Investing Guide: ESG and Sustainable Investing in the UK — How to Invest Responsibly in 2025/26
Environmental, social, and governance (ESG) investing has moved from the fringes of fund management to the mainstream. UK investors now have access to hundreds of ESG-screened funds spanning index trackers, exchange-traded funds, and actively managed portfolios — all designed to align your money with your values without necessarily sacrificing returns. According to the Investment Association, assets in responsible investment funds domiciled in the UK exceeded £95 billion by late 2025, a figure that has more than tripled since 2019. But the rapid growth has brought challenges. Greenwashing concerns, inconsistent ESG ratings, and a confusing array of fund labels have left many investors unsure where to start. The FCA's new Sustainability Disclosure Requirements (SDR), which introduced four clear investment labels from late 2024, aim to cut through the noise — yet understanding what these labels mean in practice still requires some homework. This guide explains what ESG investing actually involves, surveys the fund options available to UK investors, examines how sustainable funds have performed against their conventional peers, and walks you through the practical steps to build an ESG portfolio inside a tax-efficient wrapper like an ISA or pension. Whether you are a complete beginner or an experienced investor looking to tilt your portfolio towards sustainability, the sections below cover everything you need to know for the 2025/26 tax year.