Looking for sustainable fund ideas?
Our Sustainable Investment Finder sorts the sustainable funds, exchange-traded funds and investment trusts on our platform into seven sustainable investing categories.
How to find a sustainable investmentUpdate your operating system
Your computer’s operating system is out of date. To get the best experience of our website and enhanced security, please update your operating system.
Important information - the value of investments can go down as well as up so you may get back less than you invest. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.
If you're one of the increasing number of people who want their investments to have a positive impact, you've come to the right place. More and more of us are taking sustainable, ethical and environmental, social and governance (ESG) factors into consideration when deciding where to invest money - at Fidelity we broadly refer to this as sustainable investing. Not only is that good news for the planet and societies we live in, it’s also helping many investors to find new opportunities.
Here, you can find out more about what sustainable investing is all about. You can also check out our useful guide to jargon-busting sustainable investing terms, which helps you unpack any complexities and get to know the various sustainable approaches on offer.
You wouldn’t be the first to wonder why there are so many different terms for sustainable investing. In large part, they reflect the many different approaches investors can take. Our list of sustainable investing terms can help you learn more about what they all mean so you feel comfortable choosing whichever approach suits you best.
ESG is an acronym for the three central factors used by responsible investors to screen and select companies and other investments for their portfolios. You’ll find that the terms ‘environmental’ and ‘social’ may sometimes be replaced by ‘ethical’ and ‘sustainable’. Using ESG factors does not automatically mean a fund or investment portfolio is ‘sustainable’ or ‘ethical’, so you should always do your research first. Examples of what ESG factors cover vary but they can include climate change, health and safety in the working environment and protecting the interests of shareholders.
Choosing investments that avoid dealing with products and services that may be considered harmful or misalign with personal values, such as tobacco, adult entertainment and gambling. Many ethical funds will also screen for a wide range of environmental issues such as deforestation or negative social issues such as low labour standards.
Impact investors aim to generate positive, measurable influences on society and/or the environment, alongside a financial return. Some of the areas impact investing might aim to challenge include traditional (ie non-renewable) power generation and gender inequality.
This is an alternative term for a range of investment approaches including responsible, sustainable or ethical investing. It usually means that ESG factors and values have been integrated into the investment process. Some examples may include human rights and environmental sustainability.
An investment approach that considers environmental, social and corporate governance (ESG) factors, with a focus on companies seeking to improve wellbeing and have a positive impact on society and the physical environment.
Our Sustainable Investment Finder sorts the sustainable funds, exchange-traded funds and investment trusts on our platform into seven sustainable investing categories.
How to find a sustainable investmentTo start investing with us, you’ll need a Fidelity account. See what we have to offer, including our award-winning Stocks and Shares ISA and Self-Invested Personal Pension (SIPP).
Get the latest news and insights from our experts on sustainable and ESG investing.
ESG stands for environmental, social and governance. Broadly speaking, these headings provide the framework which allow investors to assess a company’s or fund’s sustainability credentials. They often overlap, and it can sometimes be hard to tell where an issue belongs as many environmental issues have social implications – and vice versa.
You might also find that ESG is often referred to as ‘sustainable investing’.
For many investors ethical issues are also important, such as avoiding armaments companies, tobacco manufacturers or companies with poor animal welfare standards. Many ESG and sustainability funds consider these issues although the funds we label as ‘ethical’ typically have the highest requirements.
People often swap out terms like ‘sustainable’, ‘ethical’, ‘SRI’ (socially responsible or sustainable and responsible investing) and ‘ESG’ (environmental, social and governance) for each other. But while there is overlap, these terms were coined originally to lead to slightly different investment decisions.
ESG originated from investors wanting to reduce investment risk by researching how companies manage the environmental, social and governance issues that are relevant to their businesses. Sustainable investment was originally concerned with helping to shape a greener, more sustainable future. And ethical investment is an older term which strived to bring personal values into investment decision-making.
Fidelity’s ESG spectrum incorporates both ethical and sustainable investing.
Before we had several decades of performance to look back on, there was a view that ESG and sustainable investing could lead to underperformance as fund managers’ options were more restricted.
It has become increasingly clear that companies that have higher environmental, social and governance standards are often better managed businesses and therefore more likely to succeed. In addition, funds which invest in companies that are ahead of regulatory change and helping to make progress possible are increasingly able to disrupt older business models. However, like any investment, the value of ESG and sustainable investments can go down as well as up, so you may get back less than you invest.
‘Greenwashing’ is where fund managers (or others) mislead potential clients by making false or exaggerated claims about a company’s or fund’s environmental standards.
The best way to guard against most aspects of greenwashing is to look closely at what a fund is designed to do. Funds that say they exclude a particular area, such as tobacco or oil companies, can be expected to do exactly that. Funds that say they will invest in line with named themes, such as renewable energy or healthcare, are more complex to monitor but can be expected to hold companies that align to those themes. Funds that say nothing on these topics, or are unclear in their communications, cannot be expected to invest in any particular way and their views about particular issues may be different from your own.
Funds also have different positions on stewardship – or engaging with companies to encourage them to adopt higher standards – which can lead to different investment decisions. Funds that rely substantially on stewardship activity may hold more controversial companies with the aim of encouraging them to change. So, if you are keen to avoid potentially controversial companies you may prefer to consider funds with stricter exclusions or a stronger focus on positive themes - such as sustainability themed or ethical funds.
It’s also important to remember that many listed companies are very large and complex. Most have both positive and negative features - so where one fund manager may see problems another may see a useful service or valued employment opportunities.
Ultimately, guarding against unwelcome surprises comes down to carrying out your own due diligence as strategies vary. You should start by looking online and even visit the fund manager’s own website, to understand what an individual fund sets out to do, its purpose and where it will and won’t invest.
Find out more about greenwashing and how to protect against it.
ESG reports disclose data which explains the influence a company has on environmental, social and governance issues.
Also known as a ‘sustainability report’, shareholders can see a performance analysis across the three key ESG areas. Through quantitative and qualitative data, the report will look at what the business has achieved and the impact it has on all ESG factors. And any future goals the business is working towards.
Although ESG reports are not compulsory, the rise of regulations in corporate ESG data means it’s often in the best interests of the business to communicate their strategy and consider transparency with shareholders.
Once the account is open, you’ll be able to contribute by:
Important information - please note that the Investment Manager’s focus on securities of companies which maintain strong environmental, social and governance (“ESG”) credentials may result in a return that at times compares unfavourably to similar products without such focus. No representation nor warranty is made with respect to the fairness, accuracy or completeness of such credentials. The status of a security’s ESG credentials can change over time.
Please remember that past performance is not necessarily a guide to future performance, the performance of investments is not guaranteed, and the value of your investments can go down as well as up, so you may get back less than you invest. When investments have particular tax features, these will depend on your personal circumstances and tax rules may change in the future. This website does not contain any personal recommendations for a particular course of action, service or product. You should regularly review your investment objectives and choices and, if you are unsure whether an investment is suitable for you, you should contact an authorised financial adviser. Before opening an account, please read the ‘Doing Business with Fidelity’ document which incorporates our client terms. Prior to investing into a fund, please read the relevant key information document which contains important information about the fund.
This website is issued by Financial Administration Services Limited, which is authorised and regulated by the Financial Conduct Authority (FCA) (FCA Register number 122169) and registered in England and Wales under company number 1629709 whose registered address is Beech Gate, Millfield Lane, Lower Kingswood, Tadworth, Surrey, KT20 6RP.