Ethical investing is being driven by the growing awareness and acceptance of climate change, reducing water sources and other sustainable issues. As such, there has been a significant shift over the past decade in investor preferences towards ethical investing. This trend has been seen across all types of investing, including managed funds, development projects and other sectors such as R&D.
Ethical investing does not lead to lower returns
Ethical investment options are increasing in number as well as in profitability. Millennials have been observed as the group who is pushing the strongest towards responsible investing. They will make up most of the workforce in Australia in the next couple of decades. As time passes, they will gain more influence in market movements and project developments.
There is a misconception that an investor gives up some of their returns when ethically investing. This is not true. Returns on ethically invested share funds over the decade have produced an average return greater than 6% per annum (up to 2018). See here for a list of high-performing ethical investment funds. One reason for this is that countries are shifting to more environmentally friendly and renewable solutions. As this occurs, ethical companies are able to gain access to more projects which allows them to make more revenue.
Sectors are moving towards being more ethical
Lately, housing development has been placing greater emphasis on its impact on the social community. Investors are looking at contributing to the community and avoiding creating problems. As a result, developers have shifted towards creating projects that consider these preferences. Similarly in R&D, technology and other sectors, sustainable and ethical incentives are driving the industry. In developing and emerging markets there is a growing acceptance of this fact.
Ethical practices undertaken by these developers and companies are often well ahead of their regulatory bodies. As regulations change or become more ethically centralised, these companies do not have to adapt as much as other companies. Therefore, this shows the value of proactive business strategies. As such, this makes them more profitable in the long run too.
But what does this mean for you? Nothing, or everything! Your investment preferences are your own. It is important though to know that having ethical preferences does not limit your returns. Our team at Endorphin Wealth are here to help assist you achieve your lifestyle and financial goals. We ensure that you are happy with where your wealth is invested. Feel free to contact one of our advisors who can help work with you to achieve this.
The team at Endorphin Wealth Management is here to help you achieve a positive outlook on your financial situation.
For an obligation free discussion, call us on 03 9190 8964, or schedule a meeting at endorphinwealth.com.au/contact/