Fossil-free Funds

Ethical buying guide to fossil-free investment funds, from Ethical Consumer

Ethical buying guide to fossil-free investment funds, from Ethical Consumer

This is a product guide from Ethical Consumer, the UK's leading alternative consumer organisation. Since 1989 we've been researching and recording the social and environmental records of companies, and making the results available to you in a simple format.

Our guide to carbon-divested funds for an ethical investor. 

This guide includes: 

  • Ethical and environmental ratings for 13 funds. 
  • Best buy recommendations
  • Carbon-divested companies
  • Funds investing in renewable energy


This product guide is part of the special report: Ethical Money

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Last updated: July 2016



Fossil-free Ethical Funds


There is about £15 billion invested in green and ethical funds in the UK.[1] However, this is only about 1.2% of the amount invested in ‘mutual funds’ as a whole, a figure that hasn’t budged for a decade. [2]

Image: Investment in ethical shopping guide

This lack of take-up is sad, especially considering the number of studies that have now been done comparing the financial performance of ethical and non-ethical funds. Because overall, the evidence suggests that ethical funds don’t do any worse financially.[3]

Carbon-divested funds are much newer and so it is harder to know how they are likely to do. And yet an analysis of the five years prior to 2015 suggested that investors who dumped holdings in fossil fuel companies actually outperformed those that did not.[4]



Our research


To create this guide we used an American website called, which allows anyone to easily access information on investment funds’ fossil fuel holdings.

The website awards 5 fossil free ‘badges’. They are:

  • Free of the Filthy 15 (a US-focused list of the top 15 carbon-emitting US coal companies)
  • Free of the Carbon Underground 200 (a list of the top 100 global coal companies and the top 100 oil and gas companies, ranked by the potential carbon emissions content of their reported reserves. The list is maintained by Fossil Free Indexes)
  • Free of all Coal Industry
  • Free of all Oil/Gas Industry
  • Free of Fossil-Fired utilities.



Carbon divestment lists six UK investment funds that are both socially responsible and fully fossil free, thus being awarded all 5 divestment ‘badges’. They are:

  • Henderson Global Care Growth
  • Royal London Sustainable World
  • Old Mutual Ethical
  • Sarasin EquiSar Socially Responsible
  • 7IM Sustainable Balance
  • Alliance Trust Sustainable Future European Growth


  • In addition the AXA Ethical Distribution Fund is now also fossil free but as of June 2016 was yet to be listed as such on the Fossil Free Funds website.


The other funds we rated on the table are not 100% fossil free. We included them in the list, however, as they are pretty close and have other positive features such as investing strongly in renewable energy, being rated by Castlefield as an ethically strong fund, or being in ShareAction’s list of most ethically engaged providers (see our guide to Ethical Funds). The investments of the funds that are not 100% carbon divested, taken from on 9th May 2016, are listed on the table below.

Table: Mainly fossil-free funds


The ConBrio B.E.S.T. Income Fund had the highest level of fossil fuel investment out of those we looked at. However, the company told us that it tries to combine negative and positive approaches, and that it invests in SSE plc despite its involvement in fossil fuels because of its significance in the wind power industry and transitioning the UK towards renewable energy.



Renewable energy


The ‘positive’ action of investing in renewable energy is, arguably, as important as the ‘negative’ action of divestment. While all the funds we are looking at have many other kinds of positive investments, the following four funds focus all their positive investments on environmental technologies and renewable energy:

  • FP WHEB Sustainability
  • Impax Environmental Markets
  • Quilter Cheviot Climate Assets
  • Jupiter Ecology


See our ethical investment directory for more advice on investing in renewable energy. 


Tax avoidance rankings


Only four companies avoided being marked down for likely use of tax avoidance strategies: WHEB, Impax, Alliance Trust and Elcot. Two companies received our middle ranking on this: Royal London and Bank of Montreal. All the others received the worst.

All the companies apart from WHEB, Impax and J Safra Sarasin were also marked down in the Anti-Social Finance category for paying obscene sums of money to their senior staff. However, while WHEB and Impax do pay less, Sarasin got off on this score just because we could not obtain the information. Being a Swiss bank, it is not obliged to disclose its directors’ pay.




Company behind the brand


Impax is a specialist environmental investment company. Impax Environmental Markets Investment Trust was the first UK listed equity fund to demonstrate a net positive carbon impact.[5]

Impax lost some marks as its Food and Agriculture Fund has investments in Unilever and Bunge, which have collected criticisms for many things including their use of animal products and the poor conditions in their supply chains.

Impax is also 25% owned by BNP Paribas, the third largest bank in the world. BNP Paribas invests in nuclear weapons, as well as many other unpalatable sectors. In 2015 it was fined $8.9 billion in the US after it was convicted of violating US sanctions.[6]


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1 ERIS, 2016, 

2 Scott, 2015, Why are investors shunning ethical funds? Money Marketing, 

3 Eg.Rob Bauer, Kees Koedijk & Roger Otten, 2002,  International Evidence On Ethical Mutual Fund Performance And Investment Style, Financial Economics 

4 Patrick Collinson, The Guardian 10 April 2015 

5 Castlefield, 2015, Winners and Spinners 

6 Reuters, 1/5/2015 BNP Paribas sentenced in $8.9 billion accord over sanctions violations



This product guide is part of the special report into ethical money. See what else is in the report.


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