares accounts.

Some might not necessarily exclude all of these – but rather will examine each individual investment opportunity and company in order to make a decision about an investment. For example, while an investor might be apprehensive about putting money behind an oil company, should that company be working on alternative energy solutions then this might make it a consideration.

I want to open an Ethical Investment ISA. What Do I Need to Consider?

When choosing an account, you need to answer the basic question of what matters to you. What are the values which you want to put your money behind? Are you specifically concerned about human rights? Or about animal rights? Or perhaps you are passionate about environmental issues.

Decide what your priorities are – then go shopping.

There are a great range of accounts out there, with lots of different options - meaning whether you have really strong views on one specific issue, or you just want to generally know your money is making positive change in the world, there will be an account for you.

Is an Ethical Investment ISA or an Ethical Cash ISA for me?

If you are willing and able to leave your funds in an ISA for longer periods of time, such as five years, then an Ethical investment ISA is a good fit for you. If you will need access to your cash sooner, a fixed-rate or Instant Access Cash ISA might be better suited to your needs.

Like all other investment ISAs, when putting money away you need to be aware that the stock market will fluctuate. This means you could end up getting less money back than you invested if your stock performs poorly.

How Many Ethical Stocks and Shares ISAs can I have?

Since you can only open one Ethical ISA per tax year, it’s a good idea to shop around before you choose the account and provider which is right for you.

But you can hold more than one Ethical Investment ISA, as long as you haven’t opened more than one a year. So if you invested in an Ethical Stocks and Shares ISA in the 2019/2020 tax year, you can open a totally new one in tax year 2020/2021.

Read more about Ethical Investment ISAs

Junior ISAs

Junior Ethical ISA

from Legal & General

Regular Savings
  • Investment Options: Invest from £20 pm or from £100 lump sum. The L&G stocks and shares Junior ISA is a great way to help you save for a child or grandchild, up to the annual allowance of £4,368 for the 2019/20 tax year.

Why we like it: L&G offer a "Future World" range allowing you to invest in funds that don’t just track the market – they seek to make positive change. e.g. The Future Word sustainable Opportunities Fund invests in a wide range of company shares, bonds, property and real assets (including property, land and infrastructure) which meet's L&Gs long term sustainable investment criteria, based on environmental, social and governance factors, while the Future World Climate Change identifies companies that are critical to the shift to a low-carbon economy and are paying special attention to their actions.

Important: Please remember the value of your investment and any income from it may fall as well as rise and is not guaranteed. You may get back less than you invest.

Investment Fund Supermarket ISAs

Ethical Equity

from Kames Capital

Allows ISA Transfers
  • Protection Scheme: FSCS
  • Fund Choice: Invest via Hargreaves Lansdown fund supermarket to access this fund
  • Invest From: £25 per month or £100 single

Why we like it: Investing ethically often involves avoiding certain companies or sectors. These constraints mean striking a balance between investing ethically and delivering strong performance is no easy task. The fund manager Audrey Ryan is one of few fund managers who have handled the constraints of an ethical fund well over the long run.

Important: Please remember the value of your investment and any income from it may fall as well as rise and is not guaranteed. You may get back less than you invest.

Future World Ethical ISA

from Legal & General

Allows ISA Transfers
  • Fund Choice: Managed Ethical Investment Funds
  • Invest From: £20 per month or £100 single

Why we like it: The Future World fund range range allows you to invest in funds that seek to make positive change. The Gender in Leadership UK Index Fund tilts the investments in the fund towards companies with better gender diversity, while the Future World Climate Change identifies companies that are critical to the shift to a low-carbon economy and are paying special attention to their actions.

Important: Please remember the value of your investment and any income from it may fall as well as rise and is not guaranteed. You may get back less than you invest.

High Income ISAs

High income ISA ideas:

ISAs Products

Cash ISAs

Fixed Rate & Instant Access ISAs:

Cash ISAs: 

Stocks & Shares ISAs

Types of Stocks and Shares ISA include: 

Stocks and Shares ISAs

Latest News

New (tax) Year, New You: How to Make the Most of Your ISAs in 2020/2021

6th April 2020

Dawn breaks on the morning of April 6th 2020 – the sun is (potentially shining) and the new tax year has begun. With £20,000 of possibilities for your tax allowance for this new tax year – we’ve answered the most common questions that savers have at this stage. 

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