Ethical & ESG Investing

Ethical investing means seeking a financial return while directing your money toward companies whose behaviour you are prepared to profit from, and away from those you are not. It has moved from niche to mainstream: environmental, social and governance (ESG) analysis is now embedded in how much of the fund industry assesses risk, because companies with poor practices carry real financial risk as well as reputational risk.

SIP Wealth Management offers ethical alternatives at all levels of risk-graded portfolios, from Cautious to Adventurous, so investing by your values never means abandoning the risk level that suits you.

What does ESG cover?

Environmental: emissions and climate impact, energy use, waste and the sourcing of raw materials.
Social: human rights and labour practices in a company and its supply chain, product safety and community impact.
Governance: board ethics and accountability, executive pay, shareholder rights, workplace equality and safety.

How ethical funds choose their investments

Negative screening excludes sectors or companies that breach defined standards, such as tobacco or armaments (the traditional “sin stocks”).
Positive screening actively selects companies with strong environmental and social credentials.
Thematic investing targets specific areas such as renewable energy, water or resource efficiency.

Most modern ethical funds blend these approaches, and the blend matters: two funds both labelled “sustainable” can hold very different companies.

How we keep your portfolio honestly ethical

Fund marketing and fund holdings are not always the same thing. We look at what funds actually own: underlying holdings, screening methodology and the manager’s stewardship record, as part of the same investment process and risk discipline we apply to our core portfolios.

Regulation now helps too. The FCA’s Sustainability Disclosure Requirements give UK funds strict rules on sustainability claims and a set of official investment labels, making it easier to separate genuinely sustainable funds from greenwashing. We use these standards in our fund selection and will explain plainly what any fund you hold is actually doing.

Does ethical investing mean lower returns?

Not inherently. Ethical portfolios behave differently from mainstream ones: they are typically lighter in oil, mining and tobacco and heavier in technology and healthcare, so returns will diverge in both directions over different periods. What matters is that your portfolio matches your risk profile and your values, and that you understand the trade-offs before you invest.

Speak to us about ethical investing

Whether you want your ISA, pension or whole portfolio aligned to your values, or simply want to understand what your current funds really hold, your first meeting is free and without obligation.

The value of investments can fall as well as rise and you may get back less than you invested. Past performance is not a guide to future performance.

Frequently Asked Questions

What is the difference between ethical investing and ESG?admin2026-08-20T09:15:33+01:00

What is the difference between ethical investing and ESG?

Ethical investing is values-led: excluding or selecting investments to match your principles. ESG is an analytical framework that scores companies on environmental, social and governance factors, often used to manage risk as much as to express values. Most modern “ethical” funds use both, which is why understanding what a fund actually does matters more than its label.

Do ethical funds perform worse than normal funds?admin2026-08-20T09:15:54+01:00

Do ethical funds perform worse than normal funds?

There is no consistent evidence that ethical investing must underperform. Because ethical portfolios tilt away from sectors like oil and tobacco and towards others like technology and healthcare, their returns differ from mainstream benchmarks year to year, sometimes ahead and sometimes behind. We match ethical portfolios to your risk profile exactly as we would any other.

Can my pension or ISA be invested ethically?admin2026-08-20T09:16:16+01:00

Can my pension or ISA be invested ethically?

No. Our ethical portfolios are built at the same five risk levels as our core range, from Cautious to Adventurous, using the same asset allocation discipline. Your risk profile is set first; your values then shape which investments fill it.

Can I make just part of my portfolio ethical?admin2026-08-20T09:16:44+01:00

Can I make just part of my portfolio ethical?

Yes, and many clients start this way: for example, an ethical ISA alongside an existing pension portfolio. We will structure it so the overall blend still matches your risk profile and financial goals.

How do I know a fund is genuinely ethical and not greenwashing?admin2026-08-20T09:17:53+01:00

How do I know a fund is genuinely ethical and not greenwashing?

Look at what it holds, not what its marketing says. The FCA’s sustainability labelling rules now restrict how UK funds can describe themselves, which helps, but the reliable test remains the underlying holdings, the screening methodology and the manager’s voting record. Reviewing exactly this is part of our fund selection process.

Will I have to take more risk to invest ethically?admin2026-08-20T09:18:26+01:00

Will I have to take more risk to invest ethically?

Last reviewed: August 2026

Ethical and ESG Investment Enquiry

Complete the short form below to arrange a free initial meeting. Alternatively, call us on 01792 720 200.

Ethical & ESG Investing