The ethical investing sector has come of age, as Australians realise they can make money by doing good, according to Australia’s leading ethical investment and superannuation provider, Australian Ethical.
Speaking at a media briefing event in Sydney, Australian Ethical Managing Director Phil Vernon said Australians are increasingly applying their ethical principles to their finances too.
“We are facing critical challenges as a society, and in the wake of the Paris climate change summit, Australians are realising they can use their superannuation and investment portfolios as tools for environmental change, as well as wealth generation. Moreover, they are part of a global movement, with $21.4 trillion dollars now responsibly invested,” said Mr Vernon.
“The myth that investing ethically comes at the cost of good returns has been busted. Our Australian Shares managed fund is the best performing fund amongst its ethical and mainstream peers and has been for the past 10 years, according to Mercer.
“Investors are realising this and moving their money to Australian Ethical. In the second half of 2015, we had net inflows of $155m, an increase of 102%, bringing total funds under management to $1.4 billion. Our superannuation fund experienced 11% growth in membership over the last year, and we have seen increased demand from advisers, who are being approached by their clients to source ethical investment options.”
Australian Ethical predicts the growth in the ethical investment sector is part of a transition from the ‘old economy’ – which favours environmentally damaging products such as coal – to the ‘new economy’ where healthcare, technology and renewable resources are growing rapidly. The divestment movement out of coal reflects this trend.
“Australian Ethical avoids coal as an ethical decision, but it also makes financial sense. Coal and oil prices are declining due to structural factors: China is reducing its coal use, Japan is diversifying its energy mix and developed countries worldwide have falling electricity consumption rates. These changes are structural, not cyclical and we believe smart super funds will eventually stop investing in coal and move towards renewable resources, as a more risk-averse, forward-looking strategy,” Mr Vernon said.
Research conducted by Australian Ethical in 2015 revealed that 6 million working Australians are highly ethically active and make environmental and social choices at the supermarket, as well as donating to charity. It is these ‘conscious consumers’ who are driving the growth of ethical investment.
“2016 will be a game-changing year for ethical investing, as more Australian institutional and retail investors demand uncompromising returns from both an ethical and financial perspective,” Mr Vernon said.
