Going for Green – the case for ethical investing

How would you feel knowing your investment funds have been put to use in a mining company needlessly degrading the environment? Or a pharmaceutical group that tests their products on animals? Perhaps in a tobacco company, or gambling projects?

When you pass your money over to your financial adviser, where it ends up need not be completely out of your hands. It’s worth finding out from your adviser where your funds are going. Ask about ethical investing.

What does ethical investing actually mean? And can we afford to worry about moral issues when investing our hard earned dollars?

Funds promoting ethical investing undertake to funnel capital only into sustainable assets, those promoting social and environmental good. There are several Australian funds available that actively invest in clean technology, waste management and healthcare. And the good news is, having a social conscience doesn’t have to shrink your bottom line when it comes to making investment choices.

According to Morningstar, ethical funds as a group have outperformed mainstream Australian share funds over a five-year period (4.65% versus 4.21% for the five years to July 31, 2010). The best performer over the past 5 years has been Perpetual’s Wholesale Ethical SRI Fund with an average of 7.78% over the past 5 years.

And your adviser? Be prepared to probe deeper if a glib answer is forthcoming. Perhaps he/she has not thought about it – let them know that it matters to you. Many advisers remain oblivious or resistant to client demand for responsible investment decisions - it may be worth looking around for someone who shares your values. It’s ultimately your choice where your money is going.

Good vibes and great returns? Ethical investing definitely gets the green light from us!