Ethical & Sustainable Investing

More and more Australians are asking a question that would have seemed unusual a generation ago: can my investments reflect my values? The answer, increasingly, is yes.

Growing awareness of climate change, environmental degradation, and social inequality has prompted a fundamental shift in how many people think about investing. It's no longer just about returns — it's about what those returns are built on, and whether the companies and assets you're invested in are contributing to the kind of world you want to live in.

The good news is that aligning your financial goals with your personal values doesn't have to mean compromising on performance. In fact, a growing body of evidence suggests the opposite may be true.

What is ethical investing?

At its core, ethical investing means directing your money toward companies, funds, and assets that meet defined standards of environmental, social, and governance responsibility — and away from those that don't. It's the investment equivalent of voting with your wallet.

The concerns driving this shift go well beyond carbon emissions. Many investors are focused on issues like land use, biodiversity, water management, workplace practices, supply chain ethics, corporate governance, and more. The scope of what "ethical investing" means is broad — and deeply personal.

Navigating the language

If you've started exploring this space, you've likely encountered a range of terms that can feel interchangeable but aren't always. Here's a plain-English guide to the most common ones:

Responsible Investing

The United Nations Principles for Responsible Investment (UNPRI) defines this as a strategy that incorporates environmental, social, and governance (ESG) factors into investment decisions and active ownership. In practice, it recognises that financial performance and the health of broader social, environmental, and economic systems are deeply interconnected. Most serious investors now accept that non-financial factors are not just ethical considerations — they're material ones.

ESG

ESG stands for Environmental, Social, and Governance — the three lenses through which a company or asset can be assessed for responsible investment. It's a widely used term, but an important caveat: when a product is described as "ESG-screened," that can mean many different things depending on the fund manager. The Responsible Investment Association of Australia (RIAA) provides useful guidance on how ESG criteria are applied across different strategies and products.

The UN Sustainable Development Goals (SDGs)

Established in 2015, the UN's 17 Sustainable Development Goals set a global roadmap for ending poverty, reducing inequality, and protecting the planet by 2030. Many responsible investment products are specifically designed to support progress toward these goals — directing capital toward companies and projects making a measurable positive contribution.

Sustainable Finance

Sustainable finance is about aligning the entire financial system — lenders, investors, insurers, and more — with better ESG outcomes. You may also hear the term green finance, which typically refers to a subset focused specifically on environmental impact.

Impact Investing

Impact investing goes a step further than ESG screening. Rather than simply avoiding harmful investments, it actively seeks out opportunities designed to generate measurable positive social or environmental outcomes alongside a financial return. It's a more intentional, outcomes-focused approach — and a growing area of interest for investors who want their money to do more than grow.

Who decides what's ethical?

It's a fair question — and one worth asking of any fund you're considering. In Australia, the Responsible Investment Association Australasia (RIAA) runs a certification program that provides a reliable benchmark. To qualify, fund managers must demonstrate a clear, specific methodology for screening out unethical conduct — a process independently verified by an accounting firm. If you're exploring ethical investment options, looking for RIAA-certified funds is a sensible place to start.

Finding the right path for you…

The world of ethical and sustainable investing has grown significantly in recent years, and with that growth has come both opportunity and complexity. There are now hundreds of ESG-related products available in Australia alone, with varying approaches, standards, and levels of transparency.

We can help you cut through the noise — assessing your values, your financial goals, and your risk profile to find an approach that genuinely works for you. If this is something you'd like to explore, we'd be glad to have that conversation.

Useful links…

United Nations Principles for Responsible Investment

Responsible Investment Association of Australia (RIAA)

Australian Sustainable Finance Initiative (ASFI)

The Impact Management Project (IMP)

Rick Maggi, Financial Advisor, Perth, Westmount Financial