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Should your money be ethical?

A row of windmills on the crest of a hill

Investors – or anyone with a savings account or pension – could be unwittingly funding climate change, smoking or the arms trade. But should it matter?

Unless it’s under the bed or in a deposit box, your money doesn’t just sit still: it’s being constantly invested in businesses to generate returns. 

What those businesses do with your money has a very real effect on the world we live in. You could be funding everything from the development of a life saving vaccine, to the manufacturing of deadly weapons.

But what if you only invested in the good – whilst excluding the bad?

Coins against climate change

Since 2017, I’ve been trying to avoid investing in companies that contribute to climate change, a journey I recently wrote about for Which? Money. 

Three years ago I lived in Australia, and the mass death of coral on the Great Barrier Reef seemed a horrifying reminder that time was running out to protect the planet.

Whilst this is a huge endeavour, I saw my job as relatively simple – get my pensions and investments out of fossil fuel companies.

I started by setting up an ‘ethical’ pension and, when I returned to the UK, opened stocks and shares Isas with investment companies Vanguard and Nutmeg.

Both investments have been impressive: they were simple to set up, charge low fees and (touch wood) have been recovering quickly from COVID-19.

But writing about values-driven investing has led me to reconsider. I was appalled to find oil company Royal Dutch Shell among the holdings in Vanguard’s European SRI fund. And my confidence in the data used by Nutmeg to include and exclude companies has been shaken.

Still too difficult

I don’t think my original aim was naive. There are highly regarded investment funds out there that screen out polluting companies, headed by fund managers with decades of experience. 

The problem is, it’s taken me three years and thousands of pages of jargon to find them.

Picking investments should require thought and research. That shouldn’t mean all investors need to be experts, or be capable of reading between the lines of ill-defined and inconsistent industry labels like ‘ethical’, ‘socially responsible’ or ‘Environmental, Social, and Governance’ (ESG).

That’s why Which? is calling for the Financial Conduct Authority to regulate the use of industry labels, so investors have a better idea of where their money is going.

The stakes are high – the fund management industry now offers thousands of funds to values-driven investors. Pension providers are slowly following in their footsteps. Savings accounts may come later, although there’s little on offer at present.

Listen to more about ethical investing in the latest Which? Money Podcast:

Do you care?

Which? thinks investors, as consumers, should know what they’re buying. 

But we’re agnostic about which issues should be prioritised, or whether you should take issues into account at all when it comes to your investments, pensions or savings.

Do you think morals and money should ever mix?

How important is investing ethically to you?
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Have you tried to pick your own investments, to avoid or embrace certain industries?

Let us know in the comments.


My advice would be – Bank with ” THE CO-OPERATIVE BANK ” , the home of Ethical Investing for many years .

Ian – As a matter of interest, would you invest in the Co-operative Bank if it were possible to do so? Following various financial calamities and subsequent restructurings, the bank is no longer a cooperative enterprise, it is no longer formally related to the co-operative societies, and it is largely owned by hedge funds. I agree that it has an ethical policy, but it is not alone in that.

As it happens, this Conversation is about ethical investments rather than ethical banking [whatever that means]. Banking does not differ much between one high street bank and another.

Personally, for ordinary retail banking services, I consider the remaining mutual building societies generally have a strong ethical standpoint as well as providing better yields for loyal savers and fairer terms for borrowers than any of the high street commercial banks, including the current version of the Co-operative Bank.

Polly says:
11 December 2020

I’ve been heartened by the latest ‘sustainable’ issue of Which? magazine, committing to be more conscious about eco-rating in the product reviews. Whilst this is a step in the right direction, as you point out in the editorial, we are running out of time to address the climate crisis. If we don’t change things in the next 10 years, we won’t have a home in the next 50. So why not add an eco-certification to banking?

I passionately believe that Which needs to do more when it comes to helping people understand what their money is funding, especially when offering financial advice. Which? Is built on honesty, transparency and people’s rights. So why not be transparent about the fact that most banks you review are heavily investing in fossil fuels and the arms trade? The most impactful thing we as individuals can do, is to move our money and investments to banks which invest in renewables and ethical business. I have just published an article about moving my money from Barclays (which I recently found out is one fo the worlds worst investors in fossil fuels) to Triodos. https://polly-keane.medium.com/ive-been-funding-deforestation-and-i-didn-t-even-realise-f3035d58a33e

It was easy to switch and I feel like I have taken some kind of action towards protecting the future for my daughter. I would love to know why Which? Money do not take a stronger editorial stance when reviewing banks – and at the very least to include an ‘ethical’ certification in the review tables.