Responsible Investment

We all want our superannuation and savings to be safe and earn a solid rate of return but there are other things we care about too.

• You might feel passionate about the effects of climate change, the provision of affordable and accessible health care services, managing resources sustainably to meet our current needs and those of our aging and growing global population, and supporting the transition to a low carbon economy. RI gives you a way to make your beliefs and convictions an integral part of your financial decision-making.
• Investing responsibly is also a way to support, and benefit from, solutions to life in the 21st century such as environmentally friendly technologies, sustainable agriculture, microfinance, medical technologies, recycling and waste management, and “green” infrastructure and transport projects.
• You may have come across other terms such as ethical, green, sustainable or socially responsible investing. These are all different names used to describe what is now most commonly referred to as responsible investment.
  The latest benchmark report prepared by the Responsible Investment Association Australasia details the following performance of RI in Australia:
• To the end of 2009 the average responsible investor in Australia made better returns than mainstream investors for almost all time periods from one to seven years across three major investment categories, Australian shares, International shares and Balanced.
• In the largest category, Australian shares, the major RI funds enjoyed a stronger return than the overall fund average and the market benchmark. This cements a pattern of better returns for RI investors over all time periods.
• Overseas RI funds did even better. This category has suffered losses over the past three years but it is now showing vast relative outperformance over all time periods measured.

The following table shows seven year performance figures as at December 2009 from Corporate Monitor*:

*Responsible Investment 2009 prepared by Corporate Monitor for the Responsible Investment Association Australasia. This report uses Morningstar, Fund Manager data and is available at www.responsibleinvestment.org

The most common reasons why people decide to become responsible investors are:

1. To generate competitive returns whilst making a difference to the environment or society.
2. To ensure your money is directed towards companies making a positive difference to the environment and the impact of climate change whilst avoiding those that cause harm.
3. As a way to influence corporate behaviour and push for greater accountability on issues like employment and trade conditions, environmental sustainability and good corporate governance.
4. To take your social or consumer activism to the next level.

The range of responsible investments available in Australia and New Zealand is extensive and growing all the time. There are products or services for every life stage, timeframe and risk profile.

• Managed funds with a particular RI mandate are the most common way to become a responsible investor. The fund manager may screen in or out certain sectors or companies based on their environmental or social impact; incorporate an analysis of environmental, social and governance risks and opportunities with traditional financial data; select only those companies scoring the highest sustainability rating; or invest along thematic lines.
• Superannuation funds may offer one or more RI investment options or integrate RI principles into their mainstream investment process for all of their options.
• A specialist RI financial adviser can help you design a wealth management plan based on the principles of RI using either managed funds or direct shares.
• You can open a savings or loan accounts with a bank or credit union that follows responsible lending and business practices or take out a “green” home or car loan.

Responsible investment is a way to generate competitive returns and find sustainable solutions to many of the challenges we face in the 21st century.

At moneymechanics. we can assist you in consideration of your values when putting together an investment plan and solution for you.