Ethical investing: Watch out for the coming wave
The ethical investing wave has hit Australia from the Northern Hemisphere and will soon wash up on New Zealand's shores.
Wednesday, October 10th 2001, 7:08AM
The second annual Ethical Investment Association conference in Melbourne recently attracted a record attendance of more than 250 delegates, including fund managers, researchers, advisers, trustees and academics.
This increase illustrates that ethical, or socially responsible investing, is now becoming a mainstream option for sensible portfolio construction.
Research presented to the conference showed that there is more than A$10.5 billion invested ethically across the Tasman and that figure is expected to grow rapidly.
Melbourne-based Deni Greene Consulting Services says the A$10.5 billion figure includes money invested by the country's major church groups, but excludes property.
New Zealand is trailing Australia in number of SRI funds available to investors, and the amount of money invested into the sector, however there is a growing interest in the area. In the past year a number of funds have been brought to the market including the Tower Global Responsibility Fund which is managed by Norwegian SRI specialists Storebrand Investments.
The key drivers of future growth in Australia, and to a lesser degree New Zealand, will be a new law passed last month by the Australian government and a growing demand from investors for ethical investments.
A last minute amendment was made to the Financial Services Reform Bill (FSRB) that requires fund managers to disclose their policy on ethical investments.
Lawmakers in the United Kingdom recently passed a similar bill, however the UK one only applies to employer-sponsored schemes.
The Australian amendments will require super funds and fund managers to outline the extent, if any, to which labour standards, and environmental, social or ethical considerations are taken into account in the selection, retention or realisation of their investments.
Another of the drivers is the growing awareness from investors of the need to put their money into sustainable businesses.
Balclutha based adviser Bob McAuley, who has put a number of clients into Tower's Global Responsibility Fund fund, says once people start realising how much damage some companies are doing to the environment they will start to favour more responsible businesses.
"(Socially responsible funds) are becoming increasingly attractive to clients," he says.
The idea of socially responsible investing also appeals to groups like the Sisters of Compassion.
Until recently the Wellington-based group looked after its own money and favoured bank deposits.
With the advent of socially responsible funds the group is now using an adviser and putting its money into managed funds.
Sister Margaret Anne Mills says it now invests in Tower's fund because it feels it can do better things with its money and improve its returns.
She says investing in a socially responsible fund is a way of forcing businesses to change their ways and embrace the triple-bottom line approach and use sustainable practices.
"People are becoming more conscious of their values base," she says.
Research and a presentation from a Melbourne-based planner who specialises in the ethical investment area, reinforced the trend of investors wanting ethical funds, as opposed to financial planners promoting them.
Financial planner Janice Carpenter, who is also the co-chair of the association, says ethical investing is a great way for planners to attract a new client base.
She told the conference that ethical investors tend to be female service professionals (teachers, nurses, architects, and engineers etc) and they are accumulators, as opposed to being retirees.
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