Help, support and further reading on 'good money'.
Helping you to take action
You can find financial advisers that are members of the UK Sustainable Investment and Finance Association here.
Find 'good money' banks, pensions, savings and investment options at Ethical Consumer. They also provide ethical product guides for Ethical Investment Funds and a range of other Ethical Money products.
You may have come across some of these terms:
There is no definition for this term that everyone agrees on, but we quite like this one from the Italian Forum for Sustainable Finance: “Sustainable and Responsible Investment is a medium to long term investment strategy which, in the evaluation of companies and institutions, combines the financial analysis with a robust environmental, social and governance (ESG) analysis, with the aim to create value to the benefit of investors and the society as a whole”.
There are many types of ISA (now referred to as New ISA or NISA), all with different characteristics.
Some have restrictions on who can invest:
- Help to Buy ISAs, for first time buyers only
- Junior ISAs, for children under the age of 18
- Lifetime ISAs, which under 40s can use for either a first home or for retirement.
In addition, there are three types that have no such restrictions and allow everyone to invest:
- The first type is a cash savings account whose interest is not taxed.
- The second is a stocks and shares account where no capital gains or income tax is paid, although dividends are taxed at a flat rate of 10%.
- Thirdly, the Innovative Finance ISA (IFISA) does not tax the interest on returns from loans or bonds.
Sustainable and ethical cash NISAs are savings accounts held with banks that are considered ethical. Ethical banks take environmental, social and governance (ESG) considerations into account and are transparent in their operations.
Sustainable and ethical stocks and shares NISAs are investments made into companies that perform well on ESG issues. These investments can be made directly by the account holder or through a fund, who will invest your money on your behalf. There are various sustainable and ethical funds using a range of ESG criteria.
Innovative Finance ISA’s are investments in so-called Innovative Finance Platforms, which lend your money to businesses or individuals via an online platform. Some IFISA platforms allow you to browse businesses or projects and self-select the one you think is right for you. This gives you the opportunity to choose sustainable or ethical projects to put your money into.
Individuals may place a maximum of £20,000 per year into a cash NISA, a stocks and shares NISA or an IFISA or a split between the three.
Comparison websites like Ethical Consumer rank ISA offerings from various banks and building societies operating in the UK based on a number of ESG ratings.
These are bonds issued by companies or governments used to fund green, social or sustainability projects. The term covers a variety of different financial products, the most common type of which is the green infrastructure bond.
Ben Caldecott from the University of Oxford's Smith School of Enterprise explains: “Green infrastructure bonds are bonds issued to refinance built and operating low-carbon infrastructure, such as offshore wind turbines and grid connections... Their development is critical for a number of reasons, but perhaps their most important role is to help us access the sheer scale of capital required for our low-carbon transition.”
This is the process of filtering out companies that do not meet the ethical criteria of individual investors or funds. For example, an investor may wish to avoid investing in companies involved in the arms trade or those with poor human rights records.
This is the use of the active influence of shareholders to influence a company’s decisions. Shareholders may wish to improve the environmental, social and governance performance of the company by contributing to dialogue and voting, for example; attending conferences, annual general meetings and one-on-one meetings with directors and management.
This refers to the explicit consideration or inclusion of environmental, social and governance factors within traditional financial analysis.