Best Ethical Stocks And Shares ISAs – Which Is Right For You?

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At Generation Money our purpose is to help you make better financial decisions. All of our articles are independently written and/or edited by finance professionals and adhere to strict editorial guidelines. This post may contain links which, if clicked, could result in a payment to the site. These links never impact our editorial policy and all rankings and product recommendations remain unbiased. For more details, read how this site is financed.

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Best Ethical Stocks and Shares ISA

This is our guide to the best ethical stocks and shares ISAs in the UK. 

We’ll look at the ethical stocks and shares ISA options from robo-advisors, general investment platforms and specialist providers. This includes assessing them on costs, investment options, ease of use and safety.

We also outline how to choose the right ethical stocks and shares ISA for your needs. 

I previously worked on a start-up ethical investment platform so I know the market well, including the potential pitfalls.

What You Need To Know

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  • An ethical stocks and shares ISA combines the tax advantages of an ISA with ethical, or ESG-friendly, investments
  • Ethical investing has different interpretations, but there are a range of investment platforms that cater to these
  • Robo-advisors offer automated investing and come with many ethical options. Our top pick is Moneyfarm which has 7 socially responsible portfolios
  • Our top pick for building your own ethical stocks and shares ISA portfolio is Interactive Investor for its ACE 40 list of specially selected sustainable funds
  • InvestEngine is our pick for the lowest cost method of building your own ethical stocks and shares ISA portfolio, but you’re limited to ETFs only

What You Need To Know

  • An ethical stocks and shares ISA combines the tax advantages of an ISA with ethical, or ESG-friendly, investments
  • Ethical investing has different interpretations, but there are a range of investment platforms that cater to these
  • Robo-advisors offer automated investing and come with many ethical options. Our top pick is Moneyfarm which has 7 socially responsible portfolios
  • Our top pick for building your own ethical stocks and shares ISA portfolio is Interactive Investor for its ACE 40 list of specially selected sustainable funds
  • InvestEngine is our pick for the lowest cost method of building your own ethical stocks and shares ISA portfolio, but you’re limited to ETFs only

Read on for our full rundown of the best stocks and shares ISAs in the UK, or use the links below to skip ahead:

Ethical Stocks and Shares ISAs – What Are They?

Ethical, or Environment, Social, Governance (ESG) investing, has been one of the big themes of the investment world in recent years.

ESG can mean different things to different people. There is a big focus on the environmental side which gets a lot of the attention. However, it can also mean issues such as worker’s rights, the circular economy and local production. 

Increasingly, investors are following the trend from consumers in wanting to know exactly what their money is going towards. To meet this demand, there’s a growing number of ethical stocks and shares ISA options available.

These combine tax-efficient investing with funds and portfolios that seek to put your money towards ESG-friendly investments. This has led to two developments in the retail investment industry. Existing platforms are opening or adding ethical options to their current offerings, and at the same time new standalone ethical investment platforms are springing up.

For standalone platforms it’s been a somewhat mixed picture so far with the closure of Clim8, one of the leading ethical investment platforms. However, others such as Circa5000 (more on them below) continue to raise money through crowdfunding campaigns and see their customer base grow.

This increasing interest in ESG can also be seen from the four giant investment managers. Fidelity, Vanguard, Blackrock and State Street – who manage a combined $24 trillion in investments (as at Dec-22) – have shown an increasing willingness to use their shareholdings to hold company boards to account when it comes to ESG issues. 

When I worked in Investor Relations at a major bank in 2021, there were already efforts to engage with institutional investors around our ESG credentials.

As a result of this increased corporate awareness and desire to satisfy ESG credentials, it could be argued that soon there will be enough critical mass that specialist ESG funds and investments will no longer be required. For now, though, we provide a rundown of the best ethical stocks and shares ISAs available in the UK.

Best Ethicals Stocks and Shares ISA – Robo-Advisors

Robo-advisors are a great place to begin when looking for suitable ethical stocks and shares ISAs. They’re particularly good if you don’t want to manage your own investments. 

A robo-advisor works by putting together a portfolio based on your attitude towards risk, and then managing this portfolio on your behalf. Each portfolio is made up of Exchange Traded Funds (ETFs), so the investment managers who run your portfolio won’t be picking individual stocks or bonds.

In this way, robo-advisors are able to construct ethical portfolios which consist of ESG-friendly ETFs according to the criteria of their ethical investment philosophy.

Moneyfarm

Moneyfarm logo

Alongside its 7 risk-based portfolios, Moneyfarm offers 7 ‘socially responsible’ portfolios, which also vary by risk level. 

Moneyfarm’s socially responsible investment policy is centred on environmental impact. This includes lower carbon emissions, transitioning away from fossil fuels, pollution impact, and other metrics.

According to Moneyfarm, “simulated performance shows that from 2013 to 2021* investing in our most adventurous portfolio would have earned you up to 5% more than a regular non-ESG portfolio”. 

This is when testing current ESG portfolios against their non-ESG equivalent simulations and not their own regular mid-range portfolio due to its composition changing over the modelling period. Remember, though, past performance is not a reliable indicator of future performance.

To construct their socially responsible portfolios, Moneyfarm uses ESG data and tools provided by MSCI, an investment research company. Investing in them works the same way as their regular portfolios – you sign up, complete a questionnaire and are then recommended a portfolio suitable for you.

Moneyfarm – Key Details:

  • Ethical Portfolios: 7 ethical / socially responsible
  • Products: Stocks & Shares ISA, SIPP, Junior ISA, GIA
  • Fees:
    • Up to £10,000: 0.75%
    • £10,000 – £19,999: 0.70%
    • £20,000 – £49,999: 0.65%
    • £50,000 – £99,999: 0.60%
    • £100,000 – £249,999: 0.45%
    • £250,000 – £499,999: 0.40%
    • Over £500,000: 0.35%
  • Minimum Investment: £500
  • FSCS Protection: Yes
  • Trustpilot Rating: 3.7

Note that Moneyfarm’s fees work by applying the percentage charge to your entire portfolio. E.g. when investing £80,000, the entire amount will be charged at 0.60%.

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New customers, or customers with an unfunded account, who open a Moneyfarm portfolio by 11th April 2024 will get up to £750 cashback. Ts&Cs apply.

Capital at risk if you invest. FCA regulated and FSCS protected.


Read more details on Moneyfarm in my independent Moneyfarm review.

&me

Owned by M&G Wealth, which is part of one of the largest asset managers in the UK, &me is a relatively new entrant to the robo-advisor market. 

It works in a very similar way to most robo-advisors. You sign up, complete a questionnaire on your attitude towards risk and then you will be recommended a portfolio to invest in. 

With &me, you can choose its ‘Targeted Range’ of portfolios, which will invest your money in a way that supports a ‘more sustainable future for the planet, our society, and those we love.’

This means the portfolio will be constructed using ESG-friendly ETFs, hand-picked by experts at M&G Wealth, to create a diversified portfolio. 

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You can also book a call or video chat with an &me consultant, either online or directly through the app. This human touch helps set it apart, and will benefit you if you would like further guidance before committing your money.

&me – Key Details:

  • Portfolios: 6 ‘Targeted Range’ portfolios
  • Products: Stocks & Shares ISA, SIPP, Junior ISA, GIA
  • Fees:
    • Up to £10,000: 0.75%
    • £10,000 – £19,999: 0.70%
    • £20,000 – £49,999: 0.65%
    • £50,000 – £99,999: 0.60%
    • £100,000 – £249,999: 0.45%
    • £250,000 – £499,999: 0.40%
    • Over £500,000: 0.35%
  • Minimum Investment: £500
  • FSCS Protection: Yes
  • Trustpilot Rating: 3.8

Note that &me’s fees work in a similar way to Moneyfarm’s by applying the percentage charge to your entire portfolio. E.g. when investing £80,000, the entire amount will be charged at 0.60%.

Plum

Plum logo

Plum is not just an automated investing app. It’s an investment, savings and money management app that allows you buy individual stocks and shares as well as invest in funds. 

In addition, you can save money in interest paying accounts and you will have access to tons of money management features. For full details on how Plum works read my in-depth Plum investment review.

It doesn’t have the range of ready-made ethical portfolios to invest in that Moneyfarm and &me provide, but it does offer 3 ESG funds: Balanced ESG, Socially Conscious and Growth ESG.

However, it’s more accessible for beginner investors seeking to put their money into an ethical stocks and shares ISA, as you can start investing from just £1.

Plum – Key Details:

  • Funds:
    • 3 ESG funds; 20+ additional non-ESG funds
    • Plus 1,200 stocks to choose from with Plum Basic, Pro & Ultra; 3,000 with Premium; 
  • Products: Stocks & Shares ISA, SIPP, GIA, interest-earning savings accounts
  • Fees:
    • Individual stocks & shares: Free
    • FX conversion fee: 0.45% (you will need to convert your cash into the currency of the stock you want to buy)
    • Bank transfers: Free
    • Fund investing: minimum £2.99 per month subscription
  • Minimum Investment: £1
  • FSCS Protection: Yes (but not for primary pocket)
  • Trustpilot Rating: 4.4

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Best Ethicals Stocks and Shares ISA – General Investment Platforms

If you’re confident about making your own investment decisions, you can create your own ethical portfolio in a Stocks and Shares ISA.

The larger investment platforms in the UK are increasingly providing tools and insights around ESG to help investors choose ethical investments. 

Interactive Investor

Interactive Investor logo

One such investment platform with a range of ESG tools and insights is Interactive Investor (ii). It offers over 200 sustainable investment options to invest in. From these, it has created a shortlist called ACE 40 which is a list of funds sorted by asset class which Interative Investor has picked.

Its ACE criteria stands for:

  • Avoids – Funds that focus on simply excluding companies, sectors or specific business practices
  • Considers – Funds that consider sustainable and/or environmental, social and governance (ESG) issues or themes when balancing positive and negative factors
  • Embraces – Funds that focus on companies delivering positive social and/or environmental outcomes

Interactive Investor has put a lot of effort into its ethical offering, more so than its main rivals. If you’re confident about building your own ethical portfolio in a stocks and shares ISA, Interactive Investor provides plenty of help. 

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ISA: New customers who open an Interactive Investor ISA or Trading Account by 19th May will get £100 in free trades.

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Interactive Investor – Key Details:

  • Funds: ACE40 list of ii selected sustainable investment funds. Access to ESG funds
  • Products: Stocks & Shares ISA, JISA, SIPP, GIA, Company Trading Account
  • Platform Fees based on Plan:
    • Investor Essentials: £4.99 per month (max. investment of £50k)
    • Investor: £11.99 per month
    • Super Investor: £19.99 per month
    • Pension Builder: £12.99 per month
  • Dealing Fees:
    • UK shares & funds and US shares: £3.99 per transaction on all Plans
    • 1 free monthly trade with Investor plan, 2 with Super Investor
    • Non-US international shares charged at £9.99 per transaction for all accounts except Super Investor which is £5.99
    • Dividend reinvestment £0.99 for all plans
  • Minimum Investment: No minimum investment to open an account. £25 per month minimum for regular investing
  • FSCS Protection: Yes
  • Trustpilot Rating: 4.7

Interactive Investor can be pricey if you have under £50k to invest due to the way it charges a fixed monthly fee. The more you invest, the lower the proportion of your investment the fee makes up. Read my comparison of Interactive Investor vs Hargreaves Lansdown here.

InvestEngine – Lowest Cost DIY Ethical Portfolio

InvestEngine logo

Although InvestEngine doesn’t offer ready-made ethical portfolios to invest in, you can open a stocks and shares ISA and create your own ESG portfolio using ETFs.

There are over 550 ETFs to choose from on InvestEngine’s platform, including over 100 ESG funds. To pick your own funds, InvestEngine does not charge any platform fees at all. 

This means InvestEngine is one of the lowest cost ways to build your own ethical Stocks and Shares ISA.

InvestEngine – Key Details:

  • Funds: Over 100 ESG funds, out of over 550 ETFs
  • Products: Stocks & Shares ISA and GIA
  • Fees:
    • DIY Portfolio: FREE
    • Managed Portfolios (no ethical option): 0.25% fee
  • Minimum Investment: £100
  • FSCS Protection: Yes
  • Trustpilot Rating: 4.4

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Best Ethicals Stocks and Shares ISA – Specialist Providers

There are an increasing number of specialist ethical or ESG investment providers. However, the picture is somewhat mixed with the recent closure of Clim8, one of the leading ethical investment start-ups.

Below are the main ethical-focused platforms available.

Circa5000

Circa5000, formerly known as Tickr, is an investment app with a focus on ethical or impactful investing. This means exposure to companies that are sustainable, eco-friendly, eco-conscious and socially responsible.

It was founded in 2018 and now has over 160,000 users. All of the funds available to invest in with Circa5000 revolve around ‘impact’ investing, which is another name for ethical investing.

You have the option to create a DIY portfolio from the funds available through Circa5000, or to invest in its ready-made options. These ready-made portfolios work in a similar way to a robo-advisor, with 3 themes to choose from. 

Once you’ve chosen a theme, you can then choose a risk level from Cautious, Balanced or Adventurous.

Circa5000 – Key Details:

  • Funds: 5 thematic investments funds (3 for ready-made option), 3 risk levels for each or choose how to allocate your investment yourself
  • Products: Stocks & Shares ISA, GIA, Junior ISA, SIPP
  • Fees:
    • Monthly subscription: £1
    • Platform fee: 0.45% fee
  • Minimum Investment: £5
  • FSCS Protection: Yes
  • Trustpilot Rating: 4.7

Triodos

Established in the UK in 1995, Triodos is a bank which has sustainability and ethics at its core. It offers banking and savings products as well as an ethical stocks and shares ISA.

With its ethical stocks and shares ISA, you can choose from 3 of Triodo’s own managed funds to invest in. 

Triodos – Key Details:

  • Funds: 3 in-house funds
  • Products: Stocks & Shares ISA, GIA, Cash ISA, bank accounts
  • Fees: 0.40% platform fee
  • Minimum Investment: £5
  • FSCS Protection: Yes
  • Trustpilot Rating: 3.4

Triodos has had some negative recent feedback (see it’s Truspilot rating) around customer service, although this is mainly for its current accounts. However, it offers a wide range of ethical investment options.

Recent years have seen a big increase in ethical investing as a concept, and that’s been reflected in the number of ethical investment options and platforms that have been created.

As a result, there is a good deal of choice when looking to open an ethical stocks and shares ISA. Here are some factors you should consider when deciding which one is right for you:

How to Choose The Best Ethicals Stocks and Shares ISA For You

Recent years have seen a big increase in ethical investing as a concept, and that’s been reflected in the number of ethical investment options and platforms that have been created.

As a result, there is a good deal of choice when looking to open an ethical stocks and shares ISA. Here are some factors you should consider when deciding which one is right for you:

Cost

Despite wanting to invest in a responsible way, costs will still be a factor for you to consider. 

This is one of the reasons we included InvestEngine on this list as it has very competitive pricing compared to its rivals despite not offering a standalone ethical investment option. If you’re happy to pick your own investments, though, it’s hard to beat on costs.

Some providers will charge more for ethical investment options. Many platforms will reduce fees the more you invest, so check carefully how much you are willing to invest and which fee range you will sit in with each provider. 

Note that ESG fund costs tend to be higher than non-ESG fund costs, so you will usually end up paying more for ESG investments than non-ESG investments regardless of provider.

Performance

There is some debate as to the performance of ESG funds vs non-ESG or traditional investment funds. As mentioned above, costs on ESG funds tend to be – but are not always – higher than non-ESG funds, and this will eat into your returns over time.

Many of the platforms on this list above provide past performance of their ESG funds. Be sure to check this and compare it to a suitable benchmark – but remember that past performance is not a reliable indicator of future performance. 

Your Values

We began this article by discussing how values and definitions of ‘ethical’ and ‘sustainable’ can be subjective. Some may argue that any carbon-emitting investment cannot be classed as ‘sustainable’, but others argue that companies attempting to transition away from carbon emissions while still emitting carbon are worthy of investment.

So be sure to think about what you personally value the most and check if the investment provider has catered for this in their ethical ISA criteria.

Your Investment Experience

If you’re a beginner when it comes to investing, you may feel more comfortable putting your money into a robo-advisor who will manage your funds for you. 

On the other hand, if you have a certain level of investment experience then you may want to build your own portfolio in an ethical stocks and shares ISA. In some cases, this can also work out cheaper – see InvestEngine above. 

But remember, your capital is at risk when you invest so consider whether you are confident enough to build your own portfolio.

Best Ethicals Stocks and Shares ISA – Final Verdict

Ethical investing is gaining traction across the finance world and the number of ethical stocks and shares ISAs on offer is likely only going to increase.

Before signing up with an ethical ISA provider, you should consider a number of factors including cost, past performance, your level of investment experience and your values. In addition, you only get to pay into one stocks and shares ISA per year, so think carefully before committing. 

If you’re confident in picking your own ethical investments, providers such as InvestEngine represent great value for money. For a wide range of ethical investments to build your own portfolio from, Interactive Investor is a good option. 

But if you’d prefer professionals to manage your money for you, then Moneyfarm and &me provide a good range of ethical stocks and shares ISA portfolios to choose from.

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Get £200 cashback when opening and investing in a SIPP, or transferring a SIPP, to Interactive Investor. Terms apply.

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Interactive Investor – £200 cashback

Get £200 cashback when opening and investing in a SIPP, or transferring a SIPP, to Interactive Investor. Terms apply.

Capital at risk if you invest. Interactive Investor is regulated by the FCA and has FSCS protection.

 

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