...you can do both.

After decades in the investment wilderness, the jury is finally in - 'ethical investing' works, and is rapidly gaining in popularity.

For most Australians, investing is often a 'set and forget' approach, with much of the discussion between investors and their advisors revolving around issues such as performance, asset allocation, fees, fund manager research, reputation and ranking. However, for many years now, investors have had the opportunity to add another 'layer' to the funds management vetting process - ethics, social responsibility and sustainability.

These investment categories can be described as follows...

Ethical Investing: Companies and sectors are negatively screened and not included in portfolios if they make or sell certain products. Positive screening can also be part of the process.

Socially Responsible Investing: Companies are generally screened out if they take part in excluded activities, but may be included if their commitment to social responsibility outweighs the negative aspects.

Sustainable Investing: Investments are chosen on the basis of how well a company manages environmental, social and corporate governance factors, not on what the company makes or sells.

Ethical investment funds basically screen out areas of investment they consider unethical (negative screening) and screen in areas they consider ethical (positive screening). The breakdowns vary from fund to fund, but Australian Ethical's mix gives a good sense of what ethical investment through super funds and other investment vehicles looks like…

'Unethical' investments Generally coal, fossil fuels, oil, weapons, tobacco, logging, gambling, companies implicated in human rights abuses.                                                                                                                                                          

'Ethical' investments Clean energy, sustainable products, medical solutions, innovative technologies, responsible banking, healthcare, recycling, energy efficiency, education, aged care.

Investing and growing your wealth (including your superannuation fund) in a manner that is consistent with your personal belief system is not only doable, but equally as effective as other, more traditional avenues of investment. Speak to Westmount about how you can make a difference.