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Fossil Fuel Free Investment Funds

In this guide we investigate, score and rank the environmental and ethical record of 15 fossil fuel-free investment funds.

We also discuss the meaning of 'fossil-free' and the importance of having positive investing criteria as well as negative screening exclusions.

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This is a shopping 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.

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What to buy

What to look for when choosing a fossil-free fund:

  • Is your investment fund fossil free? Ensure your chosen fund has a strong environmental policy that excludes fossil fuel companies and carbon-intensive sectors.

Subscribe to see which companies we recommend as Best Buys and why 

What not to buy

What to avoid when choosing a fossil-free fund:

  • Is the company linked to human rights abuses? Ensure that the fund is not owned by a company with a poor human rights record.

Subscribe to see which companies to avoid and why

Score table

Updated live from our research database

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Brand Score(out of 100) Ratings Categories

Our Analysis

If we are to successfully combat climate change and ecological destruction we must transition to a zero-carbon economy. Moving your money into a ‘fossil-free’ investment fund means that you can ensure your savings are not being used to support this harmful sector.

A survey by Triodos Bank in 2020 found that 52% of Brits believe that fossil fuel investments are foolish given the climate emergency. While we might worry about the reasoning of the remaining 48%, it is promising to see that people are increasingly thinking about the importance of where they invest their money.

Investing in fossil fuels is essentially foolish for two reasons:

  • Fossil fuels are a major contributor to climate change;
  • Many believe that investments in fossil fuel companies will bring financial losses in the medium to long term as their coal and oil reserves will become ‘stranded assets’. (See below).

This guide lists a selection of funds that are free of fossil fuels. We also recommend that you view our guide to Ethical Investment funds, which covers a wider range of ethical issues and will give you more detail on some of the essential tools needed to invest your money ethically.


Power plants with sunset

Fossil fuel free Investing

The terms ‘fossil-free’ and ‘carbon divested’ are being thrown about a lot these days, but it is often not clear exactly what is meant by these terms.

After all, the vast majority of industries are still heavily reliant on fossil fuels as an energy source, so it is near-impossible to make your investments completely free of any connection to the fossil fuel sector.

The funds in this guide were previously identified as ‘fossil-free’ by 3D Investing (now part of Square Mile). For a fund to be labelled as such by them, it had to meet the following criteria:

  • It excluded companies that produce or distribute fossil fuels, except where the overwhelming majority of revenues (>80%) are from renewables and the fossil fuels element is a legacy business which is being phased out.
  • It excluded fossil fuel service businesses like companies providing oil drilling equipment or oil rigs.

Fourteen out of nineteen of the funds in our guide to Ethical Investment Funds were classified as fossil-free.

Two funds were identified as having investments in fossil fuels due to investing in power producers. These funds were: Liontrust Sustainable Future European Growth and Royal London Sustainable Leaders.


Positive investing

Excluding investment in carbon intensive sectors is only one side of the coin – the other side being positive investment in solutions to the climate crisis.

It is not enough for funds to just divest from fossil fuel companies, they should also direct their investment towards companies and sectors working towards a zero-carbon economy, such as renewable energy producers. The funds that stand out in terms of their strong focus on positive environmental investment are:


Avoiding other sectors with a high carbon impact

There are many sectors, aside from the fossil fuel sector itself, that have a high carbon impact. 

Check whether a fund invests in carbon intensive sectors such as dairy and meat producers, airlines or cement producers.


Wind turnbines in sea

Fossil fuel free investment funds


The Liontrust Sustainable Future European Growth invests in companies that are making the economy cleaner, healthier or safer, according to it Sustainability and Impact report. The fund previously held investments in two power producers: Ørsted and Verbund, both of which primarily generate power through renewable energy, though Ørsted had some involvement in coal (see below).

However, on assessing the fund’s holdings in April 2021, no investments in power producers were found. Furthermore, Liontrust had strong policies in relation to climate change, as laid out in its Screenings Criteria 2021 (although this document is no longer available).

The fund excluded (among other things):

  • companies that derive >5% of turnover from the extraction and production of coal, oil and natural gas.
  • companies that derive >5% of turnover from electricity generation from coal or lignite fired power stations.

For these reasons, we have included Liontrust in this fossil-free guide, even though it had not previously been classed as fossil-free by 3D Investing.

Royal London

The Royal London Sustainable Leaders fund, in comparison, did not have such strict exclusions criteria. It also had significant investments in power producers, such as SSE, that remained heavily reliant on fossil fuels. As such, the Royal London Sustainable Leaders fund was not included in this fossil-free guide.


It should also be noted that we have included Impax Environmental Markets Plc in this guide, even though it was found to have investments in a gas infrastructure company. See below for more on Impax.


AXA Ethical Distribution fund was also identified as fossil-free by 3D Investing, though we advise you stay clear of AXA because it is subject to a boycott call as part of the BDS campaign against the Israeli state.

To invest or not to invest…the case of Ørsted

Some opportunities present a real dilemma for ethical investors. For example, a company may have direct involvement in the fossil fuel sector, yet overall be a progressive force in the transition to a zero-carbon economy. Should a fund focused on maximising positive environmental impacts invest in such a company?

We spoke to representatives from WHEB, a positive impact investor, about this issue and they gave the interesting example of Ørsted, a Danish renewable energy company. According to its website, Ørsted is one of the biggest green energy companies in the world and has installed one third of all offshore wind turbines globally. It is therefore an important player in the transition to a zero-carbon economy.

However, it still produces a small amount of its power through coal. The company has stated that it will fully phase out coal by 2023, and WHEB actually informed us that Ørsted had not been able to fully phase out its coal business before this due to contractual obligations.

From WHEB’s point of view, it doesn’t make sense to exclude a company such as Ørsted from a green fund due to its involvement in coal, because its overall impact is overwhelmingly positive, and it has set dated targets for phasing out fossil fuels. It is cases such as this that illustrate why even funds focusing on positive impact and sustainability allow a small degree of flexibility in their exclusions criteria.

Stranded Assets

The concept of stranded assets is an important element of the financial argument against investing in fossil fuels. An asset (a thing you can own) becomes stranded if it can no longer be used.

For example, it is reasonably likely that, at some point in the future, the burning of fossil fuels will be greatly limited or not possible at all, either because doing so has become so morally reprehensible or because governments have implemented strict regulations in order to control carbon emissions.

Anyone holding fossil fuel assets would be in possession of assets that cannot be used, i.e. ‘stranded’, resulting in financial losses. To invest in fossil fuels is therefore not only morally unsound but also financially foolish.

Our research into fossil fuel free funds

Past iterations of this guide used information from an American website called, which allows anyone to easily access information on some 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.

However, due to loss of funding, the website now only focuses on US investment funds. 

3D Investing/Square Mile

When we researched this guide we used data from 3D Investing, which is now part of Square Mile Research and Consulting. They identified a number of funds from our Ethical Investment Fund guide that could be considered ‘fossil-free’ based on analysis of their actual holdings.

Since the publication of our guide to ethical investment funds, 3D Investing/Square Mile requested that we remove their data from our site.

We are now looking to increase our research capacity so that we can conduct in-depth analysis of UK funds and determine whether they are fossil-free. However, before this is possible we will rely on the funds that were previously identified by 3D Investing as fossil-free.

Impax Environmental Markets Plc

Impax Environmental Markets Plc is an investment trust, as opposed to a fund. An investment trust works in a very similar way to an investment fund, but is set up as a publicly listed company. Investing your cash in an investment trust means buying shares in the trust as you would any other company on the public stock exchange.

Impax Environmental Markets Plc is the UK’s largest environmental investment trust. Its objective, as stated on its website, “is to deliver long term capital growth by investing in companies offering solutions to environmental challenges, particularly:

  • clean energy and energy efficiency
  • water treatment and pollution control
  • waste technology and natural resource management
  • sustainable food.”

We featured Impax Environmental Markets in our guide to Ethical Investment Funds, but following publication we were contacted by a reader questioning why an environmental trust had invested in Indraprastha Gas Ltd, a gas distribution company based in India. We asked Impax for the reasoning behind this and Bruce Jenkyn-Jones, Co-Head of Listed Equities, Executive Director gave the following statement:

We don’t invest in gas infrastructure companies where gas is the incumbent fuel – e.g. in Europe. In an Asian context, Impax invests in gas distributors (and purposefully not exploration businesses). In coal-heavy electricity networks, gas represents an important transition fuel that facilitates the renewables transfer. Gas makes substantial improvements to local air quality and helps decarbonise carbon-intensive power systems.

The case of Impax provides an interesting case study.

The trust is not completely free of investments in the fossil fuel sector, yet it would be unwise to tar it with the same brush as funds that are heavily invested in coal and oil producers. Because of its overall positive environmental stance and very limited investment in fossil fuels, we have chosen to include it in this guide.

Want to know more?

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