Sustainable stocks & shares ISA

Bugaboo1

Hi

I'm a newbie to stocks and shares ISAs and am overwhelmed by the options. Priorities for me are the investments need to be sustainable, no fossil fuels or other nasties, and needing minimal input from me other than depositing my money. I'm fairly risk adverse so would probably not want to go beyond moderate risk levels. I'd also like to pay as low fees as possible.

Does anyone have any recommendations for where to start? Vanguard was mentioned to me so if anyone has any experience of their sustainable options that would be good, but definitely doesn't have to be them.

Thank you!

eskbanker

'ESG' will be the generic term you're likely to need when researching sustainable products, and if you're looking for moderate risk ones then that would rule out equity-only investments, so you might consider the multi-asset ESG offerings from the likes of Fidelity or Blackrock.

Beddie

As you mentioned Vanguard, they do this fund - SustainableLife 60-70% Equity - which might meet your needs. There is also a lower risk one called SustainableLife 40-50% Equity.

Their platform is one of the cheaper options too, so you could open an account with them to invest in this fund.

https://www.vanguardinvestor.co.uk/investments/vanguard-sustainablelife-60-70-equity-fund-a-gbp-accumulation/overview

They are changing the names but not the funds, see here: https://www.vanguardinvestor.co.uk/investment-information/fund-changes

This is just one example - there are many others. As Eskbanker says, you can search for ESG funds from a given provider.

poseidon1

https://www.edie.net/vanguard-blackrock-and-other-investors-accused-of-treading-water-on-esg-issues/

OP, you may find the article above enlightening and probably depressing ( in equal parts ) in your quest for bona fide investment managers  who have investment funds which are truly ESG compliant.

Certainly with regard to sustainability, that has proven a tough nut to crack, since while oil and gas remain the preferred means to fulfil the world 's   energy needs the more sustainable options have  proven stubbornly difficult to make a profit. 

 In this regard you should note for example that National Grid recently sold its USA wind, solar and battery renewable business, whilst Shell as been offloading stakes in US wind farms and solar developments.  Indeed Shell's CEO commenting on the renewable side of the business indicated  that looking forward 'the  focus would be for the company's investments on fossil fuels to increase shareholdings returns and narrow the valuation gap with Shell's US peers'.

Why should these examples matter to you?, at some point some ESG funds would have held  ( or still hold) these investments in the justification that despite fossil fuels historically producing those company's  profits, they were making 'concerted efforts to transition to greener solutions going forward.

Just to depress you a little further, in 2022 Thames Water sold  3 billion US dollars of 'green bonds' which were acquired by over 200 ESG funds

This 'greenwashing' process has been rife within the fund management industry. Indeed, googling 'greenwashing' and  Blackrock you will find that company is having issues with the European regulators on this point. 

If you are serious to ensure there are no non compliant 'nasties' lurking with an 'ESG ' fund you  may need to drill down into fund to find and appraise the  businesses comprised therein. Even then do you feel qualified enough to make your own judgement call on what you might find?

Martico

Wealthify also offer an "ethical" S&S ISA, comes at a cost of 0.6% I think. It's set-and-forget. Have a look

Petriix

I think there's a difference between only investing in truly 'ethical' funds and simply wishing to avoid the most abhorrent companies with things like arms, tobacco and fossil fuels. The latter being far easier than the former. 

Personally I use Trading212 to invest in a bunch of renewable energy companies and some global ESG ETFs. I'm reasonably happy to know my money is invested in a reasonably ethical way without sweating too much about the intricacies. 

dunstonh

There are generally three classifications:
ESG
Sustainable
Ethical.

So, the first thing to decide is which you are looking for.  Once you know that, you then select from what it available.

Remember that all three of these historically underperform conventional investing.  So, you are putting your money where your beliefs are.   

If you are looking at basic options, like a number of those given in above posts, then you may wish to consider how serious your beliefs are vs what you are getting with a basic fund.  ESG or sustainable are pretty achievable with a basic fund but ethical is not.

So, have a think about what you are after first and then go looking for solutions.

Bugaboo1

Thanks everyone. My day job is all about sustainability, having worked for two banks and now a law firm in this field, so I'm very conversent with the challenges around greenwashing, truly ethical practices, etc. Unfortunately, despite having worked in banks, I'm clueless about investing which is where I needed the input! So the input is much appreciated, I'll mull all the comments over.

BreadGremlin

Hi Bugaboo1, I find myself in the same position as you were.

I even rang up Vanguard to discuss if there's an 'opt-out' option for the 'hands-off' managed version of their Stocks & Shares ISA for fossil fuel funds etc, but unsurprisingly it doesn't exist. (However they did make a note of it, so maybe in the future...)

Did you find an option that works for you, and if so do you mind sharing? 
I'm aware that it's mostly just greenwashing but I'd like to try and put my money where my beliefs are

Albermarle

If you want  'deep green' investments instead of 'light green' ones, you probably need something like this.

Stocks and Shares ISA | Ethical Investments

Exodi

Just as an FYI since you mentioned being new to investing and referred to Vanguard to meet your criteria of "pay(ing) as low fees as possible" - Vanguard very recently (one month ago) announced a minimum fee on all of their accounts, massively reducing their attractiveness to small pots.

Vanguard used to charge 0.15% annual platform fee.

So if you held £1000, you'd pay £1.50 per year.
If you held £10,000, you'd pay £15.00 per year.
You get the idea.

The annual platform fee is still 0.15%, but now there is a minimum monthly charge of £4.

So if you held £1000, you'd pay £48.00 per year (equivalent to 4.8%)
If you held £10,000, you'd pay £48.00 per year (equivalent to 0.48%)
The break-even point is £32,000, whereby you'd be paying 0.15%

So if you are planning on holding less than £32,000 across Vanguard (which sounds likely, as you can only deposit £20,000 into an ISA per year), then please consider the platform fee may be higher than you anticipate.

There are many other options, the cheapest being InvestEngine (they charge no platform fees). Plenty of ESG ETF's to choose from there:

https://investengine.com/etfs/
(click more and filter ESG to yes)

Alternatively, there's a plethora of providers that charge 0.3%-0.45% (just google S&S ISA).