Ethical Investing - Align your investments with your values

23 Apr 2025

As more Australians seek purpose and meaning in retirement, ethical investing is becoming an increasingly popular way for seniors to ensure their finances reflect their personal values. Also known as socially responsible or sustainable investing, ethical investing involves choosing companies and funds that prioritise positive environmental, social and governance (ESG) practices.

For many seniors, ethical investing is a natural extension of a lifetime of making values-driven decisions. Whether it’s protecting the environment, supporting human rights or promoting good corporate governance, ethical investing allows you to ‘do good while doing well’ – potentially earning returns while contributing to a better world.

There are several ways you can get started with ethical investing. A good first step is to assess your personal values and decide which issues matter most – such as climate change, animal welfare, gender equality or Indigenous rights. From there, you can look for superannuation funds or managed portfolios that screen out companies involved in industries like tobacco, gambling, weapons manufacturing or fossil fuels. Many ethical funds also prioritise businesses that actively contribute to solutions, such as clean energy or affordable healthcare.

Transparency is key. Reputable ethical funds will clearly outline their screening criteria and list the companies they invest in. Tools like the Responsible Returns platform, provided by the Responsible Investment Association Australasia (RIAA), can help you compare funds based on ethical performance.

Another important consideration is performance. Some retirees worry that ethical investing may mean sacrificing financial returns. However, numerous studies suggest that ESG-aligned investments often perform as well as – or even better than – traditional funds, especially over the long term. In fact, companies with strong sustainability practices may be better positioned to manage risk and adapt to changing regulations or consumer preferences.

For those who prefer a more hands-on approach, working with a financial advisor experienced in ethical investing can be beneficial. These professionals can tailor portfolios to reflect both your values and financial goals, ensuring the right balance between impact and income – particularly important for those drawing on their retirement savings.

Ethical investing empowers you to leave a lasting legacy, not just for your family but for future generations. By aligning your money with your morals, you can feel confident that you’re making a meaningful difference in the world, while still making smart financial decisions.