31 C
Byron Shire
February 29, 2024

Ethical investing goes prudential

Latest News

Investment fraud charges – Gold Coast

Detectives from the Financial and Cyber Crime Group have arrested and charged five people in relation to an alleged ‘boiler room’ investment fraud operating on the Gold Coast.

Other News

Seniors Festival returns March 11

The Byron Seniors Festival is back, and will be held from March 11 to 15 at the Byron Community Centre.

Stolen ute, ransacked service station and vandalised police cars

Stolen Brunswick Heads ute allegedly taken on wild adventure ransacking service station and being party to vandalising police cars before being abandoned in the bush at Coraki.

Teen charged following alleged break and enters – Evans Head and Broadwater

A teenager has been charged following alleged break and enters at two service stations at Evans Head and Broadwater.

Tintenbar-East Ballina face tough test to make LJ Hooker cricket finals

Tintenbar-East Ballina (TEB)senior cricketers face a stern test to make it through to the finals of the LJ Hooker first grade league after losing to Casino in their most recent two day-game.

Time to go? The costly impact of climate change on the housing hip pocket

Jennifer Woods had lived in Wagga Wagga her whole life, a single parent of four children, a social worker and no stranger to what life on a floodplain might throw the way of anyone living there: the town has learnt to cope with floods – 60 have been registered since Federation.

Editorial – Prosecuting publishers

WikiLeaks founder and Australian citizen, Julian Assange, will soon face possibly his final court hearing in the UK High Court of Justice over whether he should be extradited to the US to face spying charges. 

Threatened woodland in the Upper Hunter Valley, where many new coal projects (the equivalent of 10 Adani Carmichael mines) are proposed. Photo David Lisle

David Lisle

Ethical investing is the idea of using your money to make the world a better place rather than simply chasing the greatest financial return. It seeks to account for people and planet, not just profit. 

Applying your money to ethical endeavours hints at the possibility of accepting lower returns. But ethical investment vehicles now outperform benchmarks. Ethical investing is mainstream and has become thoroughly embedded in investment markets.

According to Responsible Investment Association Australia, which advocates for capital to pursue socially and environmentally just ends, over a trillion dollars, 37 per cent of all professionally managed money in Australia today, is classed as responsible investment. This is a meteoric rise for what was, until very recently, a niche industry.

Photo David Lisle

Key approaches

The mainstreaming of ethical investment has given rise to a small universe of specialist ethical funds, investor ranking initiatives, new market indices, research firms, shareholder advocacy groups, and much jargon besides.

Ethical investing has many aliases: responsible investment, socially responsible investing, sustainable investing, impact investing, gender lens investing, sustainable finance… Whatever you call it though, there are three main approaches.

Firstly, negative screening excludes investments inconsistent with investor values. Avoiding, or divesting from, such industries as tobacco, munitions, or fossil-fuel extraction is the new normal. 350.org, founded by environmentalist Bill McKibben, has been leading the charge for fossil-fuel divestment, which has seen $US14 trillion divested in the last decade.

Positive screening of companies or investments, on the other hand, tries to direct money into beneficial projects. Supporting green technologies is a classic example. Targeting specific social goods like affordable housing is less common.

And engagement such as shareholder activism uses ownership rights to agitate for change, and responsible business practices.

Photo David Lisle

Stranded assets for a liveable world

Last year, in response to concern about climate exposure among its clients, the world’s largest fund manager, Blackrock, announced it would place climate change at the centre of its investment strategy and dump its holdings in thermal-coal companies.

This was one in a flurry of such announcements, at once ethical and prudential. Fossil-fuel reserves worth trillions must become worthless, or ‘stranded’, if our planet is to remain habitable. The reckoning with climate exposure, as a financial threat, is beginning.

Photo David Lisle

Consumer choice

Most Australians are invested in companies via their superannuation accounts, and in recent times there’s been a push for people to be less passive about how their money is invested. This dynamic, together with the sudden acknowledgement by Australia’s key financial regulators of climate-related financial risk, has led to surging demand for sustainable and ethical investment options.

Yet, there is pushback. The Business Council of Australia is very wary of union influence over industry super funds. It supports ethical investment but warns that members’ money should not be used for ‘political activism’. This translates roughly as ‘don’t bash big business’.

And last year, when the ANZ bank announced its decision to not accept new thermal-coal customers, and to reduce its climate exposure more generally, David Littleproud, minster for Agriculture, Drought, and Emergency Management was furious. ‘We do not need banks in this country trying to become our society’s moral compass and arbiter’ he thundered. Other cabinet ministers opined that ANZ was playing ‘environmental activist’ and ‘virtue signalling’, and called for a boycott of its business.

Photo David Lisle

In reality, ANZ, who has lent billions for fossil-fuel projects in recent years, was taking climate policy baby steps in response to real financial risk. Moreover, these steps were driven by shareholders and customers, aka the free market.

A close associate of ethical investment is ethical consumption. Often associated with fair-trade coffee, dolphin-safe tuna, or shopping locally. It also encompasses activities such as choosing a bank or a super fund Some financial institutions such as Bank Australia, credit unions, and a raft of ethical funds have built brands by using their customers’ money for good, and avoiding using it for bad.

Being ethical is a tradable commodity and intangible assets like brands are vital for many businesses. Transforming ecological and social concerns into profit opportunities is an accumulation strategy in these days of late capitalism. The ethical-investing universe keeps expanding as it tries to coax the free market into saving the world.


Support The Echo

Keeping the community together and the community voice loud and clear is what The Echo is about. More than ever we need your help to keep this voice alive and thriving in the community.

Like all businesses we are struggling to keep food on the table of all our local and hard working journalists, artists, sales, delivery and drudges who keep the news coming out to you both in the newspaper and online. If you can spare a few dollars a week – or maybe more – we would appreciate all the support you are able to give to keep the voice of independent, local journalism alive.

1 COMMENT

  1. Indeed the more ‘free markets’ the better & the ANZ understands that. Littleproud
    is not impressed. Free markets are needed & to the betterment of the country. The
    Aussie government calls it environmental activism. Not so. Common sense suits
    far better.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

How to supply water to the increasing population?

It is predicted that the next 40 years will see the demand for water increase by 50 per cent in the local government areas that Rous County Council supply with water.

Protections can’t wait another seven years for NSW critical habitat 

Protections are needed now for native habitat in NSW as the state has seen a significant increase in native habitat clearing following the NSW...

Appeal following attempted abduction – Tweed Heads

Investigators are appealing for public assistance as investigations continue into an attempted abduction in Tweed Heads at the weekend.

Floodplain fury

With the two-year flood anniversary being recognised this week, Council appears to be pushing on with its plans to seek approval from the state government for floodplain development in Mullumbimby.