Serious momentum is building in the responsible investment space. According to the Responsible Investment Association Australasia (RIAA), 9 in 10 Australians expect their super/investments to be invested responsibly and ethically. This is no longer a fringe issue.

The trend is the same in the US. The Sustainable Signals survey by Morgan Stanley last year, found 75% of active investors (and 86% of millennials) describe themselves as being interested in sustainable investing.

Recently the head of Blackrock, Larry Fink wrote in his annual letter to CEO’s:

What a significant statement from the largest fund manager in the world!

In Australia, fund managers such as Perpetual, Australian Ethical, BT and AMP have offered sustainable or ethical specific investment options for some time. But in recent years there have been some new entrants. These managers are questioning the idea that investing is just about making money:

 

Nanuk Asset Management

“Nanuk believes that resource constraints and environmental challenges like climate change, pollution and water scarcity necessitate significant changes to business practices globally and that these changes will present significant long-term investment opportunities and risks”

 

Eight Investment Partners (Impact Fund)

“8IP Australian Equity Impact Fund is designed for investors seeking to invest in Australian companies that are solving the world’s problems. Using our proprietary impact measurement process, we direct capital to ASX listed companies that are solving the world’s social and environmental problems”

 

Impact Investment Group

“Our mission is to shift capital towards investments that blend financial returns with deep social and environmental impact, and to lead by example in using all of our resources to create the world we want to live in”

 

Betashares Sustainability Leaders – Australian and Global

Australian fund – “provide exposure to a portfolio of Australian companies that have been screened to preference companies engaged in sustainable business activities and to avoid companies engaged in activities deemed inconsistent with responsible investment considerations”

Global Fund – “provide exposure to large global stocks which are climate change leaders and which are not materially engaged in activities deemed inconsistent with responsible investment considerations”

And as recently reported in the AFR, former head of Perpetual Ethical SRI fund Nathan Parkin is setting up Ethical Partners Funds Management and aiming to raise $3billion.

I expect we’ll see an explosion in new funds in the sustainable/ethical/impact space over coming years. But investors will need to take a close look under the bonnet.

Firstly to make sure a fund is aligned with their values. This can take a fair amount of work. It can also be a case of the more you learn the harder it gets. But research and guidance from experienced investors are invaluable.

And secondly to make the investment is true to label and not green washing (deceptively trying to sound responsible/ethical).

And you know what, it feels bloody good to know you are investing in companies, ideas and technologies that are making the world a better place now and for the future.

 

This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

 

Posted by Dave Rae

CERTIFIED FINANCIAL PLANNER

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