Ethex

Ethex: ethical investment to fund extraordinary organisations

Ethex is a UK-based investment platform that allows individual investors to direct their money to social and environmental organisations. The company presents itself as a vehicle for capital to drive projects with positive impact while aspiring to a reasonable return. The platform warns that these are high-risk investments and that invested capital may be lost.

According to the company's own website data, Ethex has channelled £135 million, has more than 43,000 registered accounts and has funded more than 225 projects. The company defines itself as a movement of investors who want their money to generate social and environmental change.

What you can invest in on Ethex

The platform mainly offers two types of instruments: withdrawable shares in community benefit societies (known as community shares) and bonds issued by those same societies. It also offers bonds issued by charities and other social purpose businesses. Some of these investments may qualify for an Innovative Finance ISA (IFISA), a tax wrapper that exempts returns from tax, although it does not reduce risk or protect against potential loss of capital.

Ethex carries out due diligence on the businesses seeking finance, covering the intended use of funds, governance, financial viability and social and environmental impact. The platform itself notes that this analysis is conducted in good faith, but it should not be the sole basis for investing.

Risks the platform details

Ethex's website includes explicit warnings about the characteristics of these investments. Among the risks highlighted, it states that the investor may lose all their capital, that many of the funded businesses are start-ups and that most of these fail. It also warns that getting your money back is not quick: there is no secondary market operated by Ethex to sell shares or bonds, and although IFISA bonds must be transferable, there is no mechanism on the platform to find a buyer.

Another highlighted risk is the possible reduction in the value of community shares. Although their value cannot increase, the directors of a community benefit society can reduce it if the value of the society's assets falls below the total invested in shares, which could mean partial or total losses. The platform also reminds that it is not regulated by the Financial Conduct Authority (FCA) and that investors are not covered by the Financial Services Compensation Scheme (FSCS) nor can they turn to the Financial Ombudsman Service (FOS).

Featured investment opportunities

Ethex's catalogue shows various active and closed offers. Among the active ones is Distgen, an onshore wind developer with twenty years of experience seeking £2.4 million to repower a wind turbine in Hampshire; the issue offers a forecast return of 7.25% over eight years and has 336 investors. Another opportunity is Salad, an ethical credit entity that has exceeded its £800,000 target with a forecast return of 8% over three years. OVESCO also appears, installing solar panels for three community organisations and seeking £245,000 with a forecast return of 5%.

Among the already closed opportunities are Low Carbon Hub, which financed the UK's first community battery for the Ray Valley solar park; ICOF Community Capital, a revolving loan fund for cooperatives and community businesses offering a 3% return plus Community Investment Tax Relief (CITR), which allows eligible investors to claim 25% tax relief over five years; and Bath and West Community Energy, which aims to show that the future of energy is local through clean generation, energy efficiency and support for community initiatives.

Services for businesses and organisations

In addition to investment for individuals, Ethex offers services for entities that need finance. Organisations can apply for funding through the platform, which supports the fundraising process and offers a registry service. The website also mentions a collaboration with Triodos Bank and Energise Africa for certain investments.

Impact and investment approach

The platform publishes impact reports, such as the one for 24/25, which reviews the results of funded projects and introduces its Theory of Change. The investment areas it promotes include clean energy generation, sustainable transport, housing and community services, eliminating social inequalities and supporting businesses that protect local assets. Ethex presents itself as a community of investors seeking to align their resources with their values.