Best Brokers For Ethical Investing

Finding the best brokers for ethical investing is one of the most direct ways we can contribute to positive change in the world. Ethical investing is an umbrella term for all approaches to investing whereby trading can be both socially and environmentally responsible.

While fighting climate change and making changes to our lifestyle may seem a daunting task, technological advancements enable traders to support sustainability efforts. Using the best ethical investing brokers will help you invest your capital in green stocks, renewable energy, clean water and much more. In our review of the best brokers for ethical investing, we explain what it is, its pros and cons and the types of ethical investments you can make.

Best Brokers For Ethical Investing

These 5 firms offer the best selection of trading products for ethically-conscious investors:

#1 - eToro

Why We Chose eToro

eToro is a top-rated multi-asset platform which offers trading services in thousands of CFDs, stocks and cryptoassets. Launched in 2007, the brand has millions of active traders globally and is authorized by tier one regulators, including the FCA and CySEC. The brand is particularly popular for its comprehensive social trading platform. Cryptoasset investing is highly volatile and unregulated in the UK and some EU countries. No consumer protection. Tax on profits may apply. 76% of retail accounts lose money.

"eToro's social trading platform leads the pack with a terrific user experience and active community chat that can help beginners find opportunities. There are also competitive fees on thousands of CFDs and real stocks, plus excellent rewards for experienced strategy providers."

- DayTrading Review Team
  • Instruments: CFDs, Forex, Stocks, ETFs, Cryptos, Futures, Commodities, Bonds
  • Regulator: FCA, ASIC, CySEC, FSA, FSRA, MFSA
  • Platforms: eToro Web, CopyTrader, TradingCentral
  • Minimum Deposit: $50
  • Minimum Trade: $10

#2 - Interactive Investor

Why We Chose Interactive Investor

Interactive Investor are a hugely respected, FCA-regulated investing firm. The trading platform is easy-to-use while the sign-up and deposit process is straightforward for new investors. ii also has a long track record and a string of industry awards under its belt.

"Interactive Investor is an excellent pick for UK traders interested in longer-term investing products like ISAs and SIPP accounts. The low fixed fees for large portfolios and 40,000+ stocks will also appeal to traders with a decent bankroll."

- DayTrading Review Team
  • Instruments: Stocks, Funds, Trusts, ETFs, Bonds, Gilts, VCTs
  • Regulator: FCA
  • Platforms: Own
  • Minimum Deposit: £0
  • Minimum Trade: £25

#3 - IG

Why We Chose IG

Founded in 1974, IG is part of IG Group Holdings Plc, a publicly traded (LSE: IGG) brokerage. The brand offers spread betting, CFD and forex trading across an almost unrivalled selection of 17,000+ markets, with a range of user-friendly platforms and investing apps. For 50 years, IG has maintained its position as an industry leader, excelling in all key areas for traders.

"IG continues to provide a comprehensive package with an intuitive web platform and best-in-class education for beginners, plus advanced charting tools, real-time data, and fast execution speeds for experienced day traders."

- DayTrading Review Team
  • Instruments: CFDs, Forex, Stocks, Indices, Commodities, ETFs, Futures, Options, Crypto, Spread Betting
  • Regulator: FCA, ASIC, NFA, CFTC, DFSA, BaFin, MAS, FSCA, FINMA
  • Platforms: Web, ProRealTime, L2 Dealer, MT4, AutoChartist, TradingCentral
  • Minimum Deposit: $0
  • Minimum Trade: 0.01 Lots
  • Leverage: 1:30 (Retail), 1:250 (Pro)

#4 - XTB

Why We Chose XTB

Founded in 2002 in Poland, XTB now serves more than 935,000 clients. The forex and CFD broker combines a heavily regulated trading environment with an extensive selection of 5,600+ assets and a commitment to trader satisfaction, featuring an intuitive in-house platform with superb tools to support aspiring day traders.

"XTB stands out as a top choice for new day traders with the terrific xStation platform, commission-free pricing, no minimum deposit, and excellent educational tools, many of which are seamlessly integrated into the platform. "

- DayTrading Review Team
  • Instruments: CFDs, Forex, Stocks, Indices, Commodities, Crypto, ETFs
  • Regulator: FCA, CySEC, KNF, CNMV, DFSA, FSC
  • Platforms: xStation
  • Minimum Deposit: $0
  • Minimum Trade: 0.01 Lots
  • Leverage: 1:30 (EU) 1:500 (Global)

#5 - Plus500

Why We Chose Plus500

Established in 2008 and headquartered in Israel, Plus500 is a prominent brokerage that boasts over 25 million registered traders in over 50 countries. Specializing in CFD trading, the company offers an intuitive, proprietary platform and mobile app. It maintains competitive spreads and does not charge commissions or deposit or withdrawal fees. Plus500 also continues to shine as one of the most trusted brokers with licenses from reputable regulators, including the FCA, ASIC and CySEC.

"Plus500 offers a super-clean experience for traders with a CFD trading platform that sports a modern design and dynamic charting. That said, the broker’s research tools are limited, fees trail the cheapest brokers, and there’s room for enhancement in its educational resources."

- DayTrading Review Team
  • Instruments: CFDs on Forex, Stocks, Indices, Commodities, ETFs, Futures, Options, Crypto
  • Platforms: WebTrader, App
  • Minimum Deposit: $100
  • Minimum Trade: 0.01 Lots
  • Leverage: 1:30

What is Ethical Investing?

Before comparing the best brokers for ethical investing, let us first define the term. Ethical investing refers to the practice of aligning your moral compass and ethical values (environmental, social, political, religious, etc) to your selection of securities investing. The term encompasses all approaches to investing that consider ethical principles as well as profits. Ethical investing is entirely subjective, depending on a trader’s views.

Ethical investing often aims to stop traders from profiting from activities that may be considered harmful to society and the environment. It encourages traders to invest in companies, projects, funds and other assets that are committed to sustainable operations and consider issues like climate change, gender equality, animal testing, firearms and gambling, for example.

Typically, the best brokers for ethical investing filter out harmful activities (negative screening) and seek out those investment options that are committed to making positive changes and impacts through their environmental, social and governance (ESG) practices (positive screening):

Types Of Ethical Investing

This practice has lots of variations, even within just one of the best brokers for ethical investing, including green, socially responsible, impact and ESG investing. While most of these centre on the same idea and are often used interchangeably, we have explored them in more detail below:

Green Investing

Green investing specifically focuses on the environmental impacts of businesses and their commitment to the reduction of pollution and greenhouse gases, the conservation of natural resources and other environmentally friendly practices. Traders can buy green indices, ETFs, bonds and mutual funds or hold stocks in environmentally-conscious companies that support green initiatives. Pure-play green investments are those that generate all or most of their profits from green business brokers for ethical investing

Green business activities can be companies engaging in renewable energy research, developing eco-friendly alternatives to plastics or seeking to reduce pollution and the environmental impact from their operations.

This can be split into three categories, dark, medium and light green investing. Dark green investing is a strictly screened approach, avoiding any company or industry that does not meet the criteria, whereas light green investing seeks companies that are doing good rather than excluding companies that are considered to cause harm. Medium green approaches are a combination of the two.

ESG Investing

ESG stands for Environmental, Social and Governance and is one of the most common forms offered by the best brokers for ethical investing. It is a form of ethical trading that considers an investment’s financial returns as well as its behaviours. Their impact on the world is measured using a score based on the following principles:

Socially Responsible Investing (SRI)

Socially responsible investing (SRI) does what it says on the tin: it is an investment that is considered socially responsible based on the nature of the business. SRI actively eliminates ‘sin stocks’ or selects investments according to specific ethical guidelines, like the ESG scoring system. The best brokers for ethical investing of this form blend positive and negative screening to capture the best of both worlds.

Socially responsible investments usually mimic the current social, economic and political climate. Therefore, the investments may suffer if something changes within that climate. Traders should be aware that just because an investment is socially responsible does not mean that it will provide investors with a good return.

An example of SRI is community investing, which goes towards companies that have a track record of helping the community but have also been unable to generate funds from other sources like financial institutions. By investing in these types of companies, they can continue to provide services to communities like affordable housing and loans, without depending on governmental assistance.

Impact Investing

Impact investing is a method that delivers measurable social and/or societal effects and benefits, alongside financial gains. The best brokers for ethical investing of this type focus on generating specific social or environmental outcomes whereby investments are put into market segments dedicated to solving certain issues.

A basic goal of impact investing is to help reduce the negative effects of business activities on the social environment and can often be considered an extension of philanthropy.

Using impact investing as a strategy involves considering a company’s commitment to corporate social responsibility (CSR). Impact investing is mostly done by institutional investors such as hedge funds, banks and pension funds. Traders may choose to invest their money into emerging or developed economies and an array of industries including agriculture, education, energy (particularly clean and renewable), and healthcare.

Ethical Company Stocks

The best brokers for ethical investing will allow you to invest in companies with strong environmental commitments, which is the simplest and most popular form of ethical investing. Many new start-ups are seeking to develop alternative energies and greener materials, while established companies are betting on a low-carbon future. It can be time-consuming to pick stocks and keep track of their performance and green credentials.

However, it results in a bespoke portfolio that matches your sense of what is ethical and important.

Top ethical stocks to invest in can include Tesla, which has reached high valuation by targeting environmentally-conscious consumers. Salesforce also does well on ESG criteria as it has maintained net-zero greenhouse emissions since 2018 and is over half the way towards its 100% renewable energy by 2022 target. Other top investments include 3M (MMM), Colgate-Palmolive, and Kimberly-Clark.

Ethical Indices

Several indices seek to track environmentally favourable and sustainable businesses. Some organisations have created ethical indices that calculate benchmarks whose underlying is selected based on ESG criteria.

The starting point is a traditional index to which filters are applied (negative or positive criteria) to eliminate companies that do not satisfy social responsibility criteria. The investment spectrum will be filtered to a greater or lesser extent depending on the stringency of the SRI or ESG policies applied. Features like capitalisation, sector and geographical diversification are nearly always retained to give financial credibility to the index.

For example, the NASDAQ Clean Edge Green Energy Index and the MAC Global Solar Energy Index both target the renewable energy sector. The Dow Jones Sustainability Index (DJSI) was launched in 1999 and the FTSE4Good index was designed to measure the performance of companies that comply with recognised global sustainability standards.

These are two of the most well-known ethical investment indices for UK companies. The MSCI indices are global benchmarks that exclude companies operating in certain business segments that investors might prefer to avoid and includes companies with high ESG standards. The best brokers for ethical investing through indices will offer a wide range of such assets to allow clients to specialise or diversify their portfolios within the boundaries of their beliefs.

Ethical Funds

There is estimated to be more than £19 billion invested in ethical funds in the UK and $80 billion globally. Mutual funds, ETFs and index funds can provide wider exposure to ethical companies. Ethical funds that invest in renewable energy companies, for example, allow traders to support new technologies while perhaps tapping into any potential growth.

Ethical funds are provided by asset or investment management firms. They apply negative and/or positive value-based screening to help sift through socially responsible investments.

Ethical Cryptos

There has been a lot of attention on Bitcoin’s environmental impact recently, so some of the best brokers for ethical investing have been looking for ways that crypto traders can find the best of both worlds.

Bitcoin relies on the proof of work verification system for its blockchain, involving huge numbers of calculations and amounts of processing power to produce a single coin. While efforts are being made to reduce the digital currency’s carbon footprint, traders have started looking for greener options. Cryptocurrencies that use a proof of stake system, for example, use far less energy.

Smaller cryptos have a lower energy footprint as they involve fewer daily transactions, while some are just generally more energy efficient. Below we have listed some more sustainable cryptocurrencies:

top ethical brokers for crypto trading

Pros Of Ethical Investing For Traders

There are many obvious advantages of using the best brokers for ethical investing:

Cons Of Ethical Investing For Traders

Despite making a positive impact, even the best brokers for ethical investing has some drawbacks:

Final Word On The Best Brokers For Ethical Investing

Ethical investing is a growing phenomenon among traders as it balances earning profits with making positive environmental, ecological, political and social changes in the world. From an investor’s point of view, buying stocks in companies that fit into ESG criteria is a simple way to make a difference but doing the research can often be time-consuming. Using an ethical investment fund or a broker for ethical investing is a simpler way but is an expensive option.


How Can I Invest Ethically?

Before getting involved with the best brokers for ethical investing, some research is required. Firstly, consider what you are passionate about. Choose an issue (or several) that you care about as this will help narrow your search for investments. Next, choose an approach: do you want to exclude certain sectors completely, invest in problematic companies to improve their operations or invest your money into finding solutions. Following that, you need to pick a fund, asset or company by checking their mission statement to see if your values are aligned (or not) with theirs.

Is Islamic Trading A Type Of Ethical Investing?

Yes, Islamic trading accounts are a popular example of a religious-based approach, offered by many of the best brokers for ethical investing. The main attraction of brokers offering Islamic accounts is that it allows those who follow Sharia Law to trade on the markets without breaking with their faith. It also allows traders to stay true to their morals and ethics, avoiding investments involving alcohol, pork, gambling and other forbidden items.

How Do Ethical Investing Returns Compare?

No investment method or strategy is guaranteed to generate more or fewer profits than another. The performance of ethical funds is similar to that of traditional funds, if not somewhat better, and the greater depth of research and analysis of companies may mean that you invest in better ones. However, excluding certain industries may also limit your growth prospects and diversification opportunities.

What Is The Difference Between ESG Vs SRI Vs Impact Investing?

ESG investing has set criteria, looking at a company’s environmental, social and governance practices while also using more traditional financial measures to enhance analysis. Socially responsible investing involves negatively screening companies or excluding certain investments based on personal ethical criteria. Impact investing is focused on generating specific social or environmental outcomes and investments are put into market segments dedicated to solving certain issues.

Who Are The Best Brokers For Ethical Investing?

Interactive Brokers have ESG scores on all its platforms and you can receive alerts where ESG news may affect the scores of the companies you are investing in. With OpenInvest, you can declare what you care about most, whether that is climate change or social equality, and they will handle your investments accordingly. Ellevest is a platform built “for women by women” that considers the reality of women’s lives, including the gender pay gap. With its impact portfolio, traders can invest in women in leadership, sustainable practices and community development.