What if you could make more meaningful super contributions? Here’s why and how we’re looking to go beyond ethical to pursue social impact. (3:41 min read)

This information does not take into account your personal objectives, financial situation or needs. You should consider if the relevant investment is appropriate having regard to your own objectives, financial situation and needs.

 

What is ‘ethical’ investing or ‘ethical’ superannuation? You’ve likely been exposed to it through media or targeted advertising; it’s not only a hot investment topic but a growing area of interest for the socially-minded investors out there.

In Australia, we’ve seen a sharp rise in ethical super funds or traditional funds offering ethical options due to the investor demand.

They tend to exclude controversial industries from their portfolios like tobacco, fossil fuels, gambling, nuclear weapons etc.

While this kind of negative screening is a step in the right direction, it’s only scratching the surface in terms of what investors can do to deliver meaningful social impact as well as financial returns.

As you can see from the impact spectrum below, there’s a world of opportunity beyond simply ‘avoiding harm’, and the new wave of ethical funds are predominantly playing in this space.

Impact-spectrum
*This spectrum has been adapted from frameworks developed by Bridges Fund Management, Sonen Capital and the Impact Management Project

 

Interestingly, even when some funds claim to consider ethical, social, and governance factors, you end up finding direct or indirect investments in tobacco, fossil fuels and other nasties once you dig a little deeper into their portfolios.

Although the industry is moving in the right direction – slowly introducing investment options aligned with people’s values – it’s getting harder to discern what an ‘ethical’ investment really entails.

It’s a hazy definition at the best of times.

Let’s imagine for a moment the huge pool of capital that is superannuation (~$2 trillion) was invested in companies helping solve our most pressing challenges?

In other words, actively contributing to solutions rather than just ticking the ‘ethical’ box.

We’d spend less time debating what’s ethical, and instead focus our attention on how to invest toward building a world worth retiring in.

Not to mention unlock the potential for delivering social impact in a meaningful, measurable way.

 

Going Beyond Ethical

Investing for impact and returns is not a novel concept, but it does require keeping up with ever-evolving strategies, frameworks, new ways of thinking and the technology required to manage it all effectively – something most large funds aren’t necessarily incentivised to do themselves.

If you’re thinking ‘solving problems is great, but I need to retire comfortably, too’ then you might be pleased to find:

Funds that are implementing Core responsible investment strategies are outperforming equivalent Australian and international share funds, and multi-sector growth funds, over most time horizons.”

This was one of the key findings from the Responsible Investment Benchmark Report, which looked at the size, growth and performance of Australia’s responsible investment market.

Performance aside, if we don’t shift capital toward solving critical global issues now, what good will our nest egg be if we end up retiring in a less-than-ideal world?

Luckily, people from all over the world have come together to tackle 17 universal goals addressing the urgent environmental, political and economic challenges facing humanity.

 

Sustainable Development Goals (SDGs)

Sustainable Development Goals (SDGs)
Sustainable Development Goals (SDGs)

The Sustainable Development Goals (also known as the Global Goals) are the blueprint for creating a better, and more sustainable future for all – whether you’re 15 or 50 and hail from Sydney or Santiago.

In order to deliver on this ambitious plan by the target date of 2030, people from all corners of government, business and broader society will need to come together.

While it’ll require trillions of capital and brainpower to achieve the goals, the scale of the challenge is just as enormous as the opportunities it has created.

In fact, behind most goals is a global megatrend worthy of any smart investor’s attention – from #7 Affordable and Clean Energy (hello cleantech) to #3 Good Health and Well-being (healthcare + ageing population).

 

Market Opportunity

The SDGs aren’t merely unlocking philanthropic potential, but also represent a $12 trillion opportunity for the private sector. Or as Unilever’s CEO puts it: “the greatest economic opportunity of a lifetime”.

Whether it’s designing products and services to solve one (or many) of the goals, or simply aligning a company’s business practices to help accelerate them.

AtlasTrend is one such company looking to make a mark on the SDGs; we are considering building a superannuation product which invests in companies and industries measurably contributing to the goals.

The plan is to help people build long-term wealth and make a positive social impact – because why can’t you have your cake and eat it, too?

Our belief is that you can do both and if it sounds like something you’d get behind then cast your vote here. The more survey responses we get (just answer yes or no), the more likely it is solutions-driven super can exist.

Let’s make it happen.

 

 

About Jade Ong

Jade Ong is a Co-Founder of AtlasTrend, an investment platform that makes it easy for anyone to learn and invest in trends impacting our world. Jade has over 17 years experience in financial markets including roles at Macquarie and IAG Asset Management.