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The ABCs of ethical investing – “a financial revolution driven by women”

In Australia, women are leading the charge in shifting to ethical funds and helping secure our future. But what actually constitutes ethical investing? And how can you be a part of it?

Emma Bombonato
Manager of Environmental Sustainability - Sydney Opera House

In 2020 the Sydney Opera House committed to the Global Goals, the global ‘to do list’ for the world which sets out the blueprint for a fair and sustainable future. What role does the financial sector have to play in achieving these Goals and how can it fund them? I sat down with All About Women 2021 Event Partner Christina Hobbs, Co-Founder/CEO of Verve Super, to see if the answers lie in our super…


A to-do list for the world, the Global Goals address some of the most pressing issues of our time, including poverty, inequality, climate, education and justice.

1. What is ethical investing?

At the heart of it, ethical investing is investing in line with your values; a powerful action we can all take with our money to stop funding the climate crisis and take a stance on the social issues we care about. It can mean refusing to invest in certain industries or pro-actively directing money to investments that have a positive social impact. At Verve we do both and the good news is that there can be positive financial outcomes too.
 

2. Why are women an important focus for ethical investment?

One of the greatest consumer shifts in history occurred when women gained significant spending power. It was a huge wake up call to the sexist ad industry of the 1950s and 1960s as women with consumer power demanded better from those trying to sell them products. We’ve also seen more recently, environmentally and socially aware products explode onto the market as women have driven a shift towards conscious consumption.

Now we’re in the midst of another financial revolution driven by women: ethical investing. In Australia women are leading the charge in shifting to ethical funds. We simply don’t want our money to be invested in helping grow the fossil fuel, weapon, gambling and tobacco industries. And because of this, women who were often marginalised from financial conversations are now becoming engaged, building their financial acumen and taking back control of how their money is invested.

“There’s a lot of ‘green wash’ in the financial industry and no regulation over what constitutes a ‘responsible’, ‘green’, or ‘eco fund’. ”

3. Is there a gender gap in retirement savings?

I’d call it more of a gaping hole. Women are currently retiring with 35% less super than men, and that’s a trend that’s not expected to change without some major shifts in how Australia values women in the workforce. The gap starts in a woman’s first job, where she will on average earn $3,000 less in pay and almost $285 less in super than her male counterpart. And this gap only widens as women take time out of the workforce to care for children, and in later life, parents, without receiving any form of retirement benefit.
 

4. Why should people consider an ethical super fund? And what sort of industries do ethical funds exclude?

People choose ethical super funds for two key reasons. Firstly, because research is showing that funds that invest ethically have been out-performing the market; and secondly, to align the      investment of their money with their values. They don’t morally support fossil fuels, tobacco, weapons, gambling or other similar industries, so why would they want their super invested in them?

It’s important to be careful when selecting an ‘ethical’ fund. There’s a lot of ‘green wash’ in the financial industry and no regulation over what constitutes a ‘responsible’, ‘green’, or ‘eco fund’. Right now, there are funds labeling themselves as ‘green’ or ‘ethical’ while remaining are invested in heavy weapons, fossil fuels, and companies responsible for old growth logging. Before investing or switching super funds, it’s important to do your research and investigate exactly what a fund does and does not invest in. If this information is difficult to find or unavailable, it’s generally a red flag. At Verve, anyone (not just members) can access the complete list of our current investments with one click from our homepage
 

5. Does ethical investment really make a difference to creating a better future?

For me personally, the most important thing is that I don’t want to look back in ten years and have to tell my children that I was still investing in new coal, gas and fossil fuel projects in 2021.

I think like any social and environmental action that we take, we have to see our role as contributing to a broader change. There is so much inertia around issues like climate change because as individuals we know we can’t solve the issues alone. It’s important to release ourselves of this burden and be proud of all the actions that we can and do take as part of a broader collective.

As more and more people start shifting their money, collectively, yes, it’s absolutely already having a difference. Thanks to ethical investing, there’s more money flowing to renewable energy through super and even large financial institutions have been forced to rethink their investments in fossil fuels.


The founders of Verve Super, including Christina Hobbs (middle)

“As investors and everyday Australians look to the future, many can see the writing on the wall when it comes to investing in industries like fossil fuels, gambling and tobacco.”

6. Is there anything in it for me (besides preserving my planet)?

Research completed by the Responsible Investment Association of Australia, as well as by Oxford and Harvard universities in America, is now showing that historically well screened ethical funds have outperformed the market over the short, medium and long term. As investors and everyday Australians look to the future, many can see the writing on the wall when it comes to investing in industries like fossil fuels, gambling and tobacco. People are taking these risks seriously and looking for alternatives when it comes to long term investments, like superannuation.

 

7. How do I choose an ethical super fund that matches my values?

If you’re new to superannuation or ethical investing, this task might seem a little daunting. But it doesn’t have to be. Start by drawing up a list of industries and corporate practices that you want to see thrive in the future. Now, write a list of the industries and corporate practices which don’t belong in your vision for the future. This can also be a great activity to do as a family. Then review your lists against the negative and positive screens of different ethical funds.

Of course, it is important to take other factors into account such as fees, performance, risk profile, insurance and the alike, before you make your decision. If you’re unsure whether a particular super fund might suit your needs, I suggest you seek professional financial advice. Looking at longer term performance when it comes to ethical super funds is particularly important. 

 

8. What kinds of projects and industries does Verve support?

Verve screens out industries that we consider unethical, such as fossil fuels, gambling, tobacco, weapons, and companies servicing off-shore detention facilities. Then we specifically look for investments that support women, our community and our planet. This includes investing in renewable energy projects and also microfinance to support women’s businesses.

 

9. How does Verve support women?

We support women in three key ways. Firstly, through our Verve Academy we offer courses, resources, events and learning opportunities. This also includes a wealth building squad of Support Coaches that our members can access as part of their membership - including a divorce coach, and a career coach.

Secondly, we tailor our product and fees for women. For instance, we provide a rebate of our fixed admin fee for members on parental leave (for up to 12 months) and we don’t charge a fixed admin fee for members with a low balance (under $5,000). Thirdly, we advocate for better retirement outcomes for women.

 

Verve Super are the All About Women 2021 Event Partner. If you’d like to learn more about Verve, visit their website.

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