Five ways to start on your ethical investment journey
Ethical investing starts with applying your personal ethical standards to your money decisions. It can help you ensure your money is invested in businesses that will help make the world a better place.
Ethical investments also make good business sense. According to a recently released Responsible Investment Association of Australia report, in 2020 responsible investment funds performed on par with, or better than, the broader market.
Drawing on his experience in impact investing, Good Return CEO Shane Nichols provides his top five recommendations for starting your own ethical investment journey.
Switch your Super: making a superannuation contribution every month is essentially asking your super fund to invest your money for you. As we become more conscious of this, the industry is stepping up its claims of ethical practices. Choice has written a useful guide on how to make a good decision when it comes to super for both your long-term finances and your ethical stance. Combine this research with the latest advice on underperforming funds.
Start at home: for many of us, our other major investment is our home loan. When applying for your mortgage, consider the ethical position of your bank - starting with whether the bank has a stated position on investing in fossil fuels. There are also banks going further by offering special rates for homes which are energy-efficient, or donating a portion of profits to local communities. Do your research before signing on the dotted line.
Ask the right questions: if you are deciding to invest in a managed fund or even to support a new start-up, begin with negative screening: taking companies off the table that don’t align with your ethical stance. You can then start asking questions of the companies you are considering: what are its carbon emissions? Are all workers protected in its supply chain? Is it transparent in its reporting to the public? If you are looking at investing in a fund, consider its ethical rating.
Check your lens: take your questions further by applying a gender lens. How many women are on the company’s board? Do they promote gender equality throughout their entire supply chain? Are they offering services and products that are going to improve the lives of girls and women?
Let us do the work - Good Return facilitates investments in small and medium businesses in the Asia-Pacific owned and led by women. We work with responsible financial institutions on a local level to support businesses that strengthen the livelihoods of women and families so they can build a better future. Sophisticated investors may be interested in our Impact Investment fund, and others might consider funding a microloan to women entrepreneurs in our region.