The Ethical Conundrum!

With a changing world comes changes in our thinking and inevitably our investing preferences. Wakefield Partners have been receiving more requests for ethical investments than ever before. But what does ethical investing mean?

Ethical Investments are usually identified by two methods, Negative and Positive screening. Negative screening is ensuring that your preferred company doesn’t involve themselves in negative activities, ie. Tobacco, pornography and gambling. Positive screening is identifying companies that are making improvements like green energy, improving staff well being programs and offering community assistance.

Sounds simple right?

The banking sector provide an excellent example as to why ethical investments are hard to classify. This is because the ultimate decision does lie with the investor as to what they consider ethical. Are banks ethical? Let’s look at a few points on both sides:

Banks do a number of positive things. Think of:

  • The Westpac rescue helicopter
  • Disaster relief assistance – some of the first businesses to donate to and support those affected by the current bushfires.
  • Development programs for staff – a community feel with goals for staff wellbeing and inclusion in volunteering programs

But clearly they aren’t always on their best behaviour

  • A whole Royal Commission devoted to their misbehaviour
  • Focus on profit, seemingly ahead of customer service (think of country branch closures)

Some clients would happily invest in the banks knowing that they offer helpful programs to their staff and the wider community, whilst others would ask us to steer clear. Have a think about what impacts are important to you and whether that means a company would be considered ethical by you.  There is no one list of ‘Ethical Investments’, as everyone’s filter is different.

Have an interest in ethical investing but don’t know where to start? Contact our advisers for a free no obligation appointment to consider your options.

This website contains general advice which does not consider your particular circumstances. You should seek advice from Wakefield Partners who can consider if the general advice is right for you.