Which investment providers are the most ethical and sustainable? For the answer, see our Ethical Investment Ratings Table to compare companies’ ethical scores.
Ethical Investing: How You Can and Why You Should
Ethical Investment: Why does it matter?
The Good Shopping Guide has been independently researching and rating brands on ethical and sustainability criteria since 2001. Ethical investment has grown from a niche concern into a mainstream financial movement: UK ethical fund assets exceeded £85 billion in 2025, reflecting sustained and growing investor demand. As more consumers seek to align their money with their values, our Ethical Investment Ratings Table provides an independently researched starting point for comparing providers.
One of the most effective ways to encourage more people to shop ethically and support the development of more ethical businesses is through ethical investment. The idea of using your money responsibly has been around for a long time, but only recently has it become a mainstream means of supporting a good cause. With a growth in awareness about the benefit of ethical investments on the part of companies as well as investors, it is becoming increasingly easier to put your money where your mouth is.
Aviva UK: An Accredited Company
In 2021, one of the UK’s largest insurance companies, Aviva, achieved independent Ethical Accreditation from The Good Shopping Guide. A crucial reason for this is their commitment to corporate responsibility and ethical investments, including the incorporation of environmental, social, and governance factors into their decision-making and risk assessment. In 2021, Aviva was the first major insurance company worldwide to target Net Zero carbon by 2040 — the most demanding target of any major insurance company in the world at the time.
A Long History
The roots of ethical investment can be traced to the religious movements of the nineteenth century, such as the Quakers and Methodists, whose concerns included issues such as temperance and fair employment conditions.
During the twentieth century, more churches, charities, and individuals began to take ethical criteria into account when making investment decisions. An ethical investment ideology began to develop in the United States. Controversy over American involvement in the Vietnam war led to the founding of the Pax World Fund in 1971, which aimed to avoid investments associated with the conflict. In the 1980s, the apartheid regime in South Africa was the focal point for ethical investment and, indeed, its success as a tool of protest there accelerated its popularity and growth around the world.
In 1983, the Ethical Investment Research Service (EIRIS) was established as the UK’s first independent research service in ethical investment, providing the underlying research into companies’ social, environmental, and ethical performance required by investors to make informed and socially responsible investment decisions. The UK Sustainable Investment and Finance Association (UKSIF) continues to represent and promote sustainable finance in the UK today, working with investors, fund managers, and financial advisers to grow the responsible investment market.
‘Ethical’ or ‘socially responsible’ investment describes any area of the financial sector where the principles of the investor inform where they place their money.
The rise of ESG investing
ESG investments are becoming a crucial aspect of the financial sector, particularly within ethical insurance and banking. Companies are increasingly incorporating environmental, social, and governance (ESG) factors into their investments. But what does this mean in practice?
Environmental — considering the impact of investments on the climate, wildlife habitats, and biodiversity. Social — considering the impact of investments on people and human rights. Governance — considering the wider structure and corporate activities of a company, such as diversity and inclusion, accountability, and risk management.
Essentially, ESG investing means paying close attention to the positive or negative impact of potential investments and incorporating these factors into decision-making and risk assessment. According to Morgan Stanley’s Sustainable Signals: Individual Investors 2025 report, nearly 99% of Gen Z and 97% of Millennials globally express interest in sustainable or ESG-aligned investments, and a majority plan to increase allocations to such strategies.
In 2024, the Financial Conduct Authority (FCA) introduced sustainability labels for UK investment funds — including Focus, Improvers, and Impact labels — to help consumers identify funds that genuinely meet sustainability criteria and to combat greenwashing. If you are selecting an ethical investment fund, look for funds that carry an FCA sustainability label, as these have met independently verified standards.
Ethical ISAs, pensions and green bonds
Ethical investing is no longer limited to specialist fund managers. UK investors can now incorporate ESG principles into everyday financial products including Stocks and Shares ISAs. An ethical ISA allows you to invest up to £20,000 per tax year tax-free, with the option to choose from a wide range of ESG-screened funds that avoid sectors such as fossil fuels, weapons, and tobacco.
Ethical pension options are also growing rapidly. Self-Invested Personal Pensions (SIPPs) allow savers to direct their retirement funds into ESG-screened investments, ensuring their long-term savings are not working against their values. With pension funds representing some of the largest pools of investment capital in the UK, the ethical choices of pension providers carry significant real-world impact.
Green bonds are another growing option: these fixed-income securities direct investment specifically into qualifying environmental projects such as renewable energy, sustainable transport, and biodiversity conservation. The green bond market has grown from around £26 billion a decade ago to over £1.6 trillion globally today. When selecting any ethical investment product, look for funds carrying an FCA Sustainability Disclosure Requirements (SDR) label — the clearest regulatory signal that a fund’s ethical claims have been independently verified.
How do I begin?
The first step towards positive investing is to identify what social, environmental, and other ethical issues are most important to you. Areas of concern can be wide ranging, from animal testing to gambling, from human rights to controversial weapons, from environmental enhancement to community projects. Identifying these areas will reflect the type of companies you want to invest in or to avoid.
Nobody’s perfect
It is important, however, to remember that there is no such thing as a perfect company. All are involved in activities that someone somewhere will object to, and none go far enough in terms of positive social and environmental contribution to satisfy everyone all of the time. Ethical investment is about compromising and prioritising.
Alternative investment
Ethical investment is not confined to shares traded in stock exchanges. Many investors prefer to back individual projects or causes. Such directed investment is known by a variety of terms including ‘alternative’ investment, ‘mission-based’ investment and ‘socially directed’ investment. The cause-based investment sector includes well-known institutions such as Triodos Bank and the Ecology Building Society, although it also includes ethical companies who raise money directly from stakeholders by selling ‘ethical shares’.
Good for everybody
Companies, too, can benefit from ethical investment. Money is being consciously diverted from companies who cannot demonstrate good practice. Many investors are also engaging with companies in which they invest, or are considering investing in, to persuade them to improve their policies and practices.
Ethical finance: the bigger picture
If you are beginning to think about ethical investing, it is worth considering how your wider financial choices align with your values. The Good Shopping Guide has been independently rating financial services brands since 2001. Our Ethical Banking Ratings Table and Ethical Insurance Ratings Table apply the same independent research methodology to other key areas of personal finance. For businesses in the financial services sector that want their ethical credentials independently recognised, find out more about The Good Shopping Guide’s Ethical Accreditation.