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1 Jan 2018

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Ethical Investment

Three Steps to
Ethical Investment

How to match your investments with your values

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Ethical investment

Join a growing number of people investing ethically and receiving abundant financial returns

 

Have you ever wondered what companies your superannuation savings are supporting?  Are you concerned about climate change?

 

Did you know that your superannuation (Super) may be invested in tobacco, child labour, fossil fuels, weapons manufacturing and logging companies?  Your Super could be invested in companies that support education, healthcare, recycling and renewable energy.

You can choose to invest in companies that have a positive impact on the world and that provide solid financial returns*(1).

 

“More and more Australians are wanting their investments and savings to align with their values, and are reaping the rewards with strong financial performance.” – Simon O’Conner, CEO Responsible Investment Association Australasia

Ethical investment is a way to:

  • Help you achieve your goals with a sound financial performance

  • Avoid investments that cause harm to society and the environment, and

  • Make a positive difference by investing according to your values and supporting companies that have a positive impact on the world

 

Your ethical values

There are many different types of ethical investments and everyone has different values.  At Gold Leaf Financial we start with a personal values questionnaire to understand what is important to you and what activities you would like to support or avoid with your investments.

Ethical investment financial performance

Research shows ethical investments perform well and may outperform mainstream investments. (1)*  For more information about financial performance click here.

Contact us to arrange an appointment with a Gold Leaf Financial Planner for advice for an ethical investment portfolio and ethical Super investment that meets your personal values and goals. 

Further information on ethical investing is below:

What is ethical investing?

Ethical investment combines sound financial investments with environmental, social, governance or ethical considerations.  Ethical investment generally avoids investments that may harm people and the environment (eg. tobacco, weapons and fossil fuels) and seeks out investments that support people and the environment (eg. healthcare, education and renewable energy).

Ethical investment is also known as Responsible Investment, sustainable investment, green investment, socially responsible investment, values based investment and impact investment.

Not all ethical investments are the same.  The environmental, social, governance and ethical criteria varies between product providers.  By researching your current investments as well as other options, a Gold Leaf Financial Planner can recommend investments and Super fund investments that are in line with your personal values and goals.

Your choice 

In a capitalist society, what you do with your money makes a difference.  You have the power to support companies when you purchase products and services such as purchasing eco-friendly detergent, Fairtrade chocolate, energy efficient appliances or organic fruit and vegetables.  Through donations, you can support charities and causes that are important to you.  Through your Super and investments, you can move your capital and support companies in line with your values.

Ethical Super and ethical investments

Through your superannuation fund and your investments, you can choose where your money is invested.  If you hold a direct investment portfolio, a managed investment, a SMSF or a superannuation fund we can help you find out where your money is invested.  We compare the activities of the companies you are invested in with the issues you have told us are important to you.  For example, some people may be concerned that supermarkets profit from poker machines and some energy companies provide coal seam gas.  A Gold Leaf Financial Planner can recommend an ethical investment or ethical superannuation fund that matches your values.

Ethical investment experts

Principal Financial Planner Mary Campbell has over 13 years experience in helping clients invest according to their personal values.  The Gold Leaf Financial team have a combined experience of over 40 years in ethical investment working with some of the leading ethical investment companies in Australia including Australian Ethical, Future Super and Uniting Financial Services.

 

More people investing ethically

More Australians are choosing ethical investments, as shown in the chart below. 

In Australia, the funds invested ethical investment strategies has increased by over 188% in the last two years, to over AUD $187 billion dollars (1).  Worldwide growth also continues, with USD $70 trillion dollars of assets managed by organisations that are signatories to the UN Principles for Responsible Investment (PRI) (2).  

The increase in demand for ethical investment is due to

  • High profile examples of poor management of environmental, social, governance (ESG) and ethical issues by companies, impacting shareholder value

  • Growing demand from consumers to align retirement savings with their beliefs and values

  • Civil society groups engaging the finance sector in order to affect change

  • New ethical investment funds available on the market

  • Investment managers "understanding that the consideration of ESG factors will have a positive impact on portfolio performance" (1)

* Past performance is not a reliable guide to future returns as future returns may differ from and be more or less volatile than past returns.

References

1. Responsible Investment Association Australasia 2017, ‘Responsible Investment Benchmark Report 2017 Australia’.

2. Sydney Morning Herald 2 April 2018, 'Get active or get delisted, responsible investment group warns funds', accessed April 2018, https://www.smh.com.au/business/companies/get-active-or-get-delisted-responsible-investment-group-warns-funds-20180330-p4z71x.html.

Anne and John start an ethical investment

 

Anne is a nurse at the local hospital and John is a university professor.  They have recently inherited $100,000 from Anne’s mum and would like to invest this for the future.  They would also like to add some of their ongoing savings to this investment each month to grow their wealth long term. 

 

Anne has seen many patients with smoking related illnesses, and one of her main ethical concerns is that she does not want to invest in tobacco companies such as Phillip Morris.  John is concerned about climate change and would like to avoid companies with high carbon emissions such as fossil fuels.  They have travelled over the years and both feel they are lucky to have grown up in Australia and they would like to support education and healthcare. 

Anne and John met with a Gold Leaf Financial Planner, who helped them to established a diversified ethical investment portfolio that matches their values as well as their risk profile.  After a number of years they have seen their investment grow to $180,000 and their adviser helps them keep on track, changing the investments from time to time in order to make sure the overall ethical investment portfolio is still right for their risk comfort level, their objectives and their ethical preferences.  Anne and John are happy to know their money is “doing no harm” and supporting industries they value.