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Ethical and Sustainable Investing

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Most Australians, and no doubt people in the Pyrmont Village, have money invested in managed funds or superannuation. Their fund manager will keep them up to date with account details and returns but don’t usually let them know what their money has been doing to generate that return. You could unwittingly be profiting from activities such as uranium mining, the sale and promotion of tobacco and gambling products, animal tested products or genetically modified food. This doesn’t sit well with an increasing number of investors, many of whom are finding ethical/sustainable investment as the answer.

Ethical investment is the practice of consciously selecting to invest in companies whose activities the investor believes will serve the common good on a range of ethical, social and environmental issues. Ethical investors seek to benefit from investments which make a positive difference to society and provide financial returns which are competitive with conventional investments. So as well as adjusting our personal actions such as conserving energy and water, as investors we can target our savings to support genuinely sustainable industries.

As well as helping people to invest in line with their values, ethical screening can reduce investment risk and identify growth sectors that conventional funds may overlook. Conventional funds tend to invest heavily in stocks such as resources and the big four banks whereas an ethical fund manager actively seeks new technologies in emerging growth sectors such as renewable energy, alternative fuels, recycling and water conservation. As climate change becomes evermore part of the public consciousness investment in such areas can be both financially and emotionally rewarding.

ethical investment by chris maddoncouk1 Ethical and Sustainable InvestingThere is also a belief that the best long-term, stable returns will come from the support of sustainable businesses, both financially and ecologically, as business is increasingly required to meet the full ecological costs of production. Consumers are increasingly demanding sustainable products and they are willing to pay higher prices for these goods and services.

Companies which Australian Ethical Investment considers to be ethical and which form part of its investment portfolio include Accell Group, Whole Foods Market and Petratherm.

  1. Accell Group’s bicycle brands cater to a broad range of consumer needs. Cycling has been shown to reduce global warming, pollution and traffic congestion, while improving the health of riders.
  2. Whole Foods Market is the world’s largest retailer of natural and organic foods. They were America’s first national Certified Organic grocer, demonstrating a commitment to the preservation of the integrity of organic foods from field to shopping cart.
  3. Petratherm is aiming to produce commercially sustainable, emission-free, renewable energy by identifying and developing hot geothermal source rocks. Unlike burning fossil fuels, geothermal energy emits no greenhouse gases, pollution or hazardous wastes.

A full list of the companies we invest in is available on our website.

Increasingly, shareholders and stakeholders don’t see themselves as passive participants within the corporate landscape. Sustained growth and increased awareness of the ethical investment sector suggests that genuine ethical investment can flourish to the benefit of investors, society and the environment.

By James Thier, Executive Director, Australian Ethical Investment (August 2008).


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