Updated in September 2025
“Traditional” on this page means products that your bank will recommend you. Traditional products are a solid way to get started on sustainable investing for individuals and retail investors. The options on this page are all tried and tested, which makes it easier for you to build trust in them. You’re very likely to have friends or family who’ve used them, so you can and should learn from their experiences. But, you’ll have to compromise on impact – don’t expect to change the world this way. For the world-changing stuff, head on over to my alternative options for Impact Investing.
In any case, the prime rule of any investor should be diversification: if you can, invest in a variety of industries, regions, currencies, asset classes so that shocks to one particular investment won’t get you into trouble!
Disclaimer:
Please note that my evaluation of the options below are all based on my own personal experience and subjective assessment. I am not a finance professional, so none of it constitutes investment advice. Remember: It’s your money and you’re ultimately responsible for what you do with it. However, this list will definitely help you in getting a broader overview of what you CAN do to invest with a positive impact.
Stocks – the straightforward way of sustainable investing
The most familiar asset class for most investors. They are most easily bought through a traditional bank by opening a custody account. This will likely be linked to your regular bank account for you to buy shares online. Sustainable investing through shares means you’ll buy a piece of companies that you trust are beneficial to our society and have a bright future themselves. Indeed, the latter two points are a key challenge in deciding what shares to buy. I will dive into that in a separate article later.
Suitable for you if:
> You have formed strong trust in the sustainability credentials of one particular company. If you buy its shares, you’ll invest in its future and share in its success.
> You have at least few thousand to invest. You can also start with less, but then the bank’s transaction fees will hit you more substantially. I personally try to buy shares in big enough quantities that the fees are 1% or less. Online banks or neo brokers tend to be cheaper on this.
> You have a long investment horizon (5+ years) to sit out fluctuations in share price.
Advantages:
- Relatively easy to do. Since it’s a very common form of investment, many people know how it works. As with any investment nobody can reliably tell you what to buy of course. Still, you should seek the advice of your bank or maybe also your friends before making your first investment.
- Targeted. You can focus on specific companies in whose products and operations you have confidence.
- Transparent. Listed companies, i.e. the sort that are large enough to have their shares traded on a stock exchange, are required by law to publish lots of information on their business – including, increasingly, sustainability information. They are also frequently in the media spotlight, so independent news is easier to come by.
- Moderate risk. Large companies are less vulnerable to shocks to the economy. Although the value of their shares can fluctuate a lot in the short term, shares tend to go up in the long term. But remember that diversification is key and that there is still a risk that all your shares lose value simultaneously. Also, not all listed companies are actually that large.
Disadvantages:
- Share values fluctuate. If you end up needing your money back quickly, you might be forced to sell at a time when the share price is low and thus lose money.
- Nobody’s an angel. Only large enough companies can be invested in in this way. And the larger the company, the higher the chance that they are involved in something that you don’t like.
- Initial financial hurdle. High fees with traditional banks mean that there is a relatively high financial starting investment from which it makes sense to start buying shares. Neo brokers such as Trade Republic or Robinhood have changed this in recent years, making stock trading more accessible. I don’t have any personal experience with them, however.
- No real impact. Unless your stock broker allows you to vote for shareholder resolutions – and you actually decide to do so – buying stocks creates virtually zero impact.
Actively Managed Sustainability Funds: What they will try to sell you as your first sustainable investment
As mentioned previously, pretty much all banks have at least one nowadays. In my experience, those are a bank’s standard sustainability products. A fund contains a large number of shares of listed companies that the fund manager bundles together based on certain criteria and then sells to investors for a fee.
There are a number of difficulties related to this approach. In few words, the selection criteria for these funds are usually quite generous. Ideally, the fund manager employs the best-in-class approach. Such a fund includes, say, the five companies in every sector with the best performance based on a sustainability rating. While this approach is quite good in excluding the worst offenders, you’ll still find oil and gas companies in your portfolio. In the worst case, the “sustainability” label in the fund’s description borders on greenwashing. This is the case for funds that only apply exclusion criteria for number of controversial industries. These are usually armaments, pornography, tobacco, alcohol, gambling and sometimes nuclear energy or, increasingly, fossil fuels.
Actively managed funds using positive selection
A better approach from a sustainability point of view is positive selection. This means the fund manager actively selects companies for the fund with strong sustainability performance. Because this usually means that fewer companies will make it in, which negatively affects diversification, this hand-picking is not a very common approach. But the solutions that do exist make it a point to tailor a client’s portfolio to his or her values and priorities. Gender equality is all you care about? Here’s a portfolio of companies that excells at having female board members, even if they are not perfect when it comes to CO2 emissions!
There are fintech start-ups following the positive selection method, but of the three I listed when I started this blog – Inyova (Switzerland), tickr (UK) and Swell Investing (USA) – only Inyova is still in business and doing well. Currently, I’m aware of Carbon Collective (USA) as an alternative, let me know in the comments if you know any others! I have reviewed Inyova here and will publish an update soon including the long-term performance of my portfolio.
Suitable for you if:
> You have a long investment horizon (5+ years) because, like individual shares, funds can fluctuate.
> You don’t know enough about individual companies or want to invest in many companies at once to achieve better diversification.
> You have a bank you trust to sell you a product with robust sustainability credentials.
Potential for sustainable impact
Advantages:
- Instant diversification. It’s similar to buying shares but you are automatically invested in various companies and industries, sometimes also across different countries.
- Large variety. There are many products available on the market for you to choose from, although this does not apply to funds with positive selection
Disadvantages:
- Green with a tint of brown. You might end up having companies in your sustainability fund that are not sustainable in the conventional sense, e.g. oil companies or large car manufacturers. They may be better than their competition, but not actually green.
- Rather expensive. Fees can easily reach 1.5% per year or more. Funds that are actively managed mean more costs for the fund manager, which they charge you in the form of higher fees. Plus, sustainability performance is one more thing the manager has to take into account when deciding what companies to buy or sell.
Examples:
– Inyova (Switzerland, see my separate blog post)
– Carbon Collective (USA)
Passively Managed Funds / Sustainable ETFs: Imperfect sustainability-wise, but with low costs
Passive funds have gained in popularity in recent years because they are similar to active funds, but much cheaper. Some come as cheap as 0.2% of the invested capital per year. These low costs are achieved by just tracking a reference index, i.e. a catalogue of traded shares, meaning low effort for the fund manager.
Because these funds tend to follow indices containing dozens of companies, your diversification is also likely to be higher – and the risk thus lower – than with an active fund. This is less true for thematic ETFs. These have mushroomed in the past years and allow you to focus on specific Industries, such as hydrogen, EVs or water.
Suitable for you if:
> Same as for actively managed funds
Advantages:
- Cheap.
- Very high diversification. You benefit from the general development of a market, which is usually upwards over a longer horizon. If one or a few companies of the underlying index do badly, it doesn’t hurt the performance so much.
- Thematic index funds allow you to focus on an investment theme at the price of lower diversification
Disadvantages:
- Brown with a tint of green. The low cost comes at an immaterial price. You will have lots of companies in the index that are not really sustainable or even “bad guys”. Finding the right product here is hard from a sustainability point of view. There are more and more themed passive funds on the market, but I find these hard to evaluate.
Green Bonds: Fixed income, easy to understand
[soon to follow]