What are socially responsible shares?
Socially responsible shares and managed funds consider environmental, social, corporate governance and/or ethical factors associated with your investments, in addition to financial return. Socially responsible investment providers will generally have a clear stance on issues such as climate change, animal welfare, human rights and clean energy. They will be transparent about investments they avoid, which may include those that support fossil fuels, weapons, tobacco, practices that have negative environmental impacts and human rights abuses. They will also be clear about companies they support, which may include those involved in clean energy, recycling, energy efficiency, education and sustainable products. Socially responsible financial institutions may use their relationship with the companies in which they invest to promote ethical and sustainable practices.
Why invest in socially responsible shares?
There are many reasons to invest in socially responsible shares, including both personal and bigger picture benefits such as:
- investing in line with your values
- healthy financial returns
- plenty of choice, including low risk investment options
- facilitating social change as businesses alter their practices to attract your investment.
How to invest in socially responsible shares and managed funds
Choosing socially responsible investments might seem like a chore, especially if you are not particularly interested in finance. Fortunately, it does not need to be complicated.
Step 1: Find out where your money is invested
An easy way to start is by looking at where your money is currently invested. You can check your share portfolio or managed fund statement to see if it makes the nature of your investments clear. If not, contact your provider, bank or financial planner for clarification. If your provider isn't transparent about where it invests its money you might prefer to choose one that is.
Step 2: Research your options
If your investment provider doesn't offer responsible investment options there are plenty that do, and moving your money is generally straightforward. Look for financial advisers and investment products with Responsible Investment Association Australasia certification.
Step 3: Tweak your investments
Whether you shift part or all of your money to a new option with your current provider, or a new provider altogether, a small change to your investments can have a big impact. There are many options when it comes to socially responsible investment, so think about the causes (environmental, social and so on) that are most important to you and find a provider with practices that align with them.