Ethical investing means choosing investments based on your personal values as well as potential returns. It's about asking not only whether something will grow, but whether you agree with how that growth is made.
People draw the line in different places. Some avoid industries like tobacco, gambling or weapons; others actively seek out companies working on renewable energy, healthcare or fair trade.
This guide is general information only and doesn't take your personal circumstances into account.
Why is ethical investing good?
Investing with your values can offer a few benefits:
- Your money supports causes you care about
- It can encourage companies to act more responsibly
- You may feel more connected to your long-term plan
How to invest ethically?
There's no single right way, but these steps help:
- Get clear on your goals, budget and time horizon before choosing anything.
- List the issues that matter most to you, such as climate, labour rights or animal welfare.
- Learn the different approaches: exclusion screens, positive screens, ESG ratings and impact funds.
- Research specific funds, read their holdings and check how strict their policies really are.
- Compare fees and diversification, then review your portfolio regularly.
What is the difference between ESG and ethical investing?
ESG is a scoring framework, while ethical investing is a personal approach. ESG looks at three areas:
- Environmental: emissions, energy use, waste and resource management.
- Social: how a company treats staff, customers and communities.
- Governance: board structure, executive pay and transparency.
How can I invest ethically in Australia?
Many local providers now offer ethical or sustainable options, including managed funds, ETFs and some super funds. Check each product's disclosure documents to see what it excludes and how it measures impact.
If you're unsure, a licensed financial adviser can help you match options to your situation.
What are the 4 types of investments?
Common ethical-leaning options include:
- Socially responsible funds that screen out harmful industries.
- ESG-integrated funds that weight companies by their ESG scores.
- Impact funds targeting measurable social or environmental outcomes.
- Green bonds that finance specific climate-related projects.
What's next for ESG investing?
Demand for sustainable investing keeps rising, and regulators are pushing for clearer reporting so investors can compare products more easily.
Expect better data, stricter labelling rules and more choice for everyday investors over the coming years.
