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1 Jan 2018

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Value the Future

Contact a GOLD LEAF Financial Planner today.

Ethical Investment

Ethical investment

Have you ever wondered what companies your superannuation savings are supporting?

 

Did you know that your super may be invested in tobacco, child labour, fossil fuels, weapons manufacturing and logging companies?  Your super could be invested in companies that support education, recycling and renewable energy.

You can choose to invest in companies that have a positive impact on the world.

Ethical Investment is a way to:

  • Help you achieve your goals with a sound financial performance over time

  • Avoid investments that cause harm to society and the environment, and

  • Feel good by investing according to your values and supporting companies doing the right thing

Your ethical values

There are many different types of ethical investments and everyone has different values.  At Gold Leaf Financial we start with a personal values questionnaire to understand what is important to you and what activities you would like to support or avoid with your investments.

Financial performance

Research shows Ethical Investments perform as well financially as other mainstream investments.*  For more information about financial performance click here.

What is Ethical Investing?

Ethical Investment combines sound financial investments with environmental, social, governance or ethical considerations.  Ethical Investment generally avoids investments that may harm people and the environment (eg. tobacco, weapons and fossil fuels) and seeks out investments that support people and the environment (eg. healthcare, education and renewable energy).

Ethical Investment is also known as Responsible Investment, sustainable investment, green investment, socially responsible investment and impact investment.

Not all Ethical Investments are the same.  The environmental, social, governance and ethical criteria varies between product providers.  By researching your current investments as well as other options, a Gold Leaf Financial Planner can recommend an Ethical Investment in line with your personal values and goals.

Your choice 

In a capitalist society, what you do with your money makes a difference.  You have the power to support companies when you purchase products and services such as purchasing eco-friendly detergent, Fairtrade chocolate, energy efficient appliances or organic fruit and vegetables.  Through donations, you can support charities and causes that are important to you.  Through your super and investments, you can support companies in line with your values.

Ethical Super and Ethical Investments

Through your super fund and your investments, you can choose where your money is invested.  If you hold a direct investment portfolio, a managed investment, a SMSF or a superannuation fund we can help you find out where your money is invested.  We compare the activities of the companies you are invested in with the issues you have told us are important to you.  For example, some people may be concerned that supermarkets profit from poker machines and some energy companies provide coal seam gas.  A Gold Leaf Financial Planner can recommend an ethical investment or ethical super fund that matches your values.

Ethical Investment experts

Gold Leaf Financial Services specialise in ethical investment and Principal Financial planner Mary Campbell has over 12 years experience in helping clients invest according to their values.  The Gold Leaf Financial team have a combined experience of over 40 years in ethical investment working with some of the leading ethical investment companies in Australia.

 

Increased demand for Ethical Investments

More people are choosing ethical investments, as shown in the chart below. 

Appointments

For financial advice to help you reach your dreams.

Anne and John start an ethical investment

Anne is a nurse at the local hospital and John is a university professor.  They have recently inherited $100,000 from Anne’s mum and would like to invest this for the future.  They would also like to add some of their ongoing savings to this investment each month to grow their wealth long term. 

 

Anne has seen many patients with smoking related illnesses, and one of her main ethical concerns is that she does not want to invest in tobacco companies such as Phillip Morris.  John is concerned about climate change and would like to avoid companies with high carbon emissions such as fossil fuels.  They have travelled over the years and both feel they are lucky to have grown up in Australia and they would like to support education and healthcare. 

Anne and John met with a Gold Leaf Financial Planner, who helped them to established a diversified ethical investment portfolio that matches their values as well as their risk profile.  After a number of years they have seen their investment grow to $180,000 and their adviser helps them keep on track, changing the investments from time to time in order to make sure the overall ethical investment portfolio is still right for their risk comfort level, their objectives and their ethical preferences.  Anne and John are happy to know their money is “doing no harm” and supporting industries they value.

Three Steps to
Ethical Investment

How to match your investments with your values

In Australia, the funds invested ethical investment strategies has doubled over the last two years, to over AUD$51billion (1).  Worldwide growth also continues, with USD$70Trillion dollars of assets managed by organisations that have signed up to the UN Principles for Responsible Investment (PRI) (2).  In Australia 72% of institutionally managed assets are managed by organisations that are signatories to the UN PRI worth AU $967billion. 

The increase in demand for ethical investment is due to

  • High profile examples of poor management of environmental, social, governance (ESG) and ethical issues by companies, impacting shareholder value

  • Growing demand from consumers to align retirement savings with their beliefs and values

  • Civil society groups engaging the finance sector in order to affect change

  • An increasing awareness by investment managers and trustees that an important element of their responsibilities is to consider ESG issues (3)

* Past performance is not a reliable guide to future returns as future returns may differ from and be more or less volatile than past returns.

References

1. Responsible Investment Association Australasia 2016, ‘Responsible Investing Benchmark Report 2016 Australia’.

2. UN Principles for Responsible Investment 2018, ‘About the PRI', https://www.unpri.org/about, accessed January 2018.

3. Responsible Investment Association Australasia 2015, ‘Responsible Investing Benchmark Report 2015 Australia’.

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