A financial advisor can match your values to your portfolio

Choosing investments based on your ethical values can create a positive impact and also make you money. That’s a win/win in our books at Poole Advisory. 

What is ethical investment?

Ethical investment is the practice of using your moral or ethical principles to guide where you want to invest your money… and it’s one of the current buzzwords of the investment world!

According to 2022 research from the Responsible Investment Association Australasia (RIAA), nearly 70% of Aussies believe environmentally damaging investments (including those employing environmental degradation, pesticides and fossil fuels), should be avoided. Over 50% of those surveyed were put off by companies associated with animal cruelty, human rights abuses and gambling.

At Poole Advisory we’ve found many of our investors want to put their money where their mouth is and invest with a clear conscience. 

“As a financial planner, we discuss clients’ social and ethical views and how they wish to utilise their views in regards to their investments now and in the future,” says company principal Anthony Poole.

Why is ethical investing so popular right now?

While there is much hype about ethical investing in the 21st century, there’s actually nothing new about it. 

Religious-based ethical investing first made noise in the 18th century when The Quakers refused to invest in the slave trade. At the same time, the Methodists were refraining from investing in industry that would harm one’s neighbours. 

By the 1960s, investors were focused on organisations promoting equality and rights for workers and avoiding any company involved with the Vietnam War. 

Now, as global heating takes centre stage, the focus has shifted to environmental issues, with ethical investors moving away from fossil fuel companies and toward sustainable energy. (The Australian Government recently announced a $25 billion in investment in clean energy and renewables projects.)

Ethical investors – who are they? 

At Poole Advisory we’ve found our clients of all ages and at all stages of their investment journey are interested in ethical investing. 

There is no typical ethical investor, because what one person may see as an ethical investment, others may not. Therefore, there are only investments that are ethical to a particular investor. 

“Having a clear understanding of what is important for clients is the first step and often the hardest. Some clients don’t wish to invest in fossil fuels however are very happy driving around in a diesel car,” says Anthony.

“What is right? Well, it doesn’t really matter. Clients should develop and own their own strategy of what is important to them and stick to this strategy.  This can be done through pure ethical investments, and the ability to customise accordingly to one’s social and ethical views.”

Today’s ethical investors are analysing their investments to make sure a company and its actions align with their own core values. 

Along with bypassing environmentally damaging industries, our clients are motivated by human and animal rights issues or social issues like healthcare, public health and community infrastructure. And they are making their social impact felt by avoiding buying into so-called ‘sin stocks’ like gambling, smoking, alcohol or firearms. 

“We have tools within our research to analyse most investment funds to understand what social and ethical exposure the investment has and then discuss with clients on how they wish to manage this,” says Anthony. “We have the ability to screen investments that align to clients preference and then make recommendations accordingly.”

At Poole Advisory we guide our clients towards ethical investment decisions based on their personal profiles.

Here’s a snapshot of some of our ethically motivated investors at Poole Advisory:

• Indira and Jamie are professionals in their early 30s with two young children. They live in the booming southwest of Sydney. They want to see more investment in schools and infrastructure near to home and are drawn to place-based ethical investments in their area as part of their investment strategy.
• Bob and Dorothy are self-funded retirees who run their own self-managed super fund. They want to leave a guilt-free legacy for their grandchildren and choose not to invest in companies involved in weapons, tobacco and gambling.
• Chandra runs a growing printing business and has watched his energy costs skyrocket. He wants part of his investment portfolio to focus on climate impact investing and he buys into funds registered to buy and sell carbon credits.
• Chris and Carmen are in their 40s and wealth-building for their retirement. After almost losing their holiday home to a bushfire, they understand the threat of environmental events and want to invest accordingly – but they also want bang from their ethical investment buck.

How do you know an investment meets your standards?

With so many ethical investment options on the market, our clients at Poole Advisory are keen to know which funds and companies meet their individual moral standards and beliefs.

We advise our clients that research and analysis is key to understanding if investments use ethical principles and standards – both historically and currently – which will suit them. And also if the company has a commitment to ethical practices. 

“We run managed accounts which give clients the ability to customise their accounts to address their social and ethical views. 

“For example, one client recently didn’t want to have any gambling investment within her portfolio and we were able to go behind the scenes of her account and put a block on gambling investments which prevented the chosen investment manager from investing in the blocked gambling investments. This gives clients some control of their account.”

These are some of the common approaches to ethical investing:

Research – get started by using this handy Responsible Returns tool from the RIAA

ESG integration – consider environmental, social and governance factors of an investment 

Negative screening – cull any industries you don’t want to support 

Positive screening – search out companies making a difference 

Impact investing – look for companies focused on positive impact 

Performance – as with any investment, you want an ethical investment to make you money

Invest for good as a group – organisations like the ACCR and Market Forces unite investors and approach big companies on their behalf, agitating for change and voting as a block at annual investor meetings

What are the pros and cons of ethical investing?

Pro: Ethical investing can deliver sustainable returns and even outperform other share funds over time.

Con: You may be limiting your investment options if you insist on a heavily weighted ethical investment portfolio.

Pro: Environmental, social and governance (ESG) issues are becoming more important to companies and investment funds wanting to ensure their long-term market survival.

Con: Some small-scale ethical investment funds may charge higher fees and charges than other managed funds. 

Pro: Using your money to improve society will make you feel good and leave the world and other humans in a better place! 

Con: Not all ethical investments have potential – consider the commercial realities and ensure the idea has viability. 

Quick ways to kick-start your ethical investment journey 

1 – Question your bank

Banks are in the business of lending money – your money. If your bank is lending to fossil fuel corporations or other ethically challenged groups, it might be time to switch to a bank making responsible investments.

2 – Switch your super 

Does your current super fund offer an ethical investment option? Does it match with your moral  values? If so, switch over to the ethical option. If not, look for a fund that meets your criteria and make the guilt-free move.

How can a financial planner help with ethical investing?

Whether you want to set up a self-managed super fund (SMSF) or craft an investment portfolio that follows your moral values, our Principal Anthony Poole can guide you through the process and suggest investments to align with your beliefs and interests.

At Poole Advisory we have already done the research on hundreds of ethical investment options and we can guide you towards managed funds and exchange traded funds (ETFs) to match your preferences.

We review a company’s commitment to ethical standards and practices, and, naturally, we also look at its history, financials and projected performance to make sure any investment is sound and has the capacity to deliver you significant returns.

For more information on how Poole Advisory can help you manage your ethical investments, get in touch today or book an appointment. 

Compliance Disclaimer:

This information contains general advice only, that is, advice which does not take into account your needs, objectives, or financial situation. You need to consider the appropriateness of that general advice in light of your personal circumstances before acting on the advice. You should obtain and consider the Product Disclosure Statement for any product discussed before making a decision to acquire that product. You should obtain financial or credit advice that addresses your specific needs and situation before making investment or borrowing decisions. Taxation information is based on our interpretation of the relevant laws as at 1 July 2018. While every care has been taken in the preparation of this information, Prosperitas Partners Pty Ltd does not guarantee the accuracy or completeness of the information. The case studies are hypothetical, for illustration purposes only and are not based on actual returns

Poole Advisory Pty Ltd ABN 15 642 040 604 is a Corporate Authorised Representative (No. 001282603) of Prosperitas Partners Pty Ltd ABN 30 662 654 453 AFSL 544 917