Ethical investing is gaining a lot of popularity for Australian investors looking for a responsible solution.
According to a study by the Responsible Investment Association of Australasia (RIAA):
9 in 10 Australians expect their investments – including their superannuation – to be invested responsibly and ethically.
Many people think ethical investors only invest in companies and industries that have a positive environmental impact. However, ethical investing encompasses so much more than that.
Ethical investing takes into account environmental, social, governance (ESG), and ethical investment considerations.
In general, some industries and organisations that ethical investors aim to steer clear of include:
- Tobacco companies
- Fossil fuel industries
- Companies with a history of poor human rights standards
- Weapons and firearms manufacturers
It’s important to note that choosing to invest ethically doesn’t mean you have to sacrifice your returns.
In the past, responsible investors may have had to choose between high-performing investments and their values but with the rise in popularity and options of ethical investments, sustainable investments are performing just as well – if not better – than some regular investments.
What Approaches Do Investors Use in Ethical Investing?
Investors use four approaches in choosing companies—negative screening, positive screening, ESG integration, and impact investing.
In negative screening, investors exclude industries that don’t align with their values. This will change depending on the individual but can include the industries of alcohol, tobacco, weapons, and gambling.
People might also negatively screen for companies that use animal testing in research and development. Meanwhile, positive screening involves finding companies in fields that the investor does want to support, like healthcare, renewable energy, or education.
An investor using ESG integration can look for a company that prioritises corporate social responsibility. For a more systematic approach, the investor can integrate ESG or Environmental, Social, and Governance factors in their research.
Finally, there is impact investing, which the RIAA describes as finding companies focused on solving globally significant challenges like world hunger, access to water, and enabling more access to renewable energy.
What Investment Options Do Ethical Investors Have?
Individuals interested in responsible investment have several options available, including investing ethically in their super funds, through managed ETFs, or building a share portfolio that aligns with their values.
Many mainstream Australian super funds provide ethical investment options for their members. Plus, there are some super funds that only invest in ethical platforms.
Also, you can research and identify publicly traded companies whose values align with your own. The Responsible Returns Tool can help you find options based on issues that matter to you.
Consulting with a wealth manager can make this process easier, especially if you partner with a financial adviser who is experienced in ethical investment solutions.
More Australians are choosing ethical…
Ethical investments have a robust market performance that more and more investors are enjoying.
If you’re looking to explore your ethical investment opportunities, seek guidance from Chris Holme at HH Wealth.
Chris is committed to helping Australians thrive and achieve financial freedom.
We specialise in ethical investing in Brisbane – our wealth managers can assist you to enjoy the benefits of investing and also contribute to making the world a better place for all.
Book a consultation today or call 1300 HH WLTH (1300 449 584)
CB Wealth Australian Pty Ltd T/As HH Wealth is a Corporate Authorised Representative (No. 1283595) of Axies Pty Ltd ABN 38 136 704 446 AFSL No 339 384. Chris Holme is an Authorised Representative (No. 1004793) of Axies Pty Ltd ABN 38 136 704 446 AFSL No 339384.
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