Investing ethically to build a sustainable future and legacy requires overcoming complexities and obstacles like greenwashing. As a result, many investors put it in the too-hard basket or choose funds that will not meet their needs.Ethical Investment Week from 1-7 Octoberaims to encourage people to invest ethically by helping them understand how to navigate the complexities and overcome greenwashing.
Sarah Wood, Co-Chair of the Co-op, said research from financial market regulators reveals that many individuals find ethical investing perplexing and intimidating.
"Many feel overwhelmed and unsupported, often leading to sidelining ethical considerations. Some even resort to over-simplifications, opting for a single ethical fund provider. This can result in unintentional investments contrary to one's values."
Highlighting the challenge in choosing funds, global research company Morningstar evaluated 108 asset managers worldwide. Only eight earned 'Leader' status in ESG (Environmental, Social, and Governance) Commitment Level, while most scored merely 'Basic' and many scored ‘Low'.
Recent spikes in concerns about greenwashing further illustrate the challenges for ethical investors. Misleading information can undermine faith in sustainability-centric financial products and corporate initiatives.
In response to its concern about greenwashing, the Australian financial market regulator ASIC (Australian Securities & Investments Commission) has initiated several interventions, including issuing public infringement notices and launching civil penalty proceedings.
The International Organisation of Securities Commissions (IOSCO) is spotlighting sustainable finance during World Investor Week from 2 – 8 October. The focus is investor education and protection.
Hosted in New Zealand by the Financial Markets Authority (FMA), the New Zealand theme for World Investor Week 2023 is ethical investing, aiming to empower investors to confidently make investing decisions that are aligned with their values.
Wood says the heightened focus on combatting greenwashing and improving investor education from regulators and media alike is encouraging.“Similarly, the focus for Ethical Investment Week, from 1-7 October, is to provide education and guidance that is essential for people who want to invest their money ethically and build a sustainable lifestyle and legacy.
"The week offers an opportunity for investors to gain insights and engage with dedicated, specialist ethical investment advisers. This can help ensure their investments genuinely reflect their values and intent. Celebrating its tenth year of organising Ethical Investment Week, the Co-op has launched an updatedEthical Investment Guide.”
The guide, complemented by the Co-op's Ethical Fund Ratings, is designed to help investors see how to work with an adviser to align their investments with their ethical values. The guide and details of Ethical Investment Week events offered by Co-op members are accessible on the Co-op's website.
The Ethical Advisers' Co-op is a consortium of ethical investment specialists, with over 40 members advising more than 4,000 clients across Australia and New Zealand.
These advisers are at the helm of managing over $3.1 billion in funds in ways that reflect clients' ethical values. As the maze of ethical investments evolves, these advisers remain the trusted beacon for navigating its intricacies.
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