Best Sustainable Funds & ETFs for UK Investors
Investing sustainably allows you to put your money into companies and projects that align with your values, from environmental responsibility to social impact, while still aiming for financial growth. But for many beginners in the UK, the options can feel overwhelming: should you choose a fund or an ETF? What are the differences, and which ones are worth looking at?
This guide will explain the difference between funds and ETFs, highlight some common sustainable options available to UK investors in 2026, and show you how to do your own research before investing.
This article is for informational purposes only and is not financial advice. Always do your own research before investing.
Funds vs ETFs: What’s the Difference?
Understanding the difference between funds and ETFs is key to knowing which sustainable investment might suit you.
Actively Managed Funds
These are pooled investments where a fund manager selects which companies to invest in.
Pros:
Professional management — the fund manager screens for sustainability and financial potential.
Often more targeted ESG or ethical criteria.
Cons:
Can have higher fees (ongoing charges) than ETFs.
Performance depends on the manager’s decisions.
Example: Royal London Global Sustainable Equity Fund is an actively managed fund that invests in companies with strong ESG credentials while excluding controversial sectors like fossil fuels or tobacco.
ETFs (Exchange-Traded Funds)
ETFs are like index funds that track a set of companies, often passively. They trade on stock exchanges like a share.
Pros:
Usually lower fees than actively managed funds.
Easy to buy and sell.
Good for beginners looking for broad exposure.
Cons:
Less hands-on management; may not screen as deeply for sustainability nuances.
Can track sectors you’re not interested in if the index is broad.
Example: The UBS MSCI UK Socially Responsible UCITS ETF tracks UK companies meeting ESG criteria. It gives diversified exposure without paying the higher fees of active management.
Key Takeaway
Funds are ideal if you want someone else actively screening for sustainability.
ETFs are ideal if you want low-cost, broad exposure to sustainable companies, with flexibility to buy and sell like a stock.
Popular Sustainable Funds in the UK (2026)
Here are a few examples of actively managed funds that UK investors commonly consider:
Royal London Global Sustainable Equity Fund
Invests in companies globally that meet ethical and ESG criteria.
Excludes sectors like fossil fuels, tobacco, and weapons.
Well-known among UK investors for combining sustainability with a long-term growth focus.
Schroder Global Sustainable Value Equity Fund
Global fund focusing on companies with strong ESG profiles while seeking value opportunities.
Provides broad exposure to international sustainable businesses.
Fees are moderate for active management, and it has a history of competitive returns.
Janus Henderson Global Sustainable Equity Fund
Focuses on global growth companies with sustainable practices.
Combines ESG screening with active stock selection.
Ideal for investors wanting impact and growth in one portfolio.
Tip: Look at fund fact sheets for holdings and ESG methodology. Each fund’s website or platforms like Morningstar provide detailed, updated information.
Popular Sustainable ETFs for UK Investors
ETFs give a low-cost, diversified route to sustainable investing. Some widely recognized options include:
UBS MSCI United Kingdom IMI Socially Responsible UCITS ETF
Tracks ESG-screened UK companies.
Excludes industries like tobacco, alcohol, gambling, and weapons.
Simple way to get broad UK sustainable exposure.
Xtrackers MSCI UK ESG UCITS ETF
Focuses on ESG factors across UK-listed companies.
Provides a low-cost, passive alternative to actively managed ESG funds.
iShares Dow Jones Global Sustainability Screened ETF
Global ETF that screens out companies not meeting ESG criteria.
Gives exposure to multinational corporations with strong sustainability practices.
Vanguard ESG ETFs and Multi-Asset Funds
Vanguard offers diversified ESG ETFs and multi-asset funds like Vanguard SustainableLife.
These are good for beginners who want one-stop exposure to sustainable investments globally.
Other Sustainable Investment Options
Beyond funds and ETFs, some UK investors also explore:
Renewable Energy Trusts: e.g., Octopus Renewables Infrastructure Trust, Greencoat UK Wind.
Thematic Green ETFs: Target specific sectors such as solar, wind, or energy efficiency.
These can add specialized exposure, but may also be more volatile and require more research.
How to Research Sustainable Investments
Even with popular options, it’s essential to verify sustainability claims and make sure a fund aligns with your values. Here are steps you can take:
Check the fund provider’s fact sheet: Look for holdings, fees, and sustainability strategy.
Use independent ESG ratings: Morningstar, MSCI, and Sustainalytics provide scores and rankings.
Compare similar options: See how fees, sector exposure, and sustainability align across funds or ETFs.
Be aware of greenwashing: Some funds may overstate ESG credentials — check multiple sources.
Conclusion
There is no single “best” sustainable investment, the right choice depends on your financial goals, budget, and values.
Actively managed funds can provide professional ESG screening and targeted strategies.
ETFs are lower-cost, flexible, and easy to buy for broad sustainable exposure.
Trusts and thematic ETFs allow focused exposure to sectors like renewable energy.
By starting with widely recognized funds and ETFs, and doing your own research into holdings, ESG methodology, and fees, UK investors can confidently start their sustainable investing journey.
Always verify information and consider consulting a financial advisor. Past performance is not a guarantee of future results.