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Call for ethical super grows into a major chorus

Image: Stephen Melkisethian
Image: Stephen Melkisethian

Ninety per cent of Australians expect their super to be invested ethically, and 80 per cent would consider switching funds to more aligned providers, according to new research from the Responsible Investment Association Australasia.

The results, released at the Responsible Investment Australia 2017 conference on Wednesday and conducted by Lonergan Research, show demand for ethical investment is gaining ground, with results up from the same time in 2013. While it is known ethical investment has broad support, the RIAA said the numbers were stronger than expected.

“Consumer sentiment mirrors the continuing growth in the sector with responsible investment more than quadrupling over the past three years and nearly half of Australia’s assets under management now being invested through responsible investments,” RIAA chief executive Simon O’Connor said.

However, finding an ethical provider, and then making the switch, can be easier said than done, with just 22 per cent of those surveyed saying they were with an ethical super fund, and 56 per cent saying there was not enough independent information available to make the switch to an ethical super fund, or an ethical option within a fund.

To combat this the RIAA has released a new tool – Responsible Returns – that allows users to find ethical super, investments and banks. The tool allows users to pick their top two issues they’d like to support, such as renewable energy and green buildings, and the top two issues they’d like to avoid, such as fossil fuels and human rights violations.

A list is then provided of the most suitable companies and products.

Other similar initiatives include Market Forces’ Super Switch.

Recent research has shown that responsible investment options have outperformed mainstream investments over three, five and 10-year horizons.

“As more Australians show a desire for their investments and savings to align with their values, those already investing their money responsibly are enjoying strong financial performance,” Mr O’Connor said.

He also recently wrote in The Fifth Estate that almost half (44 per cent) of Australia’s assets under management were now being invested through some form of responsible investment strategy, with environment, social and governance (ESG) integration being the primary responsible investment approach.

The new research found that Millennials were the most likely group to consider putting their money in an ethical super fund at 88 per cent, and the most likely group to make ethical investment decisions in the future at 69 per cent.

Women were also more likely to expect their super to act ethically (57 per cent) than men (42 per cent).

Overall, the investment categories people most cared about were renewable energy (48 per cent), healthcare and medical products (45 per cent), and sustainable practices (44 per cent). Sustainable property was at 35 per cent.

The top three things Australians wanted to avoid investing in were animal cruelty (69 per cent), human rights violations (62 per cent), and pornography (56 per cent).

“What is clearer today than four years ago is that Australians are demanding that financial markets play a socially constructive role in the economy,” the research report said.

“People are expecting their investments to support the emergence of tomorrow’s industries, to remove support from companies that are doing social harm, and to create the assets and infrastructure that we will need in Australia late into this century.”

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