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The rise of ethical investing

In just a few short years, ethical investing has moved from the fringes to the mainstream. Indeed, Australians are now increasingly looking beyond traditional profit metrics and considering the broader impact of their investments on society and the environment. But what exactly is ethical investing and why does it matter? More importantly, how can you make it work for you?

What is ethical investing and why does it matter?

Ethical investing is also known as socially responsible investing (SRI), and it simply refers to the act of putting your money into companies and funds that match up with your values. Rather than being all about maximising your financial returns, it's more about supporting businesses that make positive contributions to the world and operate sustainably. These are companies that prioritise environmental, social and governance (ESG) factors alongside profitability.

So, why should it matter to you? Ethical investing isn’t just another feel-good financial trend. It’s a response to the growing awareness of how businesses are impacting our world. From climate change concerns to social justice issues, investors want to know that their money isn’t making a positive difference. Beyond the moral reasons, there’s also a practical side to it – companies with strong ESG practices are often better positioned for long-term success, as they tend to manage risks well and have resilient business models.

3 steps to getting started with ethical investing

If it sounds too good to be true, the reality is that ethical investing is a way to have your cake and eat it too. You can generate more wealth while making a positive contribution to the environment and the world simultaneously. Here’s how to get started:

  1. Identify your values: Start by identifying what matters most to you. Are you passionate about environmental sustainability, social justice or corporate governance? Knowing your values will help you choose investments aligned with your priorities.
  2. Research ethical funds: There’s a growing list of ethical investment options, from exchange-traded funds (ETFs) to managed funds. Research and compare these options to find the ones that best align with your values and financial goals. You can simplify this process by looking at ethical fund ratings.
  3. Diversify your portfolio: Just like traditional investing, diversification is important. Spread your investments across different industries and regions to better manage risk and support a variety of ethical causes.
Benefits of ethical investing

Contrary to the misconception that ethical investing means sacrificing returns, many ethical funds perform just as well as – or even outperform – traditional ones. But perhaps the most rewarding part of ethical investing is knowing that your money is supporting businesses that contribute positively to the world. Whether it's renewable energy, fair work practices or community development, your investments can be a force for good.

As the world becomes more conscious of sustainability, ethical investing will likely become the rule rather than the exception. By integrating these principles now, you can future proof your portfolio against potential risks associated with outdated or unsustainable practices.

Partner with an experienced broker

An experienced commercial broker can be your guide when trying to refocus your investment strategy. At Nero Financial, we understand the nuances of ethical finance and can help you find investments that match your values and long-term objectives. From securing loans for sustainable projects to connecting you with ethical investment opportunities, we can be a valuable ally in your quest to become an ethical investor.

“Ethical investing is no longer a niche concept, but rather a powerful way for Australians to align their investments with their values,” says David Crook, Managing Director at Nero Financial. “By understanding the principles, researching options and leveraging the expertise of a commercial broker, you can contribute to positive change while securing your financial future.”

Interested in building your financial future with an ethical investing strategy? We can help guide you on the path to prosperity. Speak to Nero Financial today or call us on 1300 025 949.