What a Green ISA could offer
The UK Sustainable Investment Forum (UKSIF) has called on the government to introduce a Green ISA.
A Green ISA could be offered by the proposed Green Investment Bank (GIB) which the government is planning to set-up to invest in renewable energy and efforts to tackle climate change. An independent commission recommended that the GIB offer Green ISAs as way for retail investors to contribute towards the development of renewable energy.
A Green ISA allowance would be on top of the existing ISA allowance which allows a certain amount to be saved each financial year without paying any tax on the interest earned. A Green ISA could allow tax-free investment up to a greater amount as long as the investment was made in eligible companies, such as renewable energy providers.
It is likely that a Green ISA allowance would only apply to stocks and shares ISA investments.
Although there is currently no specifc ISA allowance for green investment, ethical funds are available that only invest in companies meeting certain criteria. This is known as Socially Responsible Investment (SRI).
Different 'ethical' funds will have different strategies for the assets they hold and further information should be sought about the types of investments particular funds make.
Some ethical funds are eligible for ISA investments, while some banks like the Co-operative Bank have ethical and sustainability criteria determining how they do business.
See the table below for some leading ethical funds currently available through Fair Investment Company: