12 Aug 2019
Wealth Potential
It’s easy being green!

With more and more people realising the importance of caring for the planet on which we live, it’s not surprising that many are looking for investments that make a positive impact on our environment, our communities, and our children’s future as a whole.

Investor concerns now range from the environmental implications of a company’s activities, to how it treats its workforce and the communities in which it operates, and to how ethically the company is governed.

These concerns are usually wrapped up under the description of Socially Responsible Investing (SRI), or Environmental, Social and Governance (ESG). A number of managers offer specific SRI funds.

Shades of Green

There is a wide range of SRI funds, and they use different methods for weeding out undesirable investments or identifying desirable ones. For example, some managers use a negative screen to exclude things like alcohol, tobacco, gambling or uranium mining. These funds are sometimes described as ‘light green’. Another form of ‘light green’ fund is those that apply a ‘best of class’ approach. Such a fund might still invest in mining companies, but only the ones with the best environmental record.

Other funds apply positive screens, specifically looking for companies that are trying to make the world a better place as well as generate a return for shareholders. These include renewable energy companies, cosmetics companies that don’t use animal testing, or property companies that specialise in sustainable development. Funds that operate a positive screen are considered ‘dark green’.

Other colours

Green isn’t the only colour when it comes to socially responsible investing. Non-environmental concerns are important to many investors who want to avoid any involvement in companies associated with alcohol, tobacco, gambling or armaments. Corporate governance and social equity issues are also a factor for some investors.

If you are interested in learning more about socially responsible investing, contact a Financial Advisor from Future Key Financial about the many options available.

Daniel Mathers is an authorised representative (1238174) of Hunter Green Pty Ltd (AFSL 225962). Emily Matthews is an authorised representative (1261200) of Hunter Green Pty Ltd (AFSL 225962). Future Key Financial Pty Ltd ACN 608 953 840 is a Corporate Authorised Representative (1238170) of Hunter Green Pty Ltd (AFSL 225962). The information on this website contains general information and does not take into account your personal objectives, financial situation or needs. We recommend that you seek for specific financial advice if you require advice that takes into account your personal circumstances.