Fact Sheets and Guides

Summary

Responsible investing, also known as ethical investing or sustainable investing, is a holistic approach to investing, where social, environmental, corporate governance and ethical factors are considered alongside financial performance when making an investment.

There are many different ways to engage in responsible investment, and most investors use a combination of strategies including negative or positive screening; environmental, social and governance (ESG) integration; and impact investing.

Anyone can be a responsible investor, whether they are individuals choosing where to put their retirement savings; a trustee of a trust or foundation; or an institutional investor such as a super fund, fund manager, bank or asset manager.

Summary

The body of evidence continues to stack up – nationally and globally – showing that responsible investments typically achieve stronger risk-adjusted financial performance than their peers, consistently outperforming against benchmarks over short-term and long-term time frames. 

Climate change, largely created by the burning of fossil fuels and release of carbon dioxide into our atmosphere, is the most pressing issue of our time.

From excluding financiers of new reserves, or petrol station owners to divesting all companies with any involvement with fossil fuels, responsible investment can be approached in a number of different ways.

As responsible, ethical and impact investing continues to grow, and as more consumers expect sustainable options for their super and other investments, there’s been a rush to satisfy demand. Sometimes this can result in greenwashing – both intentional and unintentional.

Find out how to avoid the pitfalls and label your product appropriately.

To divest or engage? It’s been a hotly debated discussion for many years, with many responsible investors stating a preference to stay invested in companies favouring corporate engagement and shareholder action over divestment to improve the behaviour of companies.

But what exactly is it? How does it effect change in company behaviour and how do we know if it’s working? 

Australia’s FASEA Code of Ethics is designed to shape and reinforce ethical conduct of financial advisers and to encourage a deeper engagement by the adviser with their duties to their client as well as wider society. This briefing note explores how the Code relates to and embeds responsible investing’s relevance to the provision of financial advice.