Be a conscious investor – with ethical investing and align your money with your morals
The greatest thing about managing your super in Australia is the huge amount of ways you can invest it. But did you know that you may unknowingly be investing in cigarette, alcohol, oil and gambling industries?
Cue – ‘ethical investing’ a new trend in investing that’s here for the long term. As corporations place an increased focus on sustainability and Governments act on climate change, it was only a matter of time for the stockmarket to respond to these changes with socially responsible investing options.
What is ethical investing?
Put simply it is investing in companies either directly, via funds or shares that are environmentally and socially responsible for the prospect of a positive investment return.
There is a belief that companies who take care of the environment, look after their people and the community, may provide greater returns – and there is some truth in that.
What results is the ethical investing market experiencing?
The Responsible Investment Association Australasia (RIAA) released a report which found that 47% of Austraia’s investments were invested responsibly. In the same report it found that ethical investment funds outperformed mainstream funds by around 5%1 in year one.
How do I determine if a fund or company is ethical?
The RIAA created the Responsible Investment Certification program in 2005 to help investors find out whether their investments are ethical. They are looking to launch an app soon to help easily determine. There are currently 85 approved products from 30 fund managers Australia wide, each certified company is also audited by an accounting firm and reviewed yearly to ensure compliance.
You can visit responsibleinvestment.org for more information.
Help, I want to switch to ethical investments – how do I get started?
We believe that no investment switch decision should be made lightly given there can be early exit and CGT implications and quite a bit of education as to what ethical investments would be best suited to your investment strategy.
It is important to take a look at the bigger picture, sit down with a financial adviser who can walk you through your current and future goals, showcase the range of ethical investment options available and historical returns to create a plan that will achieve all of your goals whilst maintaining your morals.
- Core responsible investment Australian equities funds outperformed both the ASX300 and the average large cap Australian equities funds across one, three, five and 10 years. http://responsibleinvestment.org/wp-content/uploads/2016/07/RIA413_Benchmark_Factsheet_A4_OZ_v2.pdf