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Consumers expect social and environmental ethics from financial sector

hand holding earth

Australians have high expectations for the financial sector and the future of ethical investing according to a new report from the Responsible Investment Association Australasia (RIAA).

According to the report’s findings, nearly nine out of 10 consumers believe financial institutions should invest ethically and generate positive social, economic and environmental change. 

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In the wake of the COVID-19 outbreak, medical wellbeing became a priority for half of the consumers who wished to invest in healthcare and medical products.

“The COVID-19 crisis is reinforcing how interconnected our societal wellbeing is with business and our economy,” RIAA chief executive officer Simon O’Connor said. “It’s no longer acceptable for a company to single-mindedly safeguard its profits to the detriment of its staff, the community, or our environment.”

Environmental factors are an important issue for most consumers, with four out of five people interested in investing in sustainable development and two thirds adamant to oppose harmful industries such as fossil fuels and pesticides.

Extreme climate disasters are another growing concern for consumers, especially in the wake of Australia’s devastating bushfires. Eighty-eight per cent of people said the financial sector needs to play a larger role in bushfire recovery and supporting affected communities.

In order to accomplish this, Australians are willing to hold companies accountable for their actions, with three quarters of consumers willing to change their banking or superannuation investments to a different provider should they find their current one behaving unethically.

There was also a greater demand for transparency as over 80 per cent expected full disclosure on which companies their money is going towards and how the impacts will be felt, both positive and negative.

Much of this determination is credited towards young investors, particularly Gen Z and Millennials willing to prioritise societal benefits significantly more than older generations.

A shift towards more sustainable investing also stands to benefit financial institutions. Sixty-seven per cent of consumers said that institutions that invest ethically are more likely to perform better in the long term, a 33 per cent increase from RIAA’s previous study in 2017.

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