3 ways to invest ethically and responsibly (2024)

If you’ve been to a climate strike, then you may have felt frustrated that you can’t influence the big, global companies that are responsible for so much of our carbon emissions.

But the good news is you can!

Here’s our top 3 tips for investing ethically and responsibly:

You may not be able to spend your superannuation until you retire, but in the meantime, you do have the power to choose who manages it for you. This simple choice is a powerful one because different super funds invest in different ways.

A lot of people are still with the default super option that came with their first job out of school. So, the first step is to find out where your money’s invested. Once you know which super fund you’re signed-up with, you can ask them how they approach responsible investment and investigate whether they have an ethical investment option. If they do, and you feel their ethical framework matches what you’re looking for, then it’s usually pretty easy to switch over to that option. If you have any questions, just give them a call.

If you’re current super fund doesn’t have an option that suits your needs, then you can use the Responsible Returns tool to find one that does. Switching to a new super fund is much easier than ever these days, with some funds managing it all online.

It may be a bit daunting to dig into the various financial options, but you’d be surprised how much useful information there is out there.

Your money is powerful. Sure, you may not have a whole lot of it, but banks actually use the money in your savings account to make investments, so you should know how they’re using it. Also, banks are in the business of lending money. And many of them lend money to major fossil fuel projects or companies which may be responsible for animal cruelty.

Banks which are responsible or ethical investors will recognise that issues such as pollution or modern slavery does actually have a cost on society, even if the company doesn’t pay the cost in the short-term.

You have the power to question your bank, and if you’re not happy with their answer, you can move your money somewhere else. Responsible Returns will help you identify a range of different banking products which have been certified as true-to-label for their responsible investment claims. This will send a signal, and with a growing critical mass of people doing the same thing, banks will have no choice but to make a change.

If you’re motivated enough, you can get your hands dirty, do your own research and put together your own investment portfolio or SMSF.

The process of analysing individual companies can take some work, and you may want to get some advice from a professional. But it’s a good process to think about the companies you feel have good ethical standards, and examine what makes them different, and whether they’re competitive in the market place. If you don’t have the time or the inclination to do your own research, you can find an investment manager who can do it for you. They can offer you a ready-made portfolio in the form of a managed fund or an ETF.

You can point them to Responsible Returns which includes a broad range of products that have been certified as ‘true-to-label’ by the Responsible Investment Association Australasia for their responsible investment claims. You’ll still need to read the fine print, but if you want to be sure that your money’s doing good, and not doing harm, then this is a good starting place.

As an investor you can also support organisations like the ACCR and Market Forces. They unite groups of investors and they approach big companies on their behalf. They discuss issues, agitate for change, and if that doesn’t work they vote as a block at the company’s annual investor meeting.