Ethical Stocks and Shares ISAs

Find out about ethical Stocks & Shares ISAs

Ethical stocks and shares investments are likely to include companies which are taking positive social and environmental actions. Ethical brands will generally:

• see workers' rights as important
• treat everyone in the supply chain fairly
• treat customers well
• be taking useful actions for the climate and environment
• promote diversity, equality and inclusion

Less ethical stocks and shares funds will feature companies in sectors which are seen as problematic or unethical such as alcohol, arms, factory farming, fossil fuels, gambling, pornography and tobacco.

In this guide we investigate how ethical 28 Stocks & Shares ISA different brands (funds or platforms) are. We look at their investment policies, climate action, how transparent they are in what they invest in, the tax conduct of the brands, along with other ethical considerations. 

We also explain what an ethical Stocks & Shares ISA is, how well they perform, the risks associated with them, and how to get ethical financial advice. 

Whether you're new to investing in stocks and shares, or a long-term investor, this guide will help you make ethical decisions about where your money goes. 

The ethical ratings of the 28 brands in this guide range from 0 to 100.

We cover how you can transfer your Stocks & Shares ISA if you want to move away from one of the low scoring brands. And with 2/3rds of the brands in this guide scoring below 20, there should be an appropriate option for you. 

What is an ethical Stocks & Shares ISA?

An ISA, or Individual Savings Account, is an account which allows you to save or invest without ever paying any tax on the interest or dividends that you may receive. The amount of money you can save each tax year is capped, currently at £20,000.

There are different types of ISA, the simplest being the cash ISA, which is like an ordinary savings account, paying you interest on the cash you deposit. (We have a separate guide to Cash ISAs).

The £20,000 allowance is a combined limit across all the ISAs you hold. You can either invest all your allowance in a Stocks & Shares ISA, or you can split it across different types of ISAs, including Cash ISAs, innovative finance ISAs, and lifetime ISAs.

It looks likely that the UK government will reduce the threshold for Cash ISAs to £4,000 in autumn 2025 but keep the Stocks & Shares threshold at £20,000, to encourage more people to invest in companies.

A Stocks & Shares ISA is a bit more complicated than a Cash ISA. The money you pay in can be invested in investment funds (shares or bonds from various companies combined into one investment), bonds (a loan to a company or a government) or shares in individual companies.

Stocks & Shares ISAs may have the potential for higher returns than Cash ISAs. But as Stocks & Shares ISAs are based on the stock market there’s always a risk that the amount you invest could go down as well as up, so you risk losing some of your money. Stocks & Shares ISAs are also generally more suitable if you can lock your money in for more than five years.

Why is it called “Stocks and Shares”?

The words “stocks” and “shares” are often used interchangeably but there is a subtle difference:

• Stocks refers to the broader concept of ownership in companies.
• Shares refers to the individual units of ownership within a specific company.

For example, you might say you own stocks to mean you have investments in the stock market and you might say you own shares in Apple.

Which Stocks & Shares ISA providers are in this guide?

We’ve included some of the most popular investment platforms for Stocks & Shares ISAs, such as Hargreaves Lansdown or Fidelity.

Smaller platforms like Nutmeg (owned by JP Morgan Chase), Vanguard, Wealthify (owned by Aviva), and AJ Bell are included, along with explicitly ethical platforms such as The Big Exchange and Triodos.

The big banks also provide Stocks & Shares ISAs so we’ve included Barclays, Halifax, HSBC, Lloyds, NatWest and Santander. 

Mutual societies are also quite popular options and we’ve included platforms such as Scottish Friendly as well as OneFamily, Shepherds Friendly and Wesleyan.

How well do ethical Stocks & Shares ISAs perform?

We looked at the latest figures for the 5-year cumulative performance of some of the more ethical brands in the guide. We've also included the benchmark figure for comparison

For each company, we’ve just chosen one of the funds used in its Stocks & Shares ISAs. Most providers suggest that you invest for five years minimum.

Compared to the benchmark, returns are lower for this sample of ethical funds but ethical investors are usually seeking principled investments rather than high returns. A modest return on investment is a bonus and that is what these companies offer.

Generally speaking, ethical funds have performed as well as or better than mainstream funds for the 20 or so years that they have existed. This changed following the Russian invasion of Ukraine which led to big profits at energy (oil and gas) companies.

How to get a Stocks & Shares ISA

When investing in an ISA, most people invest in pre-selected bundles of investments called funds. The most popular way to do so is through an investment platform. These provide easy and relatively cheap access to a broad range of funds. Platforms in this guide include Big Exchange and MoneyFarm.

Some of these, the so-called “roboadvisers”, guide you towards a choice of funds based on your answers on a website to questions about why you’re saving and your attitude to risk. They’re not the same as getting advice from an independent financial advisor, but they’re popular with novice investors and with people with less to save.

Other platforms like AJ Bell and Bestinvest, allow you to take a more DIY approach to choosing the funds you invest in and, to do this, you’ll need to make sure the funds meet your needs and that you understand the risks. It’s also possible to buy individual company shares on some of these platforms to hold in a Stocks & Shares ISA. To do this, you’ll need considerable financial expertise, or professional advice, so we’re not covering this approach to investing in this guide.

As well as the platforms, you can also get a Stocks & Shares ISA from many banks and building societies, and some of them now provide platform-type services. Insurers and friendly societies offer ISAs too but they’re likely to have a smaller choice of funds to invest in.

Choosing a Stocks & Shares ISA 

Choosing a Stocks & Shares ISA involves two processes:

1. Pick the provider to buy your ISA from.
2. Decide what investment funds to put your money into.

This guide primarily helps you with stage 1. The score table shows you which provider is the most ethical across the board. This guide does not rate the many individual funds run by these providers. You’ll need to have a look at that detail yourself. Our Ethical Investment Funds guide covers some of the funds being offered and should help with stage 2.

NB: You'll be charged for using the platform AND buying/holding the funds. 

What makes a Stocks & Shares ISA ethical?

When you invest in a Stocks & Shares ISA, at least some of your money will be used to buy shares in companies. This means that you’re funding and potentially profiting from the activities of those companies, be they good or bad. On the good side, your investment could support everything from renewable energy to more sustainable farming. On the bad side, your money might be funding fossil fuel exploration or animal testing.

We looked at the overall practices and policies of the company providing the ISA, and rated them for actions they’re taking to address their climate impacts and for their financial practices such as tax conduct. Plus, we rate them on their overall company ethos, i.e. are they a not-for profit, a B Corp, and how much does their highest-paid director receive?

Our ratings also take into account each company's approach to the following two key issues for investment companies:

• their ethical investment policy
• what the companies are investing in (bonds & underwriting)

Investment policies

We looked to see whether there was any investment policy around avoiding problem sectors (like fossil fuels or armaments). We also looked at how transparent providers were about all the companies you were investing in.

The big banks and platforms were more likely to have a policy that only covered a few of their products, whereas those with a wholly ethical focus will have policies that apply to all of their activity.

As well as having an investment policy, you should be able to find the names of all the companies that you’ll be investing in through your ISA. In this way, you’re not only reliant on the policy but can make up your own mind about whether you want to invest in the chosen companies. This matters because it is unlikely that all the companies in funds that are marketed as “ethical”, or more commonly “sustainable” or “stewardship”, will align with your values. For example, a fossil fuel free fund could, in theory, have investments in companies involved in animal testing or the military.

Full lists of investments aren’t yet common, and some providers publish no information at all. Most funds publish the top 10 holdings only. Those that are trying to be ethical should be providing details on some, if not all, of their investments. 

The table below lists the platforms in this guide (by A to Z) and covers:

• Its investment policy rating (out of 100)
• Does it have an ethical policy covering all its investments?
• Do the company’s sustainable ISAs or funds clearly exclude fossil fuels?
• Is the company transparent about all the companies in fund portfolios prior to purchase?

* Funds might have exclusions for thermal coal (used in power stations) and unconventional fossil fuels (tar
sands, shale gas) or Arctic oil and gas but not exclusions for all fossil fuels.
** top ten holdings are usually found in a fund’s Factsheet

Bonds & Underwriting

We checked all the companies in this guide to see if they were listed in five NGO reports from involvement in Israel settlements to nuclear weapons. 

Of the 24 companies in this guide, half of them had no involvement in the sectors covered. Of the other 12, here’s how they performed:

• Don’t Buy into Occupation: HSBC, Barclays, Santander, NatWest, Lloyds Bank, Legal & General, Allianz (LV=), ii interactive investor, Aviva
• Ensuring Genocide: Allianz (LV=), Aviva
• Forest 500: Allianz (LV=), JP Morgan (Nutmeg), Santander, Vanguard, ii interactive investor, HSBC, Legal & General, Lloyds Bank, NatWest, Fidelity, Barclays
• Don’t Bank on the Bomb: Allianz (LV=), Fidelity, HSBC, JP Morgan (Nutmeg), Legal & General, Vanguard, Barclays, Lloyds Bank, NatWest, Santander
• Oil & Gas tracker: ii interactive investor, Allianz (LV=), Aviva, Barclays, Fidelity, HSBC, JP Morgan Chase (Nutmeg), Santander, Vanguard

Avoiding fossil fuels

Any company providing an ethical ISA should at the very least make its position on fossil fuels clear and easy to find. Ideally, it should be avoiding investing in fossil fuels altogether. Platforms offering ethical ISAs should ask customers whether they want to avoid fossil fuel investments and, depending on the answer, only offer appropriate investments. The Big Exchange does this.

We think that most people investing in an ISA fund marketed as “sustainable”, “responsible” or “ethical” will assume that it avoids fossil fuels – not least because much of the advertising material features pictures of forests and people looking at wind farms.

This isn’t always the case. Only Triodos clearly excludes fossil fuels across its entire investment portfolio and many of the supposedly sustainable ISAs we looked at held investments in fossil fuel companies, although this information was often hard to find.

In 2024, Follow the Money reported that 4 in 10 sustainable funds invest in fossil fuels.

We summarise some of what we found about companies' investment policies including fossil fuels in the table above. 

Climate rating

23 of the 24 companies in this guide scored 0 in our climate category, demonstrating how far the finance sector still has to go on this issue. A company lost points if it did not exclude fossil fuels from its investments. 

Apart from Triodos, none of the other companies fully excluded fossil fuels.

Company Ethos

We rate companies on how well their treat their workers. This includes looking at the pay gap ratio, gender pay gap, if they are Living Wage certified, and whether they are mutually owned, 

High pay and pay ratios

Companies in this guide lost 20 points in this column for paying a director over £10m a year or 10 points for paying between £1m and £10m.

Triodos was the only company in this guide which gave details of pay ratios. The ratio of the highest full-time salary coworker to the median full-time salary was 4.9 with a maximum cap of 7. For executive pay, the ratio in 2024 was 4.6 between the CEO and the average co-worker.

This compares favourably with much of the finance sector. Our separate article on high pay in the finance industry has more information.

Gender pay gap

In this Stocks & Shares ISAs guide, most of the companies were better than average on their gender pay gap. 

Living Wage employers

Ten companies in this guide were Living Wage Foundation certified and therefore paid all employees an hourly wage based on the real cost of living, a rate above the minimum wage and the National Living Wage.

The 10 were: Barclays, Big Exchange, Hargreaves Lansdown, HSBC, Legal & General, Lloyds, NatWest, Santander, Shepherds Friendly, and Triodos.

Other ethical standpoints

Other points in this column were awarded for: 

• being a mutual: NFU Mutual, OneFamily, Shepherds Friendly, Scottish Friendly, Virgin Money (now part of Nationwide building society) and Wesleyan.
• only listing funds that have a positive impact: Big Exchange, Hargreaves Lansdown, HSBC, Legal & General, Lloyds, NatWest, Santander, and Triodos.
• being B Corp certified: Triodos.

Are there any ISAs which avoid animal exploitation?

Most of the companies we looked at discuss climate issues or have fund filters related to climate, but it was hard to find policies on animal use.

Triodos has relatively comprehensive policies covering animal welfare including: animal testing, factory farming and animal welfare, fisheries and aquaculture, trade in endangered species, fur and speciality leather, and biodiversity.

However, for the factory farming section of its investment policy rating in our score table, its standards were not robust enough to gain it points. Read Triodos’ standards in full on its website, and see if they fit your values.

Wesleyan’s policy also covers animals used in testing and in agriculture but with much less detail than Triodos. It only excludes companies which do not have “robust policies and systems in place to uphold good standards for breeding, rearing, transport, housing and slaughter.” This is vague and doesn’t mean much.

The Big Exchange also flags animal use in the “Potential issues you may want to know” section of each fund on its platform.

What are the risks with Stocks & Shares ISAs?

ISAs are protected by the Financial Services Compensation Scheme up to £85,000 per person, per firm – but only if your fund manager goes bust, not if your investments take a nose-dive. If your stocks and shares perform badly, you won’t be compensated for your losses. 

So only invest what you can afford to lose.

Should I get a Stocks & Shares ISA?

Aside from the fact that you might lose money if your stock prices fall in value there may be other reasons not to invest in one:

• By their very nature, your money is invested in a portfolio of companies through funds. It’s unlikely that all the companies will align with your values. For example, a fossil-free fund may well have investments in companies involved in animal testing or the military.
• Caash ISAs and saving accounts offer good rates of interest and you know where your money is going. They may be a more appropriate choice for you.

Junior Stocks & Shares ISAs

A parent or guardian can open a Junior Stocks & Shares ISA for their child as a tax-free way to save on their behalf. The money in the account belongs to the child, but they can’t withdraw any of it until they’re 18. 

The Junior ISA limit is £9,000 for the tax year 2025/26 – meaning that is the maximum amount you can save in this way for that year.

What does all the jargon mean?

ESG stands for Environmental, Social, and Governance. The term ‘ESG investing’ is increasingly being used by financial institutions to highlight responsible investment, and can encompass a variety of ethical considerations. It can also be used very broadly to include investments which aren’t particularly ethical.

ETF stands for Exchange-Traded Fund and is a type of investment fund traded on the stock exchange. Rather than being actively managed, most ETFs track the performance of a stock or bond index (such as the FTSE100 or Dow Jones Sustainability Index often investing in all the shares in an index).

For a full list of de-coded jargon, see our ethical investment funds guide.