What is responsible investing?

Responsible investing is about factoring in more than just financial performance. It means looking at how companies affect the world around them—through the environment, how they treat people, and how they’re run. These are known as environmental, social, and governance (ESG) factors.

In short, responsible investors consider how companies impact people and the planet, how those impacts are managed, and what that means for long-term returns.

What is ESG?

ESG factors help investors assess risk and spot opportunities for sustainable growth.

Environment

How a company affects the natural world. Think carbon emissions, pollution, biodiversity, and resource use.

Social

How a company treats people. That includes working conditions, human rights, and diversity.

Governance

How a company is run. This covers leadership, transparency, board structure, and accountability.

Why invest responsibly?

Make a positive impact

Responsible investing can allow your money to grow while having a positive impact on people and the planet. It also gives you an opportunity to align your money with your values. For example, by avoiding harmful activities or sectors, or by seeking investments in companies committed to ethical and sustainable goals.

Increasing awareness

More people, businesses, and governments are recognising the importance of ESG issues. From climate change to data security, these challenges are shaping the way we invest. ESG investing has grown rapidly, surpassing $30 trillion globally in 2022 and expected to reach over $40 trillion by 2030.

Bloomberg Intelligence, 2024

Manage risk, find opportunity

Responsible investing can help reduce exposure to risks—like companies that aren’t managing their environmental impact or treating workers fairly. It can also open the door to growth by backing businesses that are adapting to a low-carbon economy or leading on ESG issues.

Our commitment

At Lloyds Banking Group, we’re playing our part to build a sustainable and inclusive future through the investments we make. We’ve set several targets for sustainable finance and investments to support the decarbonisation of our business.

We've committed £30 billion to sustainable finance in commercial banking by 2026. We aim for a 50% reduction in carbon emissions linked to our lending activity by 2030.

In our pensions business, Scottish Widows achieved its cumulative investment target of investing £20 to £25 billion in climate-aware strategies by 2025. £25.9 billion was invested by the end of 2024. This plan supports its goal of halving financed emissions by 2030 and achieving net-zero emissions by 2050.

Understanding the FCA’s sustainability labels

The Financial Conduct Authority (FCA) has introduced four labels to help investors identify sustainable funds. Each label reflects a different level of commitment to sustainability.

To get a label, funds must meet strict criteria. This helps reduce the risk of greenwashing— where something is marketed as more sustainable than it really is.

Focus

Funds investing in companies that are environmentally and/or socially sustainable.

Improvers

Funds investing in companies with the potential to improve their environmental and/or social sustainability over time.

Impact

Funds investing in companies that aim to achieve a positive, measurable impact on the environment and/or society.

Mixed goals

Funds investing in a mix of companies that are already sustainable, have potential to become more sustainable, or aim to achieve a positive impact.

Get started with the Funds Centre

Get started with the Funds Centre

The Funds Centre is a good place to start if you’re looking for responsible investment options that match your goals.

Use the ESG filter

The ESG filter helps you find UK-based funds with different sustainability aims. These funds are approved by UK regulators, so you can invest with confidence.

Funds Centre

Please remember that the value of investments and the income from them can fall as well as rise, and you may get back less than you invest. If you’re not sure about investing, seek financial advice. There will normally be a charge for that advice.

FSCS logo

Investments with Halifax Share Dealing Limited are protected up to a total of £85,000 by the Financial Services Compensation Scheme. This limit is applied to the aggregated total of any stock or cash held across the following brands which we administer.

This is in addition to any other savings deposits you may hold across Lloyds Banking Group.