Brokers With Sustainable Stocks
The best brokers offering sustainable stocks allow clients to make investments in environmentally friendly companies. There are many trading products that investors can use, such as individual stocks, ETFs and indices, which track a range of sustainable companies. This tutorial will explain how sustainable stock trading works, from picking suitable securities to comparing the top platforms. Our team have also compiled a list of the best brokers for sustainable stock trading in 2024:
Top UK Brokers With Sustainable Stocks
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eToro offers access to thousands of stocks and shares from all over Europe, the US and beyond, with new opportunities on Dubai's top stocks added in 2024. Traders can invest alone or join millions of other traders in eToro's popular social trading community. Buy-and-hold investors can also try out the broker's Smart Portfolios, covering exciting thematic collections like Big Tech.
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Plus500 continues to offer an extensive range of shares across UK, US, and European markets via CFDs. The ESG and cannabis sector opportunities are also enticing features not commonly found among other platforms. There also an impressive 30+ indices available with leverage up to 1:20.
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IBKR provides access to an unparalleled array of equity products originating from 24 diverse countries. Whether seeking capital appreciation, dividends, or voting rights, you can directly invest in stocks. Alternatively, you can engage in speculative trading on price movements through CFDs, futures and more than 13,000 ETFs. IBKR also enhanced its European equity derivatives offering in 2024 by adding trading on CBOE Europe Derivatives (CEDX).
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IG offers 13,000+ shares to trade or invest in, with more listed firms than nearly every competitor. The broker also excels for its zero commissions on US shares, while out-of-hours trading provides access to 70+ shares, plus popular ETFs and trusts, when the markets are closed.
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Invest in over 40,000 US, UK and international stocks from 17 leading exchanges. The selection of shares beats most competitors while prices are fixed and transparent.
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Zacks Trade offers a large selection of US and international stocks, including penny stocks, as well as ETFs and global indices. The broker also offers options as a way to speculate on stock price movements.
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Buy and own thousands of shares commission-free, including blue chip companies like Apple and Microsoft from the NYSE and NASDAQ exchanges. Fractional shares also allow investments from as little as $1, which will appeal to beginners and those on a budget.
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Trade US, European and Asian markets with thousands of equities and competitive spreads. You can also take advantage of DMA pricing on the broker's MT5 platform, as well as IPOs.
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Trade thousands of global equities through spread betting and CFDs. Spreadex is one of the few online brokers to provide trading opportunities on a selection of lower market cap equities traded on exchanges such as the AIM sub-market of the London Stock Exchange.
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Traders can take positions on thousands of stock CFDs sourced from various global markets, including the US, UK, EU, China, and Japan. For longer-term investors, Trading 212 facilitates direct share dealing on more than 8,500 global stocks within investment accounts and tax-efficient ISAs for UK customers. The key selling point is the zero commissions on equities.
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XTB offers 3548 real stocks 2042 CFDs on stocks (CFD and real), encompassing prominent companies such as Amazon, Barclays, and BMW, with zero commissions. The xStation platform also shines for its analysis features that elevate the stock trading experience, from stock scanners and heatmaps to diverse fundamental data, including market cap and P/E ratios.
What Are Sustainable Stocks?
Sustainable stock trading involves investing in shares of environmentally friendly and socially conscious companies. Examples include SSE, First Solar and ITM Power, which are active in the renewables energy sector and generate power from solar, wind and hydrogen.
Another option is to invest in companies that manufacture vehicles that run on alternative fuels. One example is BYD, which manufactures electric buses used in UK cities such as London and Coventry in partnership with Alexander Dennis Limited.
Another even more popular example is the electric carmaker Tesla which, at the time of writing, has the greatest market cap of all manufacturers – nearly $400 billion greater than Toyota in second place.
These are all companies that aim to make a positive impact through their services and products while also successfully generating revenue.
Why Trade Sustainable Stocks?
Brokers with sustainable stocks allow clients to invest in companies whose ethics are aligned with their own. Additionally, it provides an avenue for investors to speculate on companies that could see growth in the future as the UK introduces initiatives to become more environmentally friendly.
For instance, the UK government has laid out objectives that say the country must become greener in the future. Examples include the commitment to being carbon neutral by 2050 and the prohibition of the sale of petrol and diesel-fuelled cars from 2030 onwards.
How To Start Investing In Sustainable Stocks
- Research sustainable stocks to find securities which align with your values and trading objectives
- Search for a broker that supports trading of these stocks either directly or through derivatives like CFDs
- Register for an account with the broker and complete any KYC or verification processes
- Deposit funds into your trading account
- Complete technical and/or fundamental analysis to identify when to open a position
- Hold and monitor your trade until you identify the right time to exit
How To Compare Brokers Offering Sustainable Stocks
Platforms & Apps
The platform and trading app is the program or software on which you will spend most of your time completing any analysis, researching potential assets to find entry positions, and monitoring and executing trades.
For this, you will want to choose a broker that offers high-quality platforms such as MetaTrader 4 and MetaTrader 5. These platforms come with a range of in-built indicators, tools and chart customisation options, useful for conducting analysis.
Alternatively, eToro offers its own in-house app which displays ESG scores for a long list of stocks.
Fees
Brokers offering sustainable stocks typically charge their clients in one of two ways: either through commission-free trading (whereby the bid-ask spreads are likely to be wider) or via a percentage charge on each trade.
Other potential fees include deposit and withdrawal charges, inactivity fees, swap rates on overnight positions and any premiums for accessing certain features or services.
When comparing brokers with sustainable stocks, look at how their fee structure will work alongside your trading strategy. For instance, if you are looking to capitalise on small changes in an asset’s value using scalping techniques, you may need to find a broker offering tight spreads.
Regulation
The best brokers offering sustainable stocks are those that are regulated by recognised bodies such as the Financial Conduct Authority in the UK.
Brokers that hold a license with the FCA should abide by certain rules that help to protect clients. For example, negative balance protection helps to prevent clients from becoming indebted to the broker when trading derivatives.
In addition, through the Financial Services Compensation Scheme, traders can claim up to £85,000 if their broker defaults and becomes insolvent.
Payment Methods
When evaluating the best brokers for sustainable stock trading, you should also compare the payment methods they offer. For this, consider the time taken for funds to clear, any fees that are charged and the minimum or maximum limits.
Often, many brokers support bank transfers and credit/debit cards. Certain brokerages such as CMC Markets and Pepperstone also support e-wallet transfers including PayPal, which are usually processed instantly.
Tips & Tricks
Diversification
One way to trade with the best brokers offering sustainable stocks is through diversified trading with products such as ETFs and mutual funds. The iShares Green Bond ETF, for example, only has holdings that meet certain standards relating to sustainability.
These diversified products allow clients to spread their investments out amongst several sustainable stocks, thus reducing risk exposure. Consider, for instance, that you were to only invest in two stocks, and both see a large downward swing in price. Your portfolio will suffer greatly as a result.
However, if instead you invest in 20 stocks and two of them drop in value, your overall portfolio will not be as greatly impacted. It is also possible that the decline in value is offset by growth from some of the other holdings.
Start Small
One of the key reasons for investing in sustainable stocks is so traders can capitalise on the potential increase in their value in the future. As countries develop more sustainably to meet objectives set out in global initiatives, such as the 2015 Paris Agreement, many companies could grow as a result.
However, a downside to investing in smaller-cap companies is that there may be less liquidity, widening the bid-ask spreads and making them less suitable for short-term trading. Therefore, these smaller stocks may be better suited to investors with a long-term view.
Use Analysis
To identify which stocks to trade at online brokers and when you should enter and exit your position, you can use technical analysis. While it may be important to invest in companies that are aligned with your values, you still want to choose stocks that have growth or dividend potential.
So, if you are spot trading, you will want to find stocks that are likely to increase in value over time. If you are trading derivatives, you can capitalise on both bullish and bearish trends. In both instances, you need to be able to identify these trends over given time frames by completing analysis using tools like technical indicators.
For example, the MACD can be used to identify momentum strength and when an asset is overvalued or undervalued, and therefore likely to trend in a certain direction.
Another example is using pivot points, which identify typical price fluctuation ranges of certain stocks, showing the upper and lower boundaries that the asset is likely to oscillate between.
Follow The News
Stay up to date on news and announcements surrounding sustainable stocks. For example, if a company announces a new product or project, then its valuation can change. Also, look to see which companies are given government contracts where they are tasked with a new project. For example, developing a new wind farm or manufacturing sustainable trains and buses for public transport routes.
To help stay informed, you can also subscribe to news publications such as ESG News and Green Stock News, which offer real-time updates and global market data. You can also follow experts and analysts on social media.
Risk Management
All trading carries a degree of risk, even when investing in diversified products such as ETFs. For this reason, adopt risk management techniques to help reduce your risk exposure.
Examples of measures include using take profit and stop loss orders. These two triggers will automatically close your position once the asset reaches a certain price, to either secure profit from a winning position or limit your total losses.
UK Tax Considerations
When trading sustainable stocks, you will need to consider your tax obligations. In the UK, revenue from online investing is often classified as capital gains, which is treated separately from normal income tax. It is important to note that you are only taxed on the profits you make from trading, not the overall returns.
At the time of writing, the capital gains tax-free limit is £12,300. This means that any profits up to this threshold are untaxed. However, anything greater than this limit is liable for taxation. For example, if throughout the tax year, you generate £20,000 in profits, it is only £7,700 that you must pay tax on, whilst the first £12,300 is untaxed. The exact amount that you pay on your capital gains depends on whether you are a basic, higher or an additional tax rate payer.
Helpfully, some of the best brokers offering sustainable stocks will provide a document reviewing your trades over the tax year. These reports will detail the profits from each trade and the exit date and time, making it easier to submit your tax return.
Bottom Line On Brokers That Offer Sustainable Stocks
The top brokers for sustainable stocks offer trading and investment opportunities in companies with green credentials. This can be through direct share dealing, ETFs, or indices. Importantly, compare the fees charged, UK regulatory oversight, the reliability of the platform and app, plus additional tools and insights into specific companies and sectors, such as renewable energy.
Head to our ranking of the best brokers with sustainable stocks to get started.
FAQ
How Can I Find Sustainable Stocks To Invest In?
To find sustainable stocks, you can use trackers such as the Dow Jones STOXX Sustainability Index. This index focuses on European-based companies that meet certain criteria regarding their environmental and social impact, as well as how they are governed. Alternatively, many of the top-rated brokers for sustainable stock trading offer stock screeners and list companies by various ESG metrics.
How Do I Determine How Sustainable A Company Is?
One of the main methods to determine the sustainability of a company is through its ESG (environment, social and governance) rating. This rating evaluates a company’s operations according to a set of criteria by reviewing publicly available information. This typically includes annual reports and data such as carbon emissions. The rating providers then collect all the information together to categorise each company they review. For example, Sustainalytics, one of the main providers of ESG ratings, uses a 0 to 40+ scale to rate each company.
What Are The Best Brokers Offering Sustainable Stocks?
Some of the top brokers that UK-based investors can trade sustainable stocks with include eToro, Plus500 and IG Index. Alternatively, see our full list of brokers with sustainable stocks.
How Do I Compare Sustainable Stock Trading Brokers?
To compare and find the best brokers offering sustainable stocks, consider factors such as the trading platform, fee structure, payment methods and FCA regulation. Also look for a stable mobile app and the trading vehicles available, from fractional shares to leveraged derivatives like CFDs.