In the decade since I entered the financial services profession, many things have changed. The world is a very different place than it was in 2006. Property prices have soared, sharemarkets have closely resembled a Gold Coast rollercoaster and certain international economies have undergone complete overhauls.

Today though, I want to discuss one trend I have noticed that has been developing over many years.  Australians today have a far greater interest in what is colloquially referred to as ‘Ethical/Sustainable Investing’ or ‘ESG’ (Environmental, Social and Governance) practices.

I am not only talking about investment returns, though many ESG-style investments have performed well in recent years. I am also talking about the attitude more and more people have towards what ESG means and how they can support a philosophy that clearly resonates with so many of us. Many professionals are looking at ESG styles not only as a personal preference but also as a prudent investment approach.

What does ‘ESG’ really mean?

I am a strong believer that the answer to this question is personal and can be different for different people. For example, I have married clients who have different views on what is ethical. There is no perfect blueprint. Part of my role is to help people understand their broader objectives and preferences and then work together to determine how we can implement an ESG-style investment philosophy as part of their overall financial strategy. This may involve discussing the following questions such as:

  • Are there any types of investments you want to avoid?
  • Are there any types of investments you want to include at all costs?
  • Are there certain companies or industries you don’t feel comfortable supporting?
  • Are there any companies employing ‘sustainable’ practices in their business that you would like to support (environmental or otherwise)?
  • Are there certain countries you don’t want to invest in?

As you can imagine, answers will vary significantly from person to person. Many feel banks operate unethically, and as we all know, most Australians invest in our banks in one way, shape or form (typically through our superannuation funds). Other industries such as tobacco or weapons are also commonly excluded from ESG investments.

What may be ethical or sustainable in your eyes may not be the same for your friends, family or the wider population. The same goes for investment managers, so navigating the landscape to determine which approach suits you can be very difficult.

The good news is that help is available through organisations such as the Responsible Investment Association Australasia (RIAA), the peak industry body for responsible and ethical investors across Australia and New Zealand or professionals such as your own personal financial adviser. If you don’t have a financial adviser, as an RIAA-certified financial adviser, I will be happy to have an initial discussion with you.

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Chris Giaouris
Chris has a Bachelor of Commerce from Deakin University and is a Certified Financial Planner (CFP®) through the Financial Planning Association of Australia. CFP® is an internationally recognised mark and is currently the pre-eminent representation of professional Financial Planners around the world. Chris has been providing personal wealth management and financial advice since 2008. Over this time he has built specialised knowledge in superannuation, retirement strategies, personal / business risk protection, tax planning and portfolio management. He believes financial planning is not solely about investments or strategies, but more importantly it is about helping people make smart choices with their money so they can focus on things more important than money. Chris also has extensive experience in the UK Pension sector where he has assisted a number of clients with the transfer of their UK superannuation capital to a complying Australian fund. Away from work, Chris enjoys most sports (as frustrating as golf can be, at times!) and keeping up an active and healthy outdoor lifestyle. He is especially passionate about travelling the world and experiencing all it has to offer.
Chris Giaouris

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