Find out how to align your investments with your values. This presentation with Dr Stuart Palmer, head of ethics research at Australian Ethical Investment, aims to help investors break through the greenwash and provide an overview of the different ways that responsible funds incorporate social and environmental impacts into their strategy.

2. •
•
•

5. May 2018
The rise of ethical investing
Aligning investment outcomes with
values

6. 6
The rise of social responsibility
The growth of responsible investing

7. Green is
the new
black
92%
of Australians
expect to invest
responsibly
and ethically.
75%
of millennials
prefer responsible
super rather than
super which
simply maximises
financial returns.
88%
of millennials
will change
their super
or investments
based on values
alignment.
7
Source: From Value to Riches, Responsible Investment Association Australia, 2017.

8. The rise of responsible investing
Global
momentum
in
sustainable
investing
Source: Global Sustainable Investment Review 2016, 2014, 2012
10.7%
13.1%
25.7%
$22.89T
$18.28T
$13.34T
$8.58T
$5.36T
$3.78T
2006 2008 2010 2012 2014 2016
Europe United States Canada Australia Asia Japan
% of total sustainable investment assets that are retail assets
Total sustainable investment assets
(USD Trillion)
8

9. Growth of
ethical
investing
$15.2 $16.5
$25.6
$31.6
$51.5
$64.9
2011 2012 2013 2014 2015 2016
Source: Responsible Investment Association Australasia Benchmark reports 2011-2017
$billions

10. Global megatrends driving demand
The following forward-thinking organisations have named
some consistent themes that will influence the world
Source: CSIRO, Our Future World, Global megatrends that will change the way we live, 2012. KPMG, Future State 2030. PWC, Megatrends, 5 global shifts changing the way we live and do business.
More From Less
Going, Going... Gone
Forever Young
Innovation Imperative
Great Expectations
Resource Stress
Climate Change
Demographics
Enabling Technology
Rise of the Individual
Urbanisation
Resource Scarcity
Climate Change
Demographics and Social Change
Technological Breakthroughs
Rapid Urbanisation
CSIRO ‘Megatrends’ KPMG ‘Future State 2030’ PWC ‘Megatrends’ CONSENSUS TREND
EFFICIENCY
ENVIRONMENT
DEMOGRAPHICS
TECHNOLOGY
CONSUMER POWER
URBANISATION

11. Ethical
portfolios
are well
placed
to benefit
Efficiency
• Lowering energy
demand
• Efficient products
• Recycling and waste
management
Environment
• Clean energy solutions
• Low-carbon transport
• Avoid big carbon-emitters
Demographics
• Aged care
• Medical solutions
• Health and wellbeing
Technology
• Innovative software
• Telecommunications
• Medical technology
Consumer power
• Increase human health
and happiness
• Avoid threatened
industries like tobacco
and coal
Urbanisation
• Sustainable property
• Sustainable transport

12. 12
Types of responsible investing
Shades of green

13. Core responsible investment
Goes beyond ESG to include:
• Negative and positive screening
• Sustainability themed-investing
• Impact investing and community impact
Australian Ethical $2.6 billion
Deep green:
• Screens all investments according to 23 principles of
the Ethical Charter
• Seeks out positive investments in the new economy
• Advocates for change - corporate and government
• Delivers community impact via the Community Grants
program
• Actively managed
Traditional
investing
Focus on financial
returns regardless
of ESG concerns.
Broad
responsible
investment
$557.1 billion
Core
responsible
$64.9 billion
Broad responsible investment
Institutions who consider Environment,
Social and Governance (ESG) aspects as
part of their investment process
Shades of green
Responsible Investment Association Australasia Benchmark report 2017

14. Dimensions of
responsible
investing
ESG integration
Negative screen
Positive screen /
Thematic
Influence
companies
Influence
government
Impact for
Sustainable
Development
Goals

15. Ethical
investing vs
ESG
integration
CLEAN ENERGY
This Thator
COAL
What would you rather your money fund?

16. Making positive investments
RECYCLING
RESPONSIBLE
BANKING
CLEAN
ENERGY
ENERGY
EFFICIENT
IINNOVATIVE
TECHNOLOGY
EDUCATION
AGED CARE
SUSTAINABLE
PRODUCTS
HEALTHCARE
MEDICAL
SOLUTIONS
16

17. Avoiding these investments
COAL COAL SEAM
GAS
OIL WEAPONS TOBACCO
FOREST
LOGGING
EXPLOITATION GAMBLING HUMAN RIGHTS
ABUSES
HARMFUL
PRODUCTS
17

18. Navigating the landscape
Aligning investments with values

19. Green washing
Scored as ’bogus’ on the
Greenwashing Index

20. 20
What’s important to you?
43%
34%
15%
13%
11%
8% 7%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Climate change Environment /
conservation
Sustainable living Human rights Poverty and
social welfare
Animal welfare Corporate ethics
The key ethical
issue for members
is climate change,
followed by
environment
/conservation
Source: Annual survey (Jan 2017) conducted for Australian Ethical by Pollinate Research

21. Sustainable investing
for a sustainable
economy and society
We only invest here
following our
Ethical Charter
Source: www.kateraworth.com/doughnut/

22. Sustainable development goals
Source: United Nations Development Programme, 2018

23. Source: Australian Ethical Annual and Sustainability Report 2017
Our sustainable impact

24. 0%
5%
10%
15%
20%
25%
30%
35%
Consumer discretionary Financials Information technology Telecommunication
Sectorweighting
Australian Ethical
S&P/ASX 200&MSCI World ex. Australia
Where we invest
Health care
We invest in
healthcare, from
hospitals to
biotech companies.
Information technology
We invest in IT companies that improve efficiency,
encourage innovation and reduce environment footprint.
Utilities
This is where
many of our
renewable
investments sit.
Materials
We have low exposure to
the materials sector which
relies on non-renewable
resources such as mining.
Consumer
discretionary
Telecommunication
services
Real
estate
UtilitiesConsumer
staples
Energy Financials Health care Industrials Information
technology
Materials
Energy
We don’t invest in
fossil fuel companies
which make up most
of the energy sector.
Source: Australian Ethical Annual Sustainability Report, 2017.

25. 25
Ethical investing
doesn’t compromise returns
Source: Morningstar 31 March 2018.
Past performance is not a reliable
indicator of future performance.
Australian Ethical
Australian Shares Fund (Retail)
ASX Small Industrials
S&P/ASX All Ordinaries
0
2,000
4,000
6,000
8,000
10,000
12,000
Dollars
Date

26. Core
responsible
fund
out-
performance
Source: Morningstar Source: Responsible Investment Association Australasia Benchmark Report 2017

27. Advocating for change
We’re advocating for change in
the following areas:
• Climate change
• Financial inclusion
• Modern slavery
• Low carbon economy
• Gender diversity
• Live export

28. 28
More than $2.2 million
to the community
OVER
17 years
OVER
$2.2 MILLION
Donated to not-for-profit
companies who do good
for the planet, people and
animals
10%
of profits (before
deducting bonus and
grant expense)
In 2017
$280,000
to 18 companies
450 applications
16,000 voted
$320,000
provisioned for
community impact
in 2018
The Foundation
Source: Australian Ethical Annual Sustainability Report, 2017.

29. Communicate openly
Animal welfare
Fossil fuel free
Live export Mining
Nuclear power Banking
Healthcare
Mining
Healthcare Clean energy
Nuclear power
WeaponsHealthcare
Timber and forestry Indigenous
rights
Social media
Clean energy
www.australianethical.com.au/super/our-position-on-topical-issues/

30. Our digital community
0
5
10
15
20
25
-
20,000
40,000
60,000
80,000
100,000
120,000
Australian
Ethical
Major
industry fund
Start-up Start-up Large industry
fund
Large industry
fund
Retail Fund Start-up
Facebook fans
Engagement %
“I love our environment that’s why I chose
Australian Ethical Super”
“I don’t have a lot of things going well in my life
these days so always look out for things that
make my day a bit better like watching some
awesome videos like this so thank you”
D
“I'm thrilled I moved my super to a company that
posts things like this”
Facebook, November 2017
Facebook, November 2017
Facebook, January 2018
+117,550*
* As at May 2018

31. Australian Ethical Investment Ltd (ABN 47 003 188 930; Australian Financial
Services Licence No. 229949) is the Responsible Entity and Investment
Manager of the Australian Ethical Managed Investment Funds. Interests in
the Australian Ethical Retail Superannuation Fund (ABN 49 633 667 743;
Fund Registration No. R1004731) are offered by Australian Ethical
Investment Ltd by arrangement with its subsidiary and trustee of the Super
Fund, Australian Ethical Superannuation Pty Ltd (ABN 43 079 259 733,
Registerable Superannuation Entity Licence No. L0001441).
The information contained in this presentation is general information only,
and does not take into account your individual investment objectives,
financial situation or needs. Before acting on it, you should consider seeking
independent financial advice that is tailored to suit your personal
circumstances and should refer to the Financial Services Guide, Product
Disclosure Statements and Additional Information Booklets available on our
website (www.australianethical.com.au).
Certain statements in this presentation relate to the future. Such
statements involve known and unknown risks and uncertainties and other
important factors that could cause the actual results, performance or
achievements to be materially different from expected future results.
Australian Ethical Investment Ltd does not give any representation,
assurance or guarantee that the events expressed or implied in any forward
looking statements in this update will actually occur and you are cautioned
not to place undue reliance on such statements.
The content of this presentation is intended to provide a summary and
general overview concerning matters of interest and is correct as at the
date of publication. It has not been subject to auditor review. Australian
Ethical Investment Ltd does not accept any liability, either directly or
indirectly, arising from any person relying, either wholly or partially, upon
any information shown in, or omitted from, this update. Under no
circumstances will Australian Ethical Investment Ltd be liable for any loss or
damage caused by your reliance on information obtained from this update.
You should consider seeking independent advice from a legal or other
professional adviser before acting in response to the content of this update.
Disclaimer