How well do the Stocks & Shares ISA brands score on our ethical ratings?
We assess brands and their parent companies for a number of ethical issues. Here we highlight areas of transparency, pay, tax, carbon management and environmental reporting.
Investment policy and transparency
We looked at the companies’ ethical investment policies and how much information they published about their portfolios, their engagement with companies and their voting records. The only company we didn’t rate was The Big Exchange. This is because it didn’t directly invest in companies itself, and it didn’t advertise any of its funds using its own brand.
Ideally, a company should have a clear policy which excludes unethical practices such as fossil fuel extraction, deforestation, and animal testing. It should also disclose its full portfolio and provide information on how it engages with companies on ethical issues and votes on company resolutions.
Only Triodos got our best rating and met all of our criteria.
12 companies got a middle rating: Hargreaves Lansdown, Aviva (Wealthify), Evelyn Partners (Bestinvest), Family Assurance Friendly Society (OneFamily), abrdn (Interactive Investor), JP Morgan Chase (Nutmeg), Wesleyan, FIL Limited (Fidelity), Freetrade, NatWest, Lloyds Banking Group (Halifax), and Vanguard.
They had some disclosure or some investment policies, but they weren’t detailed or only named a small proportion of the companies invested in. Companies with this middle rating lost half marks across six of our categories to show their likely impacts.
Where we could find no or very minimal information, companies got a worst rating. This was the case for: Circa5000, AJ Bell, Shepherds Friendly, MFM Holding (Moneyfarm), Santander, and Scottish Friendly. We penalised their lack of transparency by deducting half marks across most of our categories. This does not mean that they are definitely investing in all the sectors for which we deducted marks, but it is likely and they aren’t transparent enough for us to know with certainty.
Companies getting a worst rating, with executive directors receiving over £1 million in pay, were Hargreaves Lansdown, Aviva (Wealthify), Evelyn Partners (Bestinvest), abrdn (Interactive Investor), AJ Bell, Santander, NatWest, JPMorgan Chase (Nutmeg) and Lloyds (Halifax).
In 2021, JPMorgan Chase’s CEO received over $84 million in total compensation. Directors of UK companies receive peanuts in comparison: NatWest’s director received £4.3 million and the highest-paid director at Lloyds Banking Group received £4.6 million. The director at Hargreaves Lansdown received just under £2 million.
Scottish Friendly, FIL Limited (Fidelity), MFM Holding (Moneyfarm), Shepherds Friendly, Wesleyan, Family Assurance Friendly (OneFamily), and Triodos got middle ratings, with their executives earning over £250,000.
No disclosure of executive pay was found for Vanguard, but its turnover was over £1 billion, so it lost a half mark for lack of transparency.
Read more about high pay in the finance industry in our separate article.
Lloyds (Halifax), Santander, NatWest, FIL Limited (Fidelity), JPMorgan Chase (Nutmeg), abrdn (Interactive Investor), Aviva (Wealthify), and Evelyn Partners (Bestinvest) got worst ratings for tax conduct.
JPMorgan Chase (Nutmeg) and NatWest stood out for having subsidiaries in high numbers of tax havens – 15 and 10 countries respectively. These include Luxembourg, the Cayman Islands, the Bahamas, Switzerland, Mauritius, and Malta, amongst others.
Our article on tax avoidance in the finance industry has more information about this topic.