A Guide to Sustainable Investing in 2026

Understanding sustainable investing is the first step toward aligning your money with your values. This guide explores the concept of sustainable investing, the frameworks that are commonly used, and how you can get started in the UK.

Sustainable investing is an investment strategy that considers environmental, social, and corporate governance criteria with the aim of generating long-term competitive financial returns, as well as making a positive societal impact. This approach gives you the insight and opportunity to support companies actively solving global challenges while avoiding those causing harm to people or the planet, empowering you to make more informed, more ethical decisions. 

To fully grasp the meaning of sustainable investing and how it’s evaluated, it can be useful to break down the core criteria used to evaluate companies. These are known as ESG factors.

ESG stands for environmental, social, and governance. ESG factors are used to evaluate companies, setting criteria that investors can use to better understand operational sustainability, ethical impact, and long-term risk management. ESG frameworks are often used by those seeking more sustainable investment opportunities as a way of analysing company operations, giving investors the information they need to align their portfolio with their personal values. 

Environmental factors consider how a company’s operations impact the natural world. This may be the most crucial ESG factor if you’re seeking investment opportunities that support the sustainability of the planet, natural world, and ecosystems. 

• Climate change policies: How the business reduces greenhouse gas emissions.
• Resource management: The approach to water usage, waste reduction, and recycling.
• Renewable energy: Investments in clean, sustainable energy sources.

Social factors examine how a company treats its employees and the wider community. This pillar focuses on human rights, labour standards, diversity, health and safety, and community impact. 

• Workplace safety: Ensuring safe and healthy conditions for all workers, strictly upholding human rights while ensuring fair working practices and employment terms.
• Diversity and inclusion: Promoting equal opportunities across the entire business, including at leadership level, and fostering a culture of inclusion and collaboration.
• Community engagement: Supporting and adding value in local communities, including philanthropy, while mitigating the impact of business operations. 

Governance factors assess how a company is managed and run from the top down. This encompasses controls procedures, compliance with the law, and ethical behaviour across the company, ensuring fair governance and practices. 

• Board diversity: Having a wide range of voices and experiences shaping the company and setting priorities at the leadership level.
• Executive pay: Ensuring corporate compensation is fair, proportionate, and transparent.
• Business ethics: Setting and implementing strict policies against corruption, bribery, and poor management practices, instilling a culture where people are supported to do the right thing. 

When exploring sustainable investing, you will find various ways to put your money to work. Choosing sustainable investments and sustainable assets allows you to back specific environmental and social solutions based on your personal financial goals and risk appetite.

• Green bonds: These are fixed-income instruments issued by governments or corporations specifically to finance environmental projects, such as building renewable energy infrastructure or improving pollution control.
• Social impact bonds (SIBs): Unlike traditional bonds, these are unique contracts with the public sector or local government where financial returns are explicitly tied to achieving proven, positive social outcomes. Examples include funding programs that reduce reoffending rates, support affordable housing, or improve community healthcare initiatives.
• Sustainable funds and ETFs: Exchange-traded funds (ETFs) and mutual funds pool your money with other investors’ to buy a diversified basket of shares or bonds. Some of the funds available focus on specific themes like clean technology, sustainable water management, or waste reduction, making it easier to diversify your portfolio and align it with your sustainable investing goals. 
• Renewable energy infrastructure: Investors can purchase shares in specialised investment trusts that own and operate green utility assets. These assets include wind farms, solar parks, and grid-scale battery storage facilities across the UK.
• Green savings and notice accounts: If you prefer more predictable options as part of your portfolio, certain cash accounts offer an eco-friendly overlay. With these products, the bank explicitly commits to using your deposit balances to fund local green projects or energy-efficient housing developments.

These are some of the potential risks and benefits to weigh up when considering sustainable investing as part of your portfolio.

It’s important to carry out careful research before embarking on any new investment strategy, and you may want to consult an independent financial advisor.

When navigating the world of green finance and more ethical investments, you might hear the terms sustainable investing and impact investing used interchangeably. However, they represent slightly different approaches to putting your money to work while considering people and the planet.

Sustainable investing is a broader strategy. It uses environmental, social, and governance (ESG) factors to assess potential risks and opportunities. The main objective is to generate competitive returns while aligning your portfolio with your values, often by screening out harmful industries or favouring companies with good ethical practices.

Impact investing specifically targets measurable, positive outcomes alongside a financial return. Impact investors focus on actively funding solutions to specific challenges, such as building affordable housing or developing new renewable energy technologies.

There’s also ethical investing, an approach that places the most emphasis on personal values. 

Here’s how they compare:

Greenwashing happens when an investment is presented as more environmentally or socially responsible than it actually is. To improve trust and protect investors, the Financial Conduct Authority (FCA) has implemented the Sustainability Disclosure Requirements (SDR) regime. This framework is designed to help you confidently navigate the market for sustainable financial products.

A core part of this regime is a strict anti-greenwashing rule, which states that any sustainability-related claims made by authorised firms must be fair, clear, and not misleading. The rule requires all communications about the environmental and social characteristics of financial products to be factually correct and complete. 

Firms managing £5 billion or more in assets will face mandatory entity-level disclosure rules from December 2026, ensuring broader corporate transparency. Products must also meet a strict 70% asset alignment threshold to qualify for an official sustainability label. These labels are:

Sustainability Focus: Funds that invest mainly in assets that already meet robust, evidence-based standards for environmental or social sustainability.

Sustainability Improvers: Funds that invest in assets that may not be fully sustainable today, but have clearly defined, measurable targets to improve their environmental or social impact over time.

Sustainability Impact: Funds that explicitly aim to achieve a positive, measurable contribution to real-world environmental or social outcomes alongside a financial return.

Sustainability Mixed Goals: Funds that allocate your money across a blended combination of the Focus, Improvers, and Impact strategies.

Investing through the Raisin platform allows you to view and manage your savings effortlessly by providing direct access to a range of competitive accounts from our partner banks. By simplifying how you find, open, and manage savings products, Raisin helps you take control of your financial future without corporate jargon or unnecessary complexity.

For your peace of mind, all eligible cash deposits held with UK partner banks through the Raisin platform are protected up to £120,000 per depositor, per bank, under the statutory Financial Services Compensation Scheme (FSCS).