With our laser focus on COVID-19’s cousin – the Delta variant – we may have overlooked the release of the Intergovernmental Panel on Climate Change’s (IPCC’s) report on the climate crisis.
Borne out of a partnership between the United Nations Environment Program and the World Meteorological Organisation, the IPCC report examines the widespread environmental risks and impact of climate change across the globe – from unprecedented, extreme weather events (think intense bushfires) to rising sea levels. The report is a sobering assessment of our planet’s future: the climate crisis is upon us… and, according to UN Secretary-General António Guterres, it’s a 'code-red for humanity’.
For us in Melbourne, the clamour for climate action has escalated since early 2020 following the catastrophic impact of Australia’s summer bushfires. Mounting fear of the climate crisis has dominated the concerns of over eight in ten Australians and confidence in our political leaders has dwindled. There has never been a more helpful time for us to evaluate how our everyday spending and consumption choices affect our planet and the small steps we can take to align our money with our values.
Ethical investing helps us to walk the tightrope between profit and purpose. Here, our aim is to invest our money in companies with more sustainable business practices for an equitable and clean-energy future. A detailed overview of how you can build a more ethical investing portfolio can be found in one of our recent articles.
But if you feel too intimidated to buy your own shares and ETFs, you could switch your attention and make greater personal contributions to your superfund – after all, they invest our retirement savings for us. Crucially, super is a long-term investment – the money we add to our super over our lifetimes can amount to over 35 years of savings!
Did you know that more than $3 trillion is currently invested through Australian superfunds? In fact, a survey conducted by the Responsible Investment Association of Australasia (RIAA) found that a whopping 90% of Australians expect their money to be invested ethically. Better still, Australian Ethical’s 2020 survey found that climate change and the environment were the 'primary drivers' for young investors.
In particular, ethical superfunds screen out certain industries they consider unworthy of investment, or those more likely to cause environmental harm, like oil, gas and tobacco companies. The proof lies in the results: female-led ethical superfund Verve Super has shifted over $150 million in members’ savings away from fossil fuels in three years. In any case, here are three valuable factors to consider if you’re looking to make a switch to a more ethical superfund (you can find a list of them here and here!):
- Which industries does your current superfund invest in? Do their investment choices contradict your values? Do they offer any ‘green’ or ‘ethical’ investment options? You could take a closer look at your superfund’s product disclosure statement (PDS) to find out where your money is being invested. Beyond doing your own research, you could also consider using Market Forces’ comparison tool to evaluate superfunds based on their likelihood to invest in fossil fuel companies.
- What do your superfund’s average returns look like? Here, it’s best to compare your superfund’s returns over the past five years – this time horizon will help you to discern a more accurate picture of your superfund’s performance and determine just how competitive their returns are. You can compare your superfund’s returns with others using this tool.
- How expensive are your fees? Australians spend over $30 billion in super fees each year and although ethical and mainstream superfunds generally offer similar fees, a key consideration here is to minimise as many of your out-of-pocket costs as possible.
Angela is one of the founders of vida (VIDA Melbourne), an educational initiative committed to building the next generation of financially confident, capable and courageous young women. The team at vida run engaging and interactive workshops for young women aged 14-25 across local girls’ secondary schools, tertiary institutions and external organisations on all things personal finance. Head to vida’s website to learn more about their mission, or check out their socials filled with bite-sized pieces of money wisdom!
If you liked this article, you can check out our feature on reducing your carbon footprint!
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