ESG Investing - What’s all the fuss?
What good are family or business values if we don't uphold them in our everyday lives or 'practice what we preach'?
After Thelma's blog post 'Reflections from the Beach', we thought we'd offer some information on how you can really make a difference through funds that you have invested, whether it's through your super fund, or through your own share portfolios.
"Ethical investing" is a term that has been coined in recent times, referring to when you invest in companies who are socially responsible and whose practices and values align with your own beliefs.
Environmental, Social & Governance (ESG) investing falls under the ethical investing umbrella and there are a broad range of ESG investment options to consider if this is something that you'd like to explore.
Values that ESG companies demonstrate can range from honesty, fairness, integrity, diversity and equality - just a handful from a long list!
On the flip-side, companies characterised by being unethical are those that engage in and promote inappropriate or 'unethical' business practices such as:
child labour
careless or unsafe work practices
pollution, fossil fuels, nuclear power
negative impact on climate change
poor business ethics
adult entertainment, alcohol, gambling, tobacco
weapons and firearms
In our video below, Jane takes some time to discuss this further:
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The information contained in this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.
STUDIES
Studies have revealed the ESG sector holds growing appeal for two large and important demographics — millennials and women.
A 2017 report by Responsible Investment Association Australia (RIAA) revealed that:
"...... three-quarters of Australian millennials say they prefer to invest in a responsible superannuation fund rather than a fund that only considers maximising financial returns."
It also revealed that:
"Women are more likely to strongly expect their superannuation or other investments to be invested responsibly and ethically."
Many companies are taking note and making changes to how they can make positive contributions to society. According to the Australian Institute of Company Directors, in Australia alone, at the end of 2017, RIAA reported that;
"Assets managed under an ESG approached $866b, up 37 per cent on the year before."
Clearly, investors are also taking note and while we are not advocating for changing your investment portfolios to ESG's, within a share portfolio, diversification is always key.
It really is a personal thing that gets back to your own set of values and belief systems.
At Sound Life, we believe in having investment options that give our clients the choice to be socially responsible. A small difference individually can make a large impact globally.
