No need to compromise on returns to invest ethically

Yasmine Raso

Senior Journalist, Financial Newswire

29 September 2022

Letting go of the mentality that returns don’t have to be sacrificed when investing ethically and responsibly has helped the Australian Ethical International Shares Wholesale Fund top the Responsible Investments (ESG) category at Financial Newswire’s 2022 Fund Manager of the Year Awards.

The win is even sweeter for the team, spearheaded by Chief Investment Officer David Macri, who believes that the fund’s purpose lies not only in the delivery of strong returns for investors but also in its ability to drive change on a macro level beyond the financial ecosystem.

“We have proven we can deliver results just like other fund managers, and you can be ethical and responsible, and you can drive change,” Macri told Financial Newswire.

“That helps to drive demand, as well as what’s happening in the broader system now that everyone is aware of climate change.

“We knew there was growing demand… if you can build good portfolios and deliver good risk return outcomes just like every other fund manager but in an ethical way that has a positive impact on the planet, why wouldn’t you do it? It was such a no-brainer.”

The “no-brainer” of responsible investing – as Macri puts it – also translates to Australian Ethical’s investment philosophy, where “stringent” criteria ensure not even a whiff of a sin stock in sight.

“Our approach is very unique, and we put a lot of effort in our ethical research process. It applies to all our funds and all our asset classes,” Macri said.

“It developed from a risk management framework – investors can feel safe and secure that every investment we make has gone through our rigorous process to ensure that it meets our ethical criteria, and that we’re not doing any harm to the environment or planet by investing in those companies.

“For Australian Ethical, we’re quite small. We punch above our weight. What we bring to the table is we’re committed to assessing the genuine ethical impacts of our investments, not just the impacts on the portfolio or the risk return.”

At a time where the environmental impact of human activity has shot to the forefront of the discourse, Macri said the investment industry can “get into its own little bubble”. People have lost sight that there’s broader things at play part of a bigger system, where “the ultimate system is the planet”.

“Because we’re looking at it from an impact lens as well as a financial lens – they’re both important – we feel we can engage and agitate the change when needed,” he said.

“We’re one of the biggest industries in the world. We need to play our part. We need to drive change and investors should influence corporates and governments. It’s all an interconnected system. It’s incumbent on us as an industry to do what’s right.”