The next generation of investors is definitely more motivated in making sure their money is going towards ethical or sustainable companies. The call is being heard by managed funds and super funds alike, and they’re shifting their portfolios to reflect the investor demands in these areas. But these investor demands are more than just a pursuit of a clear conscience, with studies showing that there are real returns to be had within this market.
A new report from the Responsible Investment Association Australasia (RIAA) has shown that companies that “look after their employees, minimise their impact on the environment, have good governance and protect human rights across supply chains” are more likely to deliver “superior financial returns to investors.” According to this report, the Responsible Investment Benchmark Report 2020 Australia, “Australia and multi-sector responsible investment funds outperformed mainstream funds over 1, 3, 5 and 10-year time horizons.”
So today we look at 5 different ethical investment products, from across the range available on the Australian Stock Exchange:
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Australian Ethical Investment Limited
Ticker code: (AEF)
Current price: $4.53
Australian Ethical Investment Limited is an Australian wealth management company that you can not only invest in their funds, you can also invest in the company. The company has more than $4 billion in funds under management and over 57,00 customers, with a focus on ‘People, planet & animals.’ Its available products include managed funds and superannuation that all produce 75% less carbon emissions than the benchmark. The company completely avoids investments with gambling, tobacco and fossil fuel industries. The company’s flagship Australian Shares Fund has outperformed the average large-cap fund over the medium to long term.
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BetaShares Australian Sustainability Leaders ETF
Ticker code: (FAIR)
Current price: $17.90
BetaShares, a funds management company, does all the research for you by screening companies for their ethical and sustainable business practices, before pooling them all together in one ETF. This makes for an easy, accessible option that is indexed based on the performance of the group of companies selected. Some of the top holdings right now in the Sustainability Leaders ETF is CSL, ResMed, Cochlear, Sonic Healthcare and also the mining companies Pilbara Minerals and Galaxy Resources (as those two mining companies are both heavily focused towards lithium, the crucial element for developing electric vehicle batteries).
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BetaShares Global Sustainability Leaders ETF
Ticker code: (ETHI)
Current price: $10.60
This ETF operates on the exact same principle as the previous mentioned funds, although this one tracks the performance of global companies, not just Australian. The portfolio of stocks within this ETF is identified as being ‘climate leaders’ that have minimal to low exposure to fossil fuels. Since inception, the ETF has been on a steady rise in value, reaching a high of $11 per share on 21 February this year.
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Genex Power Limited
Ticker code: (GNX)
Current price: $0.19
Genex Power is a power generation development company that listed on the ASX in 2015. The company develops innovative clean energy generation and electricity storage solutions with the support of the Australian Renewable Energy Agency (ARENA), which has provided funding for numerous projects. It has been a bit of a rollercoaster for investors since this company listed but more opportunities and broadening of licensing with renewal could have a positive impact on Genex. The stock’s highest peak was 0.38 cents in December 2017.
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New Energy Solar
Ticker code: (NEW)
Current price: $0.78
New Energy Solar is a company that acquires, owns and manages large-scale solar generation facilities across Australia and the US. Originally established in 2015, the company already has 16 operating facilities across both countries, with many more projects in the pipeline. NEW has also stated that it may also invest in other renewable energy assets in the future including wind, geothermal, hydro-electricity, hybrid solutions and battery storage. Despite a bumper start to 2020 due to Coronavirus, New Energy still paid out a 3 cents per share dividend in August, which is very reasonable considering the price per share but begs the question: are they able to sustain that? As of August 2020, the company had a share price that is 36.3% lower than its net tangible asset value per share.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regard to your circumstances.
