Compare Green ISAs
Select the best green 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
- 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
- Invest From: Min. £500 single
Why we like it: If investing responsibly is important to you then Nutmeg have put together a portfolio tilted towards companies and bond issuers that have high environmental, social and governance (ESG) standards. Nutmeg invest in exchange traded funds (or ETFs) that avoid companies engaged in controversial activities while focusing on those that lead their peers on ESG. No tie-ins, no set-up fees, no exit charges. Easy, online set up in minutes. Start with as little as £500. Capital at risk. Approved by Nutmeg 09/08/2024
- 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
- 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
Why we like it: 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.
What is a Green ISA?
A Green ISA is typically a Stocks and Shares ISA that invests in funds and shares with an environmental consideration in mind.
This means that any companies that your Green ISA invests in, either directly as shares in the stock market or through a fund or managed portfolio, support or provide environmentally friendly products and practices.
Green ISAs also exclude certain industries and specific companies that are deemed to have a negative impact on the environment. For example, certain energy or mining companies may be excluded from Green ISA portfolios if their practices are deemed to be environmentally unsustainable.
Green ISAs also fall under the umbrella term of Ethical ISAs, which are ISA accounts that invest with environmental, moral and social responsibilities in mind.
Ethical ISAs usually refrain from investing in any of the following industries:
- Gambling
- Armaments
- Fur trade
- Alcohol
- Tobacco
- Pornography
You could also invest in a Green Cash ISA if the bank or provider you open it with has a completely green investment and lending policy.
What do Green ISAs invest in?
Green ISAs invest in everything that standard Stocks and Shares ISAs do, but with the elimination of certain holdings that breach their eco-friendly criteria.
Here are some of the most popular investment products held within Green Stocks and Shares ISAs:
- Shares – shares of individual companies
- Managed Funds – a collective investment managed by professionals
- Tracker Funds – a collective investment that tracks a sector or market but is not actively managed
- Ready-Made Portfolios – A combination of all of the above and potentially more, but with the oversight of a management team that align the portfolio to a specific risk profile
In a Green ISA, all of the above investments would need to be tailored to eco-friendly and sustainable companies.
Do Green ISAs perform well?
Green ISAs have the potential to perform just as well as, or even better than, standard Stocks and Shares ISAs.
There are even some arguments for green investing that make Green ISAs more attractive from a returns perspective than normal:
1. Green companies could be ahead of the curve in terms of public support
With climate change becoming more and more of a global concern, consumers and investors are becoming more aware and critical of the companies they use and invest in – two factors that could significantly affect the success of a company in the long term.
2. Green companies could be ahead of regulations and operational restrictions from governmental policy.
If governments crack down on unsustainable business practices, green companies with an existing positive impact on the environment will already have green policies and operations in place, and they could thrive in their respective industries ahead of their competitors.
What are the disadvantages of a Green ISA?
The main disadvantage of green investing is limiting the number of investments that are available to you.
Although there are more and more green investment options coming to market every day, there will always be some investments that you can’t get exposure to with a green investment strategy, simply because of their environmental impact.
This means that, although you can still make the same or potentially greater returns in a green portfolio, there are fewer companies, funds and other investments to choose from to get you there.
How do you open a Green ISA account?
To open a green ISA account, you’ll first need to decide if you want to use a ready-made green ISA portfolio or pick and choose your own green-friendly funds and shares.
To pick your own, you’ll need a self-select Stocks and Shares ISA platform and you’ll need to research the green investments you want to buy.
To invest in a ready-made green ISA portfolio, you’ll need to find an ISA manager that offers a green portfolio service.
When you’re ready to open a Green ISA, you will usually be able to do so online or over the telephone with your chosen Green ISA provider.
You’ll need to top up with a debit card to start investing, or with a regular direct debit contribution to save money monthly.
Frequently Asked Questions
Am I committed to one ISA provider forever?
No. You can switch providers with an ISA transfer if you wish. You can also contribute to other ISA providers in separate tax years.
Are ISA accounts safe?
ISA accounts are authorised and regulated by the Financial Conduct Authority (FCA). This means that all ISA providers are covered by the Financial Services Compensation Scheme (FSCS) for up to £85,000 if they go out of business.
Please note that this may not apply to the underlying holdings within a Stocks and Shares ISA, and will not cover standard investment losses.
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 withdraw money from an Ethical ISA?
Yes, you can withdraw money at any time from your ethical ISA investment.
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.
How much can I contribute to an ethical ISA?
You have an annual allowance of £20,000 for Stocks and Shares ISAs in the 2023/24 tax year.