Money isn’t everything; how a company makes that money is now a big part of investors’ approach.

When it comes to sustainable investing (which is also called ethical or responsible investing), people are using their money to speak up about the causes that matter, with responsible investments having quadrupled between 2014 and 2017. Experts say this will only continue to grow.

What to look for when investing sustainably

Ethical investing means different things to different people. It could be:

  • avoiding companies that you deem harmful on a values basis (pornography, tobacco, for example)
  • not investing in companies that you believe are environmentally harmful (perhaps utilising landmines or fossil-fuel industries)
  • researching a company’s approach to business, or
  • actively supporting companies doing things that you believe to be important. Some of the latest trends here include investing in renewable infrastructure, property that supports homelessness and companies that have a strong, positive social impact.

In part, sustainable investing is about aligning your investment values with your personal values, by influencing and supporting those who operate responsibly. The Responsible Investment Association Australasia (RIAA) reports that this matters to 90 percent of those who invest either personally or through superannuation.

It’s also about investing in companies that are smart enough to know the benefits of sustainability. The minimum standard for being considered a sustainable investment is an organisation’s environmental, social and governance (ESG) criteria, and some experts argue that all investors should consider these factors as potential future risks to an organisation’s performance.

Evaluating individual companies on the grounds of ethics can be difficult, because there is no compulsory standard for reporting their ESG management. Information can be found in company reports and the Global Reporting Initiative (GRI) standards for sustainability reporting.

Companies are often keen to be transparent when they’re doing the right thing, however, as this gives them an ‘ESG halo’ that protects their stock from risks like public protests, environmental incidents and employee strikes.

Disclaimer: This article is not legal or personal financial advice and should not be relied on as such. Any advice in this document is general advice only and does not take into account the objectives, financial situation or needs of any particular person. You should obtain financial advice relevant to your circumstances before making investment decisions. Where a particular financial product is mentioned you should consider the Product Disclosure Statement before making any decisions in relation to the product. Whilst every reasonable care has been taken in distributing this article, Australian Unity Personal Financial Services Ltd does not guarantee the accuracy or completeness of the information contained within it. Any views expressed are those of the author(s) and do not represent the views of Australian Unity Personal Financial Services Ltd. Australian Unity Personal Financial Services Ltd does not guarantee any particular outcome or future performance. Taxation Information in this document should not be relied upon without seeking specialist advice from a tax professional. Australian Unity Personal Financial Services Ltd ABN 26 098 725 145, AFSL & Australian Credit Licence No. 234459, 114 Albert Road, South Melbourne, VIC 3205. This document produced in October 2018. © Copyright 2018