The growth of ethical investing

Posted By John Cachia  
19:31 PM

As we move towards a more sustainable future, we have noticed a shift in investor preferences towards ethically and socially responsible investments. Challenges such as climate change, equal pay and honesty are some factors that concern investors. As a result, we are seeing investment managers and researchers start to take a closer look at ethical investments. Ethical investment managers tend to exclude companies that are involved in the following:

  • Adult entertainment;
  • Alcohol;
  • Animal welfare;
  • Civilian firearms;
  • Conventional weapons;
  • Controversial weapons;
  • Fossil fuel (any companies that own any fossil fuel reserves or derive revenue from mining thermal coal or from oil and gas related activity);
  • Gambling;
  • Genetically modified organisms (GMOs);
  • Nuclear power;
  • Nuclear weapons;
  • Tobacco;
  • Soft drinks; and
  • Nutrition & Health.

Recent studies have also suggested that focusing on companies that are ethically responsible leads to improved long-term performance. Over a four-year period, an Australian Index ethical investment outperformed the ASX 200 companies by approximately 1%. This is due to the fact that this space continues to grow and investors are preferring these companies, therefore helping to stimulate its growth. It is also due to the fact the responsible companies tend to be lower risk due to the nature of their operations. We are continuing to meet the needs of our clients. To do this we are currently working on creating investment options for our clients who have a preference towards this. If you are interested or would like to know more feel free to give us a call on 03 9938 3890.