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Ethical investment accounts let you invest in companies, funds and portfolios focused on making the world a better place and which avoid companies operating in unethical sectors.

What's in this guide to the best ethical investment accounts?

Best Ethical Investment Accounts 2022

We have ranked, compared and reviewed some of the best ethical investmenting platforms and accounts in the UK that are regulated by the FCA.

Our picks for the best share dealing accounts are based on:

  • over 7,000 votes in our annual awards
  • our own experiences testing the ethical investment accounts with real money
  • an in-depth comparison of the features that make them stand out compared to alternative ethical investment platforms dealing platforms.
  • interviews with the ethical investment account CEOs and senior management

All investing carries risk. This article contains affiliate links which may earn us some form of income if you go on to open a share dealing account. This does not affect our editorial bias, rankings or comparison.

Hargreaves Lansdown

Hargreaves Lansdown: Best overall account for ethical investing

Hargreaves Lansdown lets you invest in a wide range of large and small cap ethical companies as well as investment funds and investment trusts with an ethical bias. You can also build your own portfolio of ethical ETFs with the help of HLs in-house expert reseach.

Pros:

  • No account fee for shares
  • Wide range of shares to buy
  • Excellent ethical investment research

Cons:

  • £11.95 dealing fee quite high
*There is no account charge for shares. Funds are charged at 0.45% for the first £250,000. There is no charge for buying funds, but shares are charged at £11.95 per deal or £5.95 if you do over 20 deals per month.

Interactive Investor

Interactive Investor: Best fixed-fee ethical investing

Interactive Investor provides a specific tax efficient stocks and shares ISA for ethical investing. As well as being able to pick your own ethical companies, funds and ETFs to invest in they have created an ethical growth portfolio, a long list of ethical companies to invest in their II ACE 40 is a list of sustainable investment funds.

Pros:

  • Low share dealing commission
  • £1 minimum deposit
  • ii ACE 40 ethical investment list

Cons:

  • £9.99 fixed account fee
*Dealing commissions are a free trade every month, then UK Shares and Funds, US Shares charged £7.99 or upgrade to a £19.99 “Super Investor” account 2 free monthly trades and deal for £3.99. Regular investing is free.

AJ Bell Youinvest

AJ Bell Youinvest: Best for low-cost ethical investing

AJ Bell Youinvest is the cheapest ethical investment platform for shares, funds and ETFs in sustainable sectors. They provide a wide range of research and analysis on who to invest ethically, as well as constantly update their AJ Bell Favourite funds list with ethical investing choices.

Pros:

  • Account fee capped at £3.50 per month
  • Lots of account types
  • Good research on ethical investing

Cons:

  • £500 minimum investment
  • 0.25% account fee
*Share account fees are capped at £3.50 a month. Dealing costs are £1.50 for funds and £9.95 for shares but drop to £4.95 where there were 10 or more online share deals in the previous month

Nutmeg

Nutmeg: Best robo-advisor for ethical investing

JP Morgan owned Nutmeg lets you invest in a managed pre-made portfolio of ethical-based ETFs. This is a low-cost way of quickly building an ethical investment portfolio run by expert investment managers. 

Pros:

  • Managed ethical investment account
  • Low account fee of 0.75%

Cons:

  • High minimum investment of £500
  • Cannot invest in individual shares
*Nutmeg account fees drop to 0.35% for balances over £100k. There is an addition charged by the investment fund managers of around 0.2% and the market spread on buying and selling portfolios is on average 0.07%

Moneyfarm

Moneyfarm: Excellent choice of risk-based ethical portfolios

Moneyfarm’s ethical investment plans and socially responsible portfolios are designed using funds invested in some of the most forward-thinking and impactful companies in the world – along with many others working hard to improve.

Pros:

  • Simple managed ethical account
  • Set your own risk and reward
  • Low account fee of 0.75%*

Cons:

  • Cannot invest in individual shares
  • £500 minimum investment
*Moneyfarm investing account fees are scaled between 0.75% for accounts between £500 and £50,000, then above £100k are 0.45% to 0.35%. Average investment fund fees are 0.2% and the average market spread when buying and selling is 0.10%

Weathify

Wealthify: Invest ethically from just £1

Wealthify, part of the Aviva Group, lets you invest in either an original portfolio of investments from the UK and overseas or choose an ethical investment plan made from a blend of environmentally and socially responsible investments.

Pros:

  • Managed ethical investment account
  • £1 minimum deposit
  • Low 0.6%* account fee

Cons:

  • Cannot invest in individual

*There are also investment costs of on average 0.16% for original plans and 0.7% for ethical plans. Capital at risk.

Interactive Brokers

Interactive Brokers: Best app for ethical investing

Interactive Brokers IMPACT app makes it easy to find and invest in companies that share your values, helping to better align your portfolio with the kind of world you want to create. The IMPACT app automatically scans your investment portfolio and ranks your position on an ethical basis. It will even suggest more ethical alternatives with a similar investment profile and let you switch with a single click.

Pros:

  • Excellent market coverage
  • Advanced ethical investment app
  • Low-cost share dealing of 0.05% or £1 minimum*

Cons:

  • US-based
  • No share dealing SIPP account
*Minimum dealing commisssions are £1 in the UK or 0.05% of the deal size.

Bestinvest

Bestinvest: Good for ethical investment advice and low costs

Bestinvest has combined low-cost online investing and share dealing with personalised expert advice to help clients choose the right investments for their portfolio. A good choice for large long-term investors.

Pros:

  • Advice and recommendations
  • Low £4.95 share dealing fee
  • No inactivity fee

 

Cons:

  • Uncapped 0.4% account fee for shares
  • No international share dealing
  • No app

*0.2% account fee is for holding ready-made portfolios. above £500,000 it reduces to 0.1%. For other investments the account fee is 0.4% up to £250k. Dealing commissions £4.95 per online share trade, fund dealing is free. 

Compare Ethical Investment Accounts

It’s important to compare accounts Account types when choosing an ethical investment platform as each come with their own pros & cons here you can see which investment platforms offer the most ethical account types from:

  • Managed or DIY Ethical investing – do you have to make your own ethical investment decisions or do experts do it for you
  • Ethical GIAs – a general investment account for regular investing
  • Ethical Stocks & shares ISAs – invest up to £20,000 a year in ethical investments
  • Ethical SIPPs & Pensions – can you invest ethically for your retirement?
  • Ethical Junior SIPPs and ISAs – can you buy ethical investments for your children?
  • Ethical Lifetime ISAs – does the platform offer ethical Lifetime ISAs to help you buy your first house?

Ethical Investing Explained

Ethical and ESG investing is also about focussing on firms that are more socially responsible and better governed. Collectively, these companies tend to score higher in the environment, social, and governance factors (ESG), described below:

  1. Environment – Is the firm a steward of the environment?
  2. Social – Is the firm making a positive impact on its employees, suppliers, customers, and its wider social circle?
  3. Governance – Is the firm showing leadership in internal control, audit, diversity and shareholder rights?

The argument for ethical investment is clear: To make the world a better place by channeling funds into high-ESG firms.

Choosing ethical investments

The first step is to define which sectors to avoid. This is known as negative screening. Generally, there is a common list of sectors to keep clear (see above). But remember that within ethical investing there are sub-sectors, such as Green-Focussed, Health-Focussed, Community-Focussed, Gender-Equality etc.

Ethical investing not investing in companies that engage in unethical operations. Examples of these activities include:

  • Tobacco
  • Defence-related
  • Alcohol
  • Gambling/Casino
  • Adult entertainment

Ethical investing is different from impact investing in that it is about avoiding investing in bad things, where are impact investing is about investing in companies that actively do “good”, like climate tech.

Once the universe is defined, the next step is to apply a ESG scoring mechanism to the firms and rank them.

The last step is to find the best-in-class firms using traditional financial metrics, and build a narrowed list that we can invest in.

The above process, you may observe, is generic. The devil is in the details. How does one apply a EGC scoring mechanism to a firm? What specific financial metrics should we look for? What is the portfolio weightings should we apply?

Ethical companies to invest in

According to Peter Michaelis of the Liontrust UK Ethical 2 Net Acc fund the best ethical companies to invest in through his fund are:

  • Kingspan Group
  • Prudential
  • Smurfit Kappa

Although it is worth noting that the top ten holdings in the ethical fund are:

  1. LEGAL & GENERAL GROUP – 5.09%
  2. PARAGON BANKING GROUP – 4.35%
  3. SMURFIT KAPPA GROUP – 4.27%
  4. PRUDENTIAL – 4.13%
  5. COUNTRYSIDE PROPERTIES – 3.87%
  6. SOFTCAT – 3.75
  7. LONDON STOCK EXCHANGE GROUP – 3.41%
  8. HARGREAVES LANSDOWN – 3.30%
  9. HALMA – 3.24%
  10. OXFORD INSTRUMENTS – 3.17%

So ethical investing funds still have a long way to go before you can call them completely ethical. For instance, the London Stock Exchange earns income from mining and oil companies.

Ethical funds to invest in

Here is a list of ethical funds that you can invest in through a share dealing platform like Hargreaves Lansdown or Interactive Investor.

  • Mirabaud Equities Global Focus
  • Legg Mason ClearBridge US Equity Sustainability Leaders
  • Liontrust Sustainable Future Global Growth
  • BMO Sustainable Opportunities Global Equity
  • Janus Henderson Global Sustainable Equity
  • Liontrust Sustainable Future Absolute Growth
  • Royal London Sustainable World Trust
  • BMO Responsible Global Equity
  • Sarasin Responsible Global Equity
  • Kames Global Sustainable Equity
  • AB SICAV | Sustainable Global Thematic Portfolio
  • Davy ESG Equity
  • Liontrust UK Ethical
  • Royal London Sustainable Leaders Trust
  • Liontrust Sustainable Future Managed
  • Vontobel mtx Sustainable Emerging Markets Leaders
  • Liontrust Sustainable Future UK Growth
  • ASIUK Responsible Equity
  • BMO Responsible UK Equity
  • Janus Henderson Inst Global Responsible Managed
  • Royal London Sustainable Diversified Trust
  • Liontrust Sustainable Future Cautious Managed
  • ASIUK Ethical Equity
  • Thesis Climate Assets
  • Newton SRI for Charities
  • Liontrust Sustainable Future Defensive Managed
  • Janus Henderson UK Responsible Income
  • BMO Responsible UK Income
  • Unicorn UK Ethical Income
  • Royal London Sustainable Managed Growth Trust
  • Rathbone Ethical Bond
  • 7IM Sustainable Balance
  • Royal London Ethical Bond
  • Liontrust Sustainable Future Corporate Bond
  • Royal London Sustainable Managed Income Trust
  • Royal London Short Term Money Market

Ethical ETFs (exchange-traded funds)

ESG-based investment has been around for a decade or so. There are many financial services companies that cater for this niche sector, such as Morgan Stanley Capital International (MSCI). They have build screening frameworks to invest in high-ESG firms. I show one example below.

Example – UBS MSCI World Socially Responsible (LSE: UC44)

In the UK, you can invest in Exchange-Traded Funds (ETFs) to gain exposure to foreign and domestic markets, here is how to invest in ETFs.

Here I pick one ETF that is engaging in socially responsible investing. It is sponsored by UBS and is based on the MSCI Socially Responsible Index (SRI, with factsheet here). LSE-listed with the ticker UC44, the fund has AUM of about £730 million. It has been around since 2013. (Note, there is a sister fund with ticker UB39.)

According to the MSCI SRI fact sheet, the SR index excludes firms “involved in Nuclear Power, Tobacco, Alcohol, Gambling, Military Weapons, Civilian Firearms, GMOs and Adult Entertainment” and that “current constituents of the MSCI SRI Indexes must have an MSCI ESG Rating above B and the MSCI ESG Controversies score above zero to be eligible.” Finally, the construction the SRI is “float-adjusted market capitalization weighted.

Here are some of the most popular ETFs for ethical investors and what they invest in:

What do they invest in?ETF Name & Ticker
AgeingIShares Ageing Population UCITS ETF (AGES)
Smart CityIShares Smart City Infra. UCITS ETF (CT2B)
IT, DigitalIShares Digital. UCITS ETF (DGIT)
Health, BioIShares Healthcare Innovation UCITS ETF (DRDR)
DigitalLyxor MSCI Digital Economy ESG Filtered UCITS ETF (EBUY)
WorldIShares MSCI World ESG Enhanced UCITS ETF (EGMW)
MobilityLyxor MSCI Future Mobility ESG Filtered UCITS ETF (ELCR)
Gender, EqualityLyxor Global Gender Equality (DR) Ucits ETF (GEND)
Climate, Paris AlignedHSBC MSCI World Climate Paris Aligned UCITS ETF (HPAO)
Climate, Clean EnergyIShares Global Clean Energy UCITS ETF (INRG)
Climate, ImpactRIZE ENV. IMPACT 100 UCITS ETF (LVNG)
World, Low VolatilityIShares Edge MSCI World Min. Volatility ESG UCITS ETF (MVEW)
Auto, RoboticsIShares AUTO & ROBOTICS UCITS ETF (RBTX)
Digital, SecurityIShares Digital Security UCITS ETF (SHLG)
WaterLyxor World Water UCITS ETF (WATL)
SRI, World, Paris AlignedAmundi Index MSCI World SRI UCITS ETF (WSRI)

Ethical Investing FAQs:

Yes. Ethical investing is a growing financial phenomenon that could last for years. Public companies, with increased public scrutiny, can no longer shy away from their public responsibilities. Those firms that showed leadership in this area may benefit from higher investment ratings.

However, from the investor standpoint, it is better to buy into a ‘ethical’ fund that can diversify into multiple holdings and regions. Maintaining a ESG framework is difficult and so it should be outsourced to professional financial firms. Even some newcomers, such as Nutmeg, are latching on to ethical investing. You should do so too.

Similar to ESG investing, ethical investments are growing in popularity because of the rise in social awareness and transparency. For example, many investors are asking: “Do I want to be associated with firms that thrive from gambling/addictions?” Probably not.

As the popularity of ESG investing continues to rise, more banks will likely offer more choice in ESG investment products, like HSBC.

Yes. Although with all types of investing you can also lose money. If you compare the 5-year performance to 2019 of this ETF and the FTSE 100 Index, the return difference is stark (see below). If you compare MSCI SRI and MSCI World Index, there are some improvements too over traditional investments.

Yes, if you invest with an FCA-regulated ethical investment platform as your money is protected by the FSCS

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