Australia’s recent bushfire crisis has made many of us question the impact of our everyday spending actions on the planet and because of this, it’s highly likely that we’ll see greater appetite for ethical investing in the near future.
Ethical investing is trending because it gives people a way to make a positive impact on the planet without having to rely on political leaders to take action for them.
Last year it grew by 13% in Australia to be valued at $980 billion based on assets under management, according to the Responsible Investment Association of Australasia’s (RIAA) latest Benchmark Report.
Ethical investing is all about taking a more mindful approach to investing in company shares or financial products. For the most part people get it, especially women.
“Women broadly understand that they can have an impact on the planet through their own consumption and shopping habits but we are also beginning to realise that we can have a greater impact also through the way we invest,” says Leah Willis, Head of Client Relationships at Australian Ethical Investment.
So how can you take action and find ethical investments?
To make it easier for people to make decisions about ethical investments, superannuation funds are being forced by the financial regulator to publish their company share holdings on their public websites from December 2020.
This means that if you don’t agree with the companies that your super fund invests in, then you can make a decision to invest your money elsewhere.
Here’s what you might like to consider.
- Think about the key values that you want your investments to line up to.
- Then look at your super fund or other investments that you have, and question whether their underlying investments and strategy actually align with your thinking.
The cheapest and easiest way to get access to ethical investing is through a superannuation fund with some focusing on this space like Australian Ethical Investments or offering ethical investment options as part of their suite of fund choices.
Research by the RIAA shows that Australians expect their super or other investments to be invested responsibly and ethically. Yet, many super funds have no independent sustainability framework and people may not know if their super fund is investing sustainably, according to Elevate Super.
The Australian Ethical Pers Balanced fund ranked number two this year, according to the SR50 MySuper Index and delivered a return of 10.41% after fees over a 12-month period to September 2019.
This super fund charges around $667 per year in fees and other costs for a representative member with a $50,000 balance.
Outside of superannuation, Beyond Bank, and Bank Australia offer bank products such as personal loans that are focused on making a positive social impact and taking a more socially conscious approach.
There are also a variety of Exchange Traded Funds (ETFs) and Managed Funds that offer exposure to sustainable companies and can be lower cost than superannuation funds.
According to comparison website Canstar, the BetaShares Australian Sustainability Leaders ETF with the ASX code ‘FAIR’ is one of the top performing ethical funds returning 19.9% to investors during the 12 month period from 30 June 2018 – 30 June 2019. FAIR provides exposure to a portfolio of Australian companies that have been screened using strict ESG filters.
The management fee based on your investment amount is charged at 0.49%. This equates to $245 per year based on a $50,000 investment.
But the good thing about this ETF is that there is no minimum investment required, however online brokers such as Commsec, and NabTrade as examples, require a minimum amount. View their website for details.