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When we think of investing, we generally think of generating profit. This profit comes from companies maximising their return on investment – sometimes at the cost of environmental, social or other factors. In recent years, however, there has been an increasing movement toward investing that maximises profit whilst also taking into account corporate social responsibility across environmental, social and governance concerns.

What is Socially Responsible Investing?

Socially Responsible Investing (SRI), also known as Environmental, Social and Governance (ESG) investing or values-based investing, is a strategy that aims to generate both financial returns and social change.

It has gained momentum in the last decade, especially amongst younger generations, who are largely more mindful of the connection between their personal and financial choices than generations before them. Research conducted by the RIAA shows that of Australians currently investing responsibly, Gen X leads the charge with 20% actively involved in responsible investing, with Millennials just behind them at 19%¹.

There has also been a significant shift amongst companies as they realise that they won’t thrive whilst ignoring environmental, social, ethical and corporate governance issues. Interestingly for money managers, 74% of Australians would consider moving to another provider if they found that their current money manager was investing in companies engaged in activities that were inconsistent with their personal values. This rises to 87% for younger generations¹.

Why is Socially Responsible Investing gaining momentum?

There are several catalysts driving demand for sustainable investment options.

Easy access to technology has given consumers the power to help them make sense of the world they are living in, the type of world they want to live in, the world they want to build for future generations, and how their investment decisions can make a difference in that world. The RIAA reports that two-thirds (67%) of Australians have heard of or know what responsible investing is, a marked increase from just 50% in 2020¹.

There has also been a significant increase in demand amongst consumers for ethical and sustainable living in recent years. You’ve probably noticed the rise in sustainable product packaging, eco-friendly products and plant-based foods.

Younger generations, in particular, have a different attitude to money and social causes than previous generations and are more active in making informed decisions about their personal investment decisions. As a result, values-based investing has become an effective tool to engage in financial activism and push real change outside of the political system.

And as the younger generations stand to inherit $3.5 trillion in wealth over the next 20 years², there is an even greater focus on how that money can be invested for the future of the planet. Estelle Parker, Executive Manager, Programs at RIAA says, “We’ve hit a tipping point of the responsible investing trend. Companies can no longer tick a box by providing cursory ESG metrics. Investors are expecting real, measurable action towards environmental and social issues”.

How does Socially Responsible Investing compare?

As of 2022, the number of Australian assets managed using a rigorous, leading approach to responsible investment hit a record value of $1.54 trillion, now accounting for 43% of the total investment market³. With that much money in the market, the question on everyone’s mind is, ‘how does performance compare to traditional investment options?’.

A recent KPMG report showed that responsibly invested funds outperform their benchmarks and have far outperformed ‘vanilla’ investment strategies in many cases₄. Since the start of 2020, this outperformance seems to have accelerated despite (or maybe because of) local and global events, including bushfires, floods across Australia and the disruption of COVID-19 – highlighting the fact that responsibly invested strategies appear to provide greater resilience and better manage increasing volatility in a changing world.

It points to the fact that the application of responsible investment strategies by investment managers does not automatically mean a loss of performance. Responsible investing can result in positive social and environmental outcomes, supported by financial out-performance and investor growth.

Futurity Investment Group (‘Futurity’) and Responsible Investing

Futurity is a mutual fund owned by more than 56,000 members focussed on making a difference for members and their families when it comes to education, future investment planning and social advocacy.

As the intergenerational wealth transfer continues and demand for responsible investing continues to increase, Futurity has tailored its investment menu and options to provide clients with more ways to invest responsibly.

Across Futurity’s entire investment menu, they aim to invest in excess of 90% of total funds under management with investment managers who are signatories to the United Nations Principles for Responsible Investment (UNPR) and/or the United National Global Compact (UNCG), of which we are a signatory of. Of their diverse range of investment options, there are 6 that are specifically invested into underlying managed funds managed by Responsible Investment specialist managers.

Socially responsible investing is a growing investment category that holds the key for clients to invest in sustainable assets for their children’s future, social causes and environmental issues.

By partnering with Futurity and utilising Education Bonds, advisers can help provide their clients with a solution to lifelong education funding, ways to accumulate and protect wealth tax-effectively, provide for their children or grandchildren’s future, and pass on wealth precisely as intended, in a way that helps combat the environmental issues currently being faced.

Find out more about Futurity Education Bonds and their responsible investment options here.


¹From Value to Riches 2022: Charting consumer demand for responsible investing in Australia by RIAA
²Research from Griffith University estimates that over the next 20 years, Australians aged over 60 will transfer an estimated $3.5 trillion in wealth.
³Australian responsible investment assets hit $1.54 trillion as investment managers agitate for ESG action by RIAA
RIAA Responsible Investment Benchmark Report 2020 by KPMG Australia