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When Australian Ethical first opened its doors in 1986, it was an upstart in the country’s sleepy retirement savings scene.
Fast-forward nearly 40 years, and the $3.5 trillion superannuation sector is scrambling to launch and grow similar ethically invested products.
A slew of specialist ESG funds have launched in the past decade while, at the big end of town, the major industry funds are building out fledgling ethical options to entice younger customers to join.
And contrary to common belief, investors have not lost out on returns over longer timeframes in ethical options versus unrestricted options.
Throw in the rise of greenwashing and questions over whether ethical funds are, indeed, ethical, and there is a lot of noise for wannabe green investors to wade through.
So what are your ESG options for superannuation and how do these funds invest and manage your money?
So what are your ESG options for superannuation and how do these funds invest and manage your money?
“It’s about actually using the investments you have to make a change and have a voice, that’s where you can have some really strategic programs.” - Australian Ethical chief customer officer Maria Loyez.
Australian Ethical is working with companies to stop financing fossil fuels, reduce harm to animals from animal testing, stopping livestock-driven deforestation and reducing emissions from the building industry.
“Our ethics research team has a really strong program of voting for changes to directors and remuneration [over these issues], and also collaborating with other investors to signal shared expectations of responsible business programs,” she says.
While this may not appear to be as “green” as divesting, she says having a seat at the table to change their direction may create more meaningful change.”
“Worsening climate change and Russia’s invasion of Ukraine have also turbocharged concern around ethical investments.
Australian Ethical recorded a jump in demand during the 2019-20 bushfires, for example.
“It was a stark reminder that climate change is real ... and many investors were quite frustrated by government and business inaction and saw super as a means of moving their money and taking individual action,” Loyez says.
That means that with El Nino underway and a hot, dry summer forecast, she is (somewhat sadly) expecting another boom in demand.
“But it’s also just starting to become a zeitgeist, that people are seeing it’s just common sense that actually investing in future-focussed companies that are sustainable are going to do better in the long term.”
This is an extract from an article written by Hannah Wootton for the Australian Financial Review, published on 4th October 2023.
Read the full story: How to turn your super portfolio green? - The Australian
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