INVSTR054 The rise of ethical investments (506 words)

In this article we discuss the rise in popularity of ethical investing: What it is, how to go about socially responsible investing, and the importance of diversification in any investment portfolio. We conclude with a recommendation to seek professional financial advice.

In recent years, ethical investing or socially responsible investing (SRI) has become increasingly popular. Driven by the growth in demand for businesses that are profitable and ethical, along with regulatory frameworks to address challenges such as climate change and modern slavery, there has never been a better time to gain exposure to ethical investments.

What are ethical investments?

Ethical investments provide exposure to companies with strong environmental, social and corporate governance (ESG) structures and practices. The Responsible Investment Association of Australia estimates there is almost $1 trillion invested in ethical companies and strategies across the country, equating to 44 per cent of the entire $2.24 trillion managed by professional investors in Australia.