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What is Ethical Investing? · She's On The Money

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Speaker 1: Just before we get started, we'd like to acknowledge and
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Speaker 1: pay respect to Australia's Aboriginal and torrest Right islander people's.
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Speaker 1: They're the traditional custodians of the lands, the waterways and
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Speaker 1: the skies all across Australia. We thank you for sharing
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Speaker 1: and for caring for the land on which we are
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Speaker 1: able to learn. We pay respects to elders past and present,
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Speaker 1: and we share our friendship and our kindness.
0:22
Speaker 2: She's on the Money, She's on the Money.
0:45
Speaker 3: Hello, and welcome to She's on the Money, the podcast
0:48
Speaker 3: for millennials who want financial freedom. My name is Georgia King,
0:52
Speaker 3: and as ever, I'm joined by Victoria define financial advisor,
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Speaker 3: sweet woman all round hive.
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Speaker 1: H Well, are you ready to get into a deep dive,
1:02
Speaker 1: like a deep, deep deep dive where I'm probably gonna
1:04
Speaker 1: arguably got off the chain with another ranch lead the
1:07
Speaker 1: way today, I'm going to rant because we're talking ethical
1:10
Speaker 1: investing Georgia King, which means we are talking ethics and
1:13
Speaker 1: that is a very personal thing. My friend.
1:15
Speaker 3: Should I be laying on the therapist's couch for this one?
1:20
Speaker 1: Oh? Like you can if that makes you more comfortable.
1:23
Speaker 1: Audio might sound WEIRDERO, yeah, if you're like laying down,
1:26
Speaker 1: like in all seriousness, why do things get personal when
1:30
Speaker 1: it comes to ethics, Because ethics mean different things to
1:32
Speaker 1: different people, right, Like I'm a little crazy person who's
1:35
Speaker 1: plant based and doesn't want to drink milk and only
1:38
Speaker 1: drinks oat milk and all of this other stuff. But
1:40
Speaker 1: then other people would be like, no, that's completely ethical,
1:43
Speaker 1: and that is so fine in my books. And it's
1:44
Speaker 1: not about judging each other's values. It's about going, Okay,
1:48
Speaker 1: what are my values so that I can then overlay
1:52
Speaker 1: them onto what I'm going to do in the investing world.
1:55
Speaker 1: And you'll find out later in this episode a bit
1:57
Speaker 1: more about what I believe is and isn't ethical. And
1:59
Speaker 1: it's it's not necessarily saying you have to cookie cut
2:02
Speaker 1: or copy me, you have to have these ethics or
2:04
Speaker 1: it's not okay. It's more saying, well, what's the scope
2:07
Speaker 1: of what you're willing to take, because unlike George, you're
2:10
Speaker 1: going to the supermarket and being like, all right, well,
2:12
Speaker 1: I'm going to head straight to the organic aisle because
2:14
Speaker 1: I know that the produce that have the organic stickers
2:17
Speaker 1: on it have passed a whole heap of guidelines to
2:19
Speaker 1: be called organic in Australia. Ethical investing is nothing like that.
2:22
Speaker 1: It's kind of like the wild West and they kind
2:24
Speaker 1: of do whatever they want. And there's as you know,
2:26
Speaker 1: because we've talked about this topic in passing before on
2:29
Speaker 1: the podcast, there's things like greenwashing where people are using
2:32
Speaker 1: words that make us think it's ethical, but then it's
2:34
Speaker 1: not and it's just kind of rude.
2:36
Speaker 3: Is it worth prefacing that we have done an episode
2:39
Speaker 3: on this.
2:39
Speaker 1: Before, Yeah, we totally have done an episode on this before.
2:42
Speaker 1: But like, there's no such thing as too much investing content.
2:44
Speaker 1: Georgia King, Well, that's exactly right. So today we're going
2:47
Speaker 1: to unpack exactly what it is. We are going to
2:49
Speaker 1: talk about investing ethically, what sustainable investing is opposed to
2:53
Speaker 1: ethical investing, or what impact investing is, and of course Gking,
2:57
Speaker 1: we're going to talk about what your values are, not
2:59
Speaker 1: what your personal value, but like give you some guidelines
3:01
Speaker 1: on how to work out what your personal values are
3:04
Speaker 1: so you can make decisions that are in line with them.
3:05
Speaker 3: Exactly right, because what's ethical to you or I will
3:08
Speaker 3: be different to the listener exactly. Ethicsl be have not
3:11
Speaker 3: always been a consideration when it comes to investing. I
3:14
Speaker 3: don't know if that's because we're more socially conscious now
3:17
Speaker 3: or what that is. I mean, you said on last
3:19
Speaker 3: week's episode that younger people are investing more and more.
3:22
Speaker 1: They are geniuses, exactly right. How rich are we going
3:26
Speaker 1: to be like as a whole community if we're all
3:29
Speaker 1: investing when we're younger and if one person put themselves
3:32
Speaker 1: in a position where they have a million dollar portfolio,
3:35
Speaker 1: imagine like on scale, like there are two hundred thousand
3:38
Speaker 1: people in our Facebook community, but if they all did it,
3:41
Speaker 1: that's two hundred grand we didn't have yesterday.
3:43
Speaker 3: Exactly right, take over the world go. But in terms
3:48
Speaker 3: of ethics, this wasn't a thing. It's like relatively new.
3:51
Speaker 1: Not on a public scale, Like I feel like there
3:53
Speaker 1: were those people that were super interested in there, but
3:56
Speaker 1: it definitely wasn't ever an investment consideration until recently. So
4:00
Speaker 1: there's obviously a really long history of it. Some say
4:03
Speaker 1: it dates back all the way to the early nineteen
4:05
Speaker 1: hundreds in the USA with the Methodist Church. Actually not
4:08
Speaker 1: that ethical investing is religious, but with the Methodist Church
4:11
Speaker 1: deciding that it wasn't a form of gambling to invest
4:14
Speaker 1: in the stock market, but only doing so on the
4:16
Speaker 1: basis that their money wouldn't back companies involved in alcohol
4:20
Speaker 1: or gambling or weapons manufacturing. And that became the basis
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Speaker 1: of what quote people today refer to as the core
4:28
Speaker 1: base of ethical investing. Right. So, fast forward to the
4:32
Speaker 1: Vietnam War G and the early wave of public demand
4:34
Speaker 1: for ethical investment in companies who weren't profiting from that war.
4:38
Speaker 1: And then the eighties the apathe'd movement was the catalyst
4:41
Speaker 1: for the UK's first ever independent research service for ethical investors.
4:45
Speaker 1: That's pretty cool. And then these days, ethical investments now
4:48
Speaker 1: account for g wait for it, forty percent of the
4:52
Speaker 1: country's professionally managed money. And that's over one point two
4:56
Speaker 1: eight trillion dollars, accounting for forty percent of every pit
5:00
Speaker 1: freshly managed dollar. In twenty eleven, g it was only
5:03
Speaker 1: one hundred and sixty eight billion dollars. How's that for
5:06
Speaker 1: compound growth?
5:07
Speaker 3: Wow, she's thriving. So is that because of compound growth
5:11
Speaker 3: or because No, it's because more people are interested in
5:14
Speaker 3: it and joining in like.
5:15
Speaker 1: Sadly, compound growth doesn't happen that significantly and that quickly.
5:18
Speaker 1: I wish it to imagine if in ten years you
5:21
Speaker 1: could take your money from being one hundred and sixty
5:22
Speaker 1: eight billion dollars to one point two eight trillion dollars
5:26
Speaker 1: the dream. I don't even have a billion dollars to
5:29
Speaker 1: start with, not even like one million, wiscrewed.
5:31
Speaker 3: And I don't know what a trillion is. But how
5:34
Speaker 3: does Australia compare to the rest of the world in
5:37
Speaker 3: terms of how much we ethically invest?
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Speaker 1: Well, arguably I'm quite biased, so I think Australia is
5:41
Speaker 1: better than most countries. But we are definitely mirroring a
5:45
Speaker 1: pretty global trend with forty eight trillion dollars, which equates
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Speaker 1: to around thirty six percent of the world's professionally managed money,
5:53
Speaker 1: and it's backing responsible investment and g Eighty three percent
5:58
Speaker 1: of Australians now expect them in their bank accounts and
6:01
Speaker 1: their superannuation funds to actually be invested ethically and responsibly,
6:05
Speaker 1: while eighty percent expect their savings to have a positive
6:08
Speaker 1: impact on the world. How nice are we as a country.
6:11
Speaker 3: Well, we are nice. I don't want to get political,
6:14
Speaker 3: but it's very interesting that we're all very interested in
6:18
Speaker 3: ethical investing, looking after the environment, yet our government continues
6:22
Speaker 3: to let us down.
6:23
Speaker 1: Okay, yeah, that's a bit.
6:24
Speaker 3: Little bit of a downer, but it's topically savage for
6:27
Speaker 3: this show.
6:27
Speaker 1: But also yes, absolutely, it's super topical at the moment. Okay.
6:30
Speaker 3: So aside from concerns that the world is going to
6:33
Speaker 3: hell in a hand basket, which, let's be honest.
6:35
Speaker 1: Is caption did you like them? My grandmother?
6:41
Speaker 3: What might be some other motivations for this rise in
6:44
Speaker 3: ethical investment?
6:45
Speaker 1: Be Well, I think, like most things in life, education,
6:48
Speaker 1: we know more, we've learned more, we've done more, we
6:51
Speaker 1: have access to more information and research, and I think
6:54
Speaker 1: we now just expect better because historically we weren't sure
6:57
Speaker 1: of our impacts on the world. We weren't sure you
7:00
Speaker 1: know how much of an impact eating meat has on
7:02
Speaker 1: the world. But it's one of those things where people
7:05
Speaker 1: are now looking for personalization, and the finance and investment
7:09
Speaker 1: world are a consumer product, and I think that it's
7:12
Speaker 1: important that we align that to our values, and more
7:15
Speaker 1: so aligning it to our values, because if you think
7:18
Speaker 1: about it, if you're making money, it makes me relatively uncomfortable,
7:24
Speaker 1: not even relatively, it makes me incredibly uncomfortable to think
7:27
Speaker 1: that my future wealth and my future financial security will
7:31
Speaker 1: come from the detriment of others, Like I just don't
7:33
Speaker 1: want that to be the case. And I'm sure you
7:35
Speaker 1: guys are the same, and I think I've said as
7:37
Speaker 1: well on the pod before. But if you're a client listening,
7:39
Speaker 1: you absolutely know this. But my financial advice company will
7:43
Speaker 1: only invest ethically because I'm very much of the belief
7:46
Speaker 1: that ethical investing is the way of the future. Like,
7:49
Speaker 1: I think it's all about sustainability and creating a sustainable
7:52
Speaker 1: world for everybody, and I just don't think that unethical
7:56
Speaker 1: investments are a part of that. And it's not to
7:59
Speaker 1: say we don't things that. You know, we have a
8:02
Speaker 1: couple of clients that do definitely hold oil companies, but
8:05
Speaker 1: we've discussed this. It's aligned to their values. But those
8:08
Speaker 1: oil companies are actually investing significant amounts of money into
8:12
Speaker 1: the future sustainability of the energy sector, and I really
8:16
Speaker 1: respect that. So I think that there's also this balance of, well,
8:19
Speaker 1: do you just not invest in that sector at all,
8:22
Speaker 1: or do you invest in the companies that are trying
8:24
Speaker 1: to do good and pivot and change, Because you know,
8:27
Speaker 1: I don't think any company ever started and I'm like
8:30
Speaker 1: you know what, I'm going to be a coal mine
8:32
Speaker 1: because I want to ruin the world. Like they didn't
8:34
Speaker 1: do that. It's because they didn't have the education at
8:37
Speaker 1: the time, and I think that sometimes it's really nice
8:39
Speaker 1: to go on that journey as well, as long as
8:41
Speaker 1: you're comfortable with it. But it's all about education, not
8:44
Speaker 1: necessarily boycotting companies that don't align to your values.
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Speaker 3: So are there any other motivations v for the rise
8:51
Speaker 3: in people choosing this way of investing?
8:54
Speaker 1: So did some research or you did some research and
8:56
Speaker 1: gave me the statistics? Cheers? Actually that was an a Lisa,
9:00
Speaker 1: How good is this is? We just rocked up and
9:01
Speaker 1: got a list of statistics and she's probably looking at
9:04
Speaker 1: us going like you're not reading any of them, just ranting.
9:07
Speaker 1: So gee. The RI double A, which is the Responsible
9:10
Speaker 1: Investment Association of Australasia, they've actually reported that seventy four
9:15
Speaker 1: percent of Australians said that they would consider moving to
9:18
Speaker 1: another provider if their current fund was investing in companies
9:21
Speaker 1: that were engaging in activities that were inconsistent with their values.
9:25
Speaker 1: I kind of love that, like I love the people
9:27
Speaker 1: know their values, which has risen to eighty seven percent
9:30
Speaker 1: for gen Z, so those peeps between the ages of
9:33
Speaker 1: eighteen and twenty four and eighty two percent for millennials.
9:37
Speaker 1: That's people over the age of twenty five, which is
9:39
Speaker 1: very nice. But it's also really important to understand that
9:42
Speaker 1: world events are also highlighting the way that your money
9:45
Speaker 1: can be tied up in things that you don't want
9:47
Speaker 1: them to be. So, for example, I had a question
9:50
Speaker 1: recently come into the Shees on the money inbox and
9:52
Speaker 1: they said, oh my gosh, Victoria, please help. I've just
9:56
Speaker 1: reviewed my suberanuation portfolio and their own Russian oil company
10:00
Speaker 1: and I'm freaking out and that's really scary, and do
10:03
Speaker 1: I need to change super funds? And I was just like,
10:05
Speaker 1: please just sit tight, like all of this was only
10:08
Speaker 1: just unfolding. I guarantee you the fund manager of your
10:11
Speaker 1: superannuation portfolio is just as worried about that, arguably if
10:16
Speaker 1: not more, because they could obviously lose a lot of
10:18
Speaker 1: clients and have a lot of blowback for something like that.
10:21
Speaker 1: But I think if you're looking at stuff like that,
10:23
Speaker 1: see what the company is going to do about it
10:25
Speaker 1: before jumping ship. But again, obviously Russia a few years ago,
10:29
Speaker 1: would you have been worried about investing there. Absolutely not
10:32
Speaker 1: like there were a really strong country that had really
10:36
Speaker 1: good things going on. Now today in twenty twenty two,
10:39
Speaker 1: as we are recording this podcast, it's actually illegal to
10:42
Speaker 1: invest in Russia. Really kind of scary. But also that's
10:46
Speaker 1: just to protect us, Like what if you didn't know,
10:48
Speaker 1: So it's putting people in the best possible position because
10:50
Speaker 1: obviously it's way too risky. But also we don't want
10:53
Speaker 1: to be funding more because that's ridiculous.
10:55
Speaker 3: So why is that is that to protect us to
10:58
Speaker 3: punish Russia a little bit?
11:00
Speaker 1: I think it's the world trying to or Australia in particular,
11:03
Speaker 1: because like I'm sure that there are other rules and
11:05
Speaker 1: regulations around the world that don't apply to us. But
11:08
Speaker 1: it's the Australian government, I guess, pulling out of Russia
11:11
Speaker 1: and saying we don't support this because by allowing Australian
11:14
Speaker 1: citizens to invest in another country that is doing the
11:17
Speaker 1: wrong thing, it's saying, you know, underlyingly, we might not
11:20
Speaker 1: have said it, but we don't not not support you
11:23
Speaker 1: very So I think it's I think it's smart. I
11:25
Speaker 1: think it's really impressive. Obviously there's going to be a
11:28
Speaker 1: massive shift in the markets for people having to sell
11:30
Speaker 1: down their assets or change it or you know, maybe
11:33
Speaker 1: not being able to realize investment strategies they had. But
11:36
Speaker 1: that's not the worst thing in the world. But obviously
11:39
Speaker 1: that's front of mind and on the front page of
11:40
Speaker 1: the newspaper, and we see it and we understand it,
11:43
Speaker 1: and it's something that we're like, yeah, of course you
11:44
Speaker 1: wouldn't invest in Russia, But what about all those things
11:47
Speaker 1: that aren't making the front page of the newspaper, Like
11:49
Speaker 1: how do we find out about those and how do
11:51
Speaker 1: we know that they actually are happening and that we
11:54
Speaker 1: are okay with them or not okay with them. I
11:56
Speaker 1: think that's the question we need to be asking.
11:58
Speaker 3: Absolutely, and we will do more into that. On the
12:01
Speaker 3: other side of the break, let's talk about the returns
12:05
Speaker 3: on ethical investing, because it sounds amazing on paper. We
12:08
Speaker 3: all want to make the world a better place, But
12:10
Speaker 3: can we still make bank?
12:11
Speaker 1: Absolutely we can make bank. I can absolutely make bank.
12:14
Speaker 1: I've got a couple of colorful opinions on this, but
12:16
Speaker 1: first I'm going to drown you in statistics so that
12:18
Speaker 1: the rest of it makes sense. Right, So Morning Star,
12:21
Speaker 1: which is actually a research house, or we call them
12:24
Speaker 1: research houses. It's a company that does investment research, and
12:27
Speaker 1: a lot of financial advisors rely on that research to
12:30
Speaker 1: make investment decisions for their clients. But morning Star recently
12:34
Speaker 1: examined seven hundred and forty five sustainable funds and then
12:38
Speaker 1: they compared them to four thousand, one hundred and fifty
12:41
Speaker 1: traditional funds, and they found that they matched or beat
12:45
Speaker 1: returns in all categories. So this isn't costing you any
12:48
Speaker 1: more money, Like, it's not going, oh okay, you're compromising
12:52
Speaker 1: something by picking something that aligns to your values, Therefore
12:55
Speaker 1: you're going to get lower returns. No, sir, that is
12:57
Speaker 1: not the case at all. And I think that is
12:59
Speaker 1: a really common misconception that by being an ethical investor
13:02
Speaker 1: you're not going to get such good returns. I just
13:06
Speaker 1: really wanted that to be in the podcast so that
13:07
Speaker 1: you guys know that actually following your values and aligning
13:11
Speaker 1: to something that is more ethical and is more sustainable
13:14
Speaker 1: is actually going to be more profitable long term. And gee,
13:18
Speaker 1: over a ten year period, the average annual return for
13:21
Speaker 1: a sustainable fund invested in large global companies had an
13:25
Speaker 1: average return of six point nine percent. Per year, but
13:29
Speaker 1: those traditionally invested funds had an average return of six
13:32
Speaker 1: point three percent per year, So I mean it's not
13:35
Speaker 1: that big of a difference. But like the ethical are
13:38
Speaker 1: on top, we love that. I think it's really important
13:41
Speaker 1: to talk about this stuff as well, because I think
13:43
Speaker 1: so many people are genuinely like, I don't want to
13:46
Speaker 1: invest ethically. Yeah, I don't want to change. I don't
13:48
Speaker 1: want to do anything it's going to compromise my financial
13:51
Speaker 1: future because you feel like there has to be a
13:52
Speaker 1: trade off, right, Whereas that's not the case. But the
13:55
Speaker 1: thing I do want you to be really aware of
13:58
Speaker 1: is the fees. I feel like there's you know how
14:00
Speaker 1: we talked about pink tax. I feel like there's potentially
14:03
Speaker 1: a green tax. Can I call it that? I don't
14:05
Speaker 1: think I've ever heard someone we're going to call it
14:07
Speaker 1: the green tax, where people are adding additional fees and
14:11
Speaker 1: additional charges and management fees and admin fees to funds
14:15
Speaker 1: that are more ethical, and whilst I completely understand why
14:19
Speaker 1: in the grand scheme of things that they exist. So
14:22
Speaker 1: for example, obviously just an example I'm pulling out of nowhere,
14:26
Speaker 1: the Vanguard Ethical Fund is more expensive to invest in
14:30
Speaker 1: than their normal fund for ETFs. And that's okay, because
14:34
Speaker 1: I do understand comprehensively that there is far more research
14:39
Speaker 1: and understanding and background checking and balancing that needs to
14:43
Speaker 1: be done on an ethical portfolio. We get that. But
14:47
Speaker 1: what I see with their fees is that they're reasonable
14:50
Speaker 1: for the amount of additional work that goes into ethical investing.
14:54
Speaker 1: But when you look at other companies, and I've spoken
14:57
Speaker 1: about this on the podcast before, where they're like, oh
15:00
Speaker 1: my god, we're a super fund and we're super ethical
15:02
Speaker 1: and we're awful women and we do this and we
15:04
Speaker 1: do that. Like, I genuinely think that some of them
15:06
Speaker 1: are taking the piss Georgia Keane with what they are
15:09
Speaker 1: trying to sell us, because it's like, yeah, okay, so
15:12
Speaker 1: your woman only focused one. Great, it's ethical, great, all
15:15
Speaker 1: of this other stuff. But I can go by something else,
15:18
Speaker 1: Like if you were looking at an ETF or a
15:19
Speaker 1: different superfund, I can just go into an ethical portfolio
15:23
Speaker 1: and a pre existing superannuation fund. It's not going to
15:25
Speaker 1: cost me anymore. But I'm not paying that dumb pink
15:28
Speaker 1: or green tax you're adding because I want my values
15:31
Speaker 1: to be upperheld. So I just feel like, especially in
15:35
Speaker 1: this industry where a lot of us feel overwhelmed when
15:37
Speaker 1: it comes to talking about superannuation or investing or making
15:40
Speaker 1: the right decision. I think we've started looking for companies
15:43
Speaker 1: that have marketing that really appeals to our values. So
15:46
Speaker 1: you go, oh, my gosh, Like they've absolutely posted everywhere
15:49
Speaker 1: that they're ethical and they're for women, and I'm a woman.
15:52
Speaker 1: But like, genuinely, George, what the hell is the difference
15:56
Speaker 1: between investing as a man and a woman. But from
15:59
Speaker 1: the fact that I think we will only be able
16:01
Speaker 1: to invest seventy three cents in comparison to their men's dollar,
16:04
Speaker 1: but whatever, that's not the case at all. It's more
16:07
Speaker 1: what is the different management strategy and why as a
16:09
Speaker 1: woman should I be paying more for your woman's super fund?
16:13
Speaker 3: Yeah, so there's are like these little extra taxes that
16:15
Speaker 3: were shit paying. But then so there's also a concept
16:19
Speaker 3: of grain washing when it comes to ethical investing, Right,
16:22
Speaker 3: so how do we know that what we're investing in
16:24
Speaker 3: is legitimately ethical or if it's just has the fancy marketing.
16:28
Speaker 1: We need to look at the underlying investments and understand
16:31
Speaker 1: as I was talking about before, you know, how I
16:33
Speaker 1: talked about the organic sticker in the fruit shop. Yes,
16:35
Speaker 1: like it is not like that, unfortunately, and they mean
16:38
Speaker 1: all different things. So you just have to be really
16:41
Speaker 1: cautious when looking at an asset and going, oh my god,
16:44
Speaker 1: but it says it's green, or it says it's ethical,
16:46
Speaker 1: or that's the Emerald portfolio or that's the whatever portfolio
16:50
Speaker 1: they're calling it. I think you really need to talk
16:54
Speaker 1: about what that means when it comes to ESG investing,
16:57
Speaker 1: and there are a few things around that that are
17:00
Speaker 1: important to wrap your head around. So ethical investing is
17:04
Speaker 1: more about your thoughts and your feelings and your personal beliefs.
17:07
Speaker 1: Sustainable investing is a strategy where investments are concentrated in
17:11
Speaker 1: companies that have sustainable business practices, and a really good
17:14
Speaker 1: measure of that is ESG investing, which you've probably heard
17:17
Speaker 1: historically being thrown around. I think we've spoken about it
17:20
Speaker 1: in Passing Fleeting Lad Georgia King on the podcast before.
17:24
Speaker 1: But that is an acronym for environmental, social, and governance.
17:28
Speaker 1: So those are the three key pillars that they are
17:31
Speaker 1: measuring ethical investments on, or sustainable investments on, or however
17:35
Speaker 1: you want to articulate them. So companies that employ what
17:38
Speaker 1: we are calling in the investment world and eat SG
17:41
Speaker 1: focus look at the sustainability side of things, So they
17:44
Speaker 1: look at the environment, they look at the diversity and
17:47
Speaker 1: inclusion and positive social impacts. They then look at the
17:51
Speaker 1: social side of things and making sure that their employees
17:54
Speaker 1: are well looked after and paid and they're not you know,
17:56
Speaker 1: shipping off all of the work overseas and paying them
17:58
Speaker 1: below minimum wage and you know, absolutely making fun of it.
18:02
Speaker 1: Then they are also looking at the governance of the business.
18:05
Speaker 1: So are they doing the right thing by the business,
18:07
Speaker 1: are they doing the right thing by their shareholders that
18:09
Speaker 1: own shares in the company, and are they overarchingly doing
18:12
Speaker 1: the right thing. So personally, I love the idea of
18:15
Speaker 1: ESG investing because it gives you a bit of a measure,
18:18
Speaker 1: like you can go, okay, cool, Like what are those
18:20
Speaker 1: three things and how does this stack up? So don't
18:23
Speaker 1: just look at the shiny label and go, oh, but
18:25
Speaker 1: it's the green portfolio. Because George, I could go out
18:28
Speaker 1: tomorrow and I'm sure someone else already hasn't. I'm probably
18:30
Speaker 1: going to get sued for saying this, But I could
18:33
Speaker 1: go out tomorrow and register a company called the super
18:36
Speaker 1: greens super company, and you go, wow, so cool, like
18:40
Speaker 1: that sounds ethical, that sounds good, And then I could
18:42
Speaker 1: just buy oil companies because screen's actually just a color
18:45
Speaker 1: and I can do whatever I want because it's basically
18:47
Speaker 1: the same as calling it they're super pink super company.
18:51
Speaker 1: So I think it's really important to know the buzzwords,
18:53
Speaker 1: but then also have that backing in ESG and go okay, cool, like,
18:57
Speaker 1: what are the environmental impacts? What are the social impa
19:00
Speaker 1: what is the governance of this company?
19:02
Speaker 2: Like?
19:02
Speaker 1: And then gee, the next thing I want you to understand,
19:05
Speaker 1: not just you, everybody listening because we love them just
19:08
Speaker 1: as much as we love digging is impact investing. And
19:12
Speaker 1: impact investments are investments that are made with the intention
19:15
Speaker 1: to generate positive, measurable social and environmental impact alongside financial return.
19:21
Speaker 1: So impact investments are kind of the investments that you
19:23
Speaker 1: make with the intention to just like do good and
19:25
Speaker 1: be good and be a good egg and have a
19:27
Speaker 1: really solid impact on the world.
19:29
Speaker 2: Like.
19:29
Speaker 1: Investors who are putting their dollars into impact investing and
19:32
Speaker 1: investing in this way are actively looking to support areas
19:36
Speaker 1: that they care about, and some really big ticket I
19:39
Speaker 1: guess people who are doing this are people like Bill
19:42
Speaker 1: and Melinda Gates and you've got Warren Buffett or Buffet
19:45
Speaker 1: or however was that was that he's back him and
19:49
Speaker 1: he's like lack of financial creep are back because he's
19:52
Speaker 1: spending all of his money on impact investing. So it's
19:55
Speaker 1: giving back. It's like that philanthropic vibe where you want
19:59
Speaker 1: to give back more than you're receiving, but you also
20:01
Speaker 1: want to make money so you can have a long
20:02
Speaker 1: term impact.
20:03
Speaker 3: So it's like maybe you'll get a return, like that
20:05
Speaker 3: would be nice, but that's not really No.
20:07
Speaker 1: No, you absolutely oh you're getting a return, but you're
20:10
Speaker 1: specifically taking companies not they're going to have a good
20:13
Speaker 1: impact on the world. So it's not just measuring them
20:16
Speaker 1: and going are they ethical and doing the right thing?
20:17
Speaker 1: Like you could go to a company and be like,
20:19
Speaker 1: oh my gosh, you're producing shoes. You are doing it
20:22
Speaker 1: in an ethical way. You've got shoes that are good shoes.
20:25
Speaker 1: They're not made of leather, they are made by people
20:27
Speaker 1: who are being paid a living wage, and you have
20:30
Speaker 1: really great governance, you have really great internal policies. You've
20:33
Speaker 1: just got this really great shoe company. But that's not
20:36
Speaker 1: really making an impact on the world, whereas you might go,
20:39
Speaker 1: oh my gosh, there's this shoe company and for every
20:42
Speaker 1: shoe that is sold, one gets donated to somebody in need.
20:45
Speaker 1: So that's, I guess, a very simple way of distilling
20:49
Speaker 1: down the difference between going, okay, well, what's impact investing
20:53
Speaker 1: versus ethical? Impact investing is usually ethical, but it's that
20:57
Speaker 1: overarching additional benefit of all having a positive impact on
21:01
Speaker 1: the world.
21:02
Speaker 3: So on impact investing v Yes, I'm so happy for
21:06
Speaker 3: our boy Warren Buffett that any lack of lifestyle creep
21:10
Speaker 3: that he can invest where he wants may probably.
21:13
Speaker 1: Take away lattes like we do. Well, he probably doesn't,
21:17
Speaker 1: probably doesn't have much fun either. Honestly, party pooper, what
21:20
Speaker 1: are you.
21:21
Speaker 3: Doing, Warren? Anyway, Warren can invest in whatever he wants.
21:25
Speaker 3: He can change the big impact. But me, I'm just
21:28
Speaker 3: a girl. I've got one thousand dollars to invest, Yes, sir,
21:32
Speaker 3: Can I truly have an impact if I'm only investing
21:36
Speaker 3: that much? Or am I better off just like popping
21:38
Speaker 3: it somewhere where I'm guaranteed.
21:40
Speaker 1: A hot return. Honestly, just juck it in an oil company.
21:42
Speaker 1: We're all screwed, You're welcome, goodbye. No, you can absolutely
21:46
Speaker 1: have an impact. And I don't think that we need
21:47
Speaker 1: to compare ourselves to these big name impact investors to
21:51
Speaker 1: think that we're not having an impact. I think that
21:53
Speaker 1: it's really important to consider these things over the long term.
21:56
Speaker 1: I think it's important for you as an individual with
21:59
Speaker 1: your first thousand, making a decision to go is this
22:02
Speaker 1: aligned to my values? Is this something that I want
22:05
Speaker 1: to do? And maybe you do choose a company that's
22:06
Speaker 1: having a positive impact on the world. Lots of companies
22:09
Speaker 1: are now choosing to add these types of things into
22:12
Speaker 1: their business models because they know that's what investors want.
22:15
Speaker 1: They know that what the world wants. But it's not
22:18
Speaker 1: necessarily about you and your thousand dollars. Yes you're putting
22:21
Speaker 1: it there, and yes it doesn't feel massive, but it's
22:24
Speaker 1: about the community. It's about lots of people doing that,
22:28
Speaker 1: and the more people that are on board with that,
22:30
Speaker 1: the bigger that mountain becomes. So think about you and
22:33
Speaker 1: your one thousand dollars. Gee, one point two million people
22:36
Speaker 1: listen to this podcast. Imagine if they were all putting
22:38
Speaker 1: their money where their mouth is, Like, we can have
22:41
Speaker 1: as a community a massive impact on driving a shift
22:45
Speaker 1: when it comes to our expectations around how companies treat
22:48
Speaker 1: people and what they do and the impact that they have.
22:51
Speaker 1: So it's it's good that you're thinking that way, but
22:54
Speaker 1: I would hate for someone to be disheartened and be like, oh,
22:56
Speaker 1: my thousand dollars doesn't have an impact. It does because
22:59
Speaker 1: there are so many people just like you trying to
23:01
Speaker 1: make that right decision.
23:03
Speaker 3: All right, I'm going to pivot a little here. V
23:05
Speaker 3: It's time to chat about eggs. I great love a
23:08
Speaker 3: good egg.
23:09
Speaker 1: Do you actually you're vegan? Do you know what? Whenever
23:12
Speaker 1: I go to the cafe, I do buy Lucy an egg,
23:15
Speaker 1: and she gets a little poachy at the cafe.
23:16
Speaker 3: A little chyachy.
23:19
Speaker 1: Sometimes they bring her a fried one. I don't really
23:21
Speaker 1: like that because you know, oil dog doesn't really mix. Yeah,
23:24
Speaker 1: what's your egg question?
23:26
Speaker 3: So it's eggy, and it's it's ethical. It's a moral dilemma.
23:30
Speaker 1: I'm a moral dilemma.
23:31
Speaker 3: I'm gonna put it to you, all right. You tell
23:33
Speaker 3: me your thoughts. Do you if you're not vegan like me,
23:37
Speaker 3: you're going to the supermarket, do you pick the brand
23:40
Speaker 3: that is small, free range, et cetera. Knowing that your
23:44
Speaker 3: dollar is going directly to a totally ethical organization who
23:48
Speaker 3: have never had cages. They're doing great work out on
23:51
Speaker 3: the farm. So that's option one V. Or is it
23:55
Speaker 3: better to choose the bigger brand, the brand that has
23:59
Speaker 3: cage eggs, but they also have a little free range
24:02
Speaker 3: egg option.
24:03
Speaker 1: Or what are you doing this? Is this a dilemma?
24:05
Speaker 3: Is it better to choose the free range eggs because
24:07
Speaker 3: then that will encourage that corporation to make a move
24:10
Speaker 3: to a brighter future for the chickens.
24:12
Speaker 1: Does that make sense? I feel like they already know
24:14
Speaker 1: they should be doing that if they have a free
24:16
Speaker 1: range line, like they know people don't want their chickens
24:19
Speaker 1: to be treated like trash.
24:20
Speaker 3: But maybe they don't know how much money they can
24:22
Speaker 3: make from it, because at the end of the day.
24:23
Speaker 1: It's true, the free range eggs are more expensive. I'm
24:26
Speaker 1: happy to pay for pasta raised really important. I don't know.
24:30
Speaker 1: I think I like the idea of supporting companies that
24:32
Speaker 1: are holistically doing good, but again, it's kind of about
24:35
Speaker 1: supporting companies again your values. G It doesn't matter what
24:38
Speaker 1: you choose, it's more about are you happy with the choice.
24:41
Speaker 1: That you are making. And sadly, you know, I wish
24:44
Speaker 1: that cage eggs were illegal because I think it's absolutely disgusting.
24:48
Speaker 1: This isn't a pet podcast. It's not like she's on
24:51
Speaker 1: the barn, but she's in the barn. She's in the barn.
24:56
Speaker 1: She's on the barn, like, it's just not what she's
24:58
Speaker 1: on the farm. That's better. We got this. It's not
25:01
Speaker 1: about that. It's actually about like what are you most
25:03
Speaker 1: comfortable with? And if I personally was buying eggs, I
25:06
Speaker 1: would want the company to be entirely kind to its chickens,
25:09
Speaker 1: Whereas if you're buying a free range egg from somebody
25:12
Speaker 1: who still has caged chickens, they're still underlyingly treating their
25:16
Speaker 1: chickens like trash. So for me, I would do the
25:18
Speaker 1: one hundred percent free range egg company and my favorite
25:22
Speaker 1: egg company. I didn't even know I had a favorite
25:24
Speaker 1: egg company until now. Is you know those Josh's free
25:26
Speaker 1: range eggs. Yeah, so cool. Josh's Rainbow eggs, I believe
25:31
Speaker 1: they're called. And he's like one hundred percent ethical and
25:33
Speaker 1: they're all like pasta raised anyway, he looks like he
25:36
Speaker 1: has a really fun times him. He's not sponsor, like,
25:39
Speaker 1: he's just he just sounds like a really cool human.
25:41
Speaker 3: Another egg brand is Lil's Yochi dope Eggs down on
25:44
Speaker 3: the Peninsula.
25:45
Speaker 1: Amazing Yochi Dokei Eggs. Is that your friend, Lily?
25:48
Speaker 3: No, No, it's actually a really long and sad story,
25:51
Speaker 3: so I won't go into it. But if you can
25:53
Speaker 3: support them, they're amazing, oh so sweet. Maybe we'll link
25:56
Speaker 3: in the show notes.
25:57
Speaker 1: We'll link in the show notes to the egg company.
25:59
Speaker 1: Absolutely not in line with my values, but I'm glad
26:01
Speaker 1: it's in line with yours.
26:03
Speaker 3: Okay, So when it comes to ethical investing, what do
26:06
Speaker 3: we do?
26:07
Speaker 1: Where do we look?
26:07
Speaker 3: If we are just starting out on this wild, wild adventure.
26:11
Speaker 3: There are a lot of places you can look. Google's
26:13
Speaker 3: your friend, obviously, We've got blog posts and links to
26:16
Speaker 3: a whole heap of resources. There are a million different
26:18
Speaker 3: places you could look, and most investing platforms these days
26:21
Speaker 3: have ethical options or ESG options. Just look it up
26:25
Speaker 3: shares these This isn't a sponsored mention like, it's just
26:28
Speaker 3: they have a good amount of resources on their website
26:31
Speaker 3: for you to understand the decision making around what is
26:34
Speaker 3: going to be in line with your values or not.
26:36
Speaker 3: Also shameless plug two six Park, who I obviously work
26:39
Speaker 3: incredibly closely with. They have a sustainable portfolio which I
26:43
Speaker 3: adore and I think they're doing really good things with
26:46
Speaker 3: and a whole heap of resources on their blog for
26:48
Speaker 3: you to absorb and learn from.
26:50
Speaker 1: But then I also think the last thing I want
26:52
Speaker 1: to leave you with before we run off and grab
26:54
Speaker 1: another oat latag King is that you're not going to
26:57
Speaker 1: lose by ethically investing. And I think so many people
27:01
Speaker 1: are of the opinion that it's like the compromise and
27:03
Speaker 1: like on the ethical one, you're not going to get
27:04
Speaker 1: as good as returns. Like in this episode, I gave
27:07
Speaker 1: you the facts to prove that that is not the case,
27:10
Speaker 1: and you can do even more research on your own
27:12
Speaker 1: to figure that out. I think you just need to
27:13
Speaker 1: be smart about it and pick things that are aligned
27:16
Speaker 1: to your values, and you need to do that sooner
27:18
Speaker 1: rather than later.
27:19
Speaker 3: So take a little moment to really reflect on what
27:21
Speaker 3: you are actually passionate about, what is ethical to you,
27:24
Speaker 3: what that means to you.
27:25
Speaker 1: Yeah, and I think we've done full stop. End of story,
27:28
Speaker 1: see you later. Try to do the wrap, Joe.
27:30
Speaker 3: Yeah, Yeah, yeah, Okay, the advice shed on she is
27:33
Speaker 3: on the Money is general in nature and does not
27:35
Speaker 3: consider your individual circumstances. She's on the Money exists purely
27:39
Speaker 3: for educational purposes and should not be relied upon to
27:42
Speaker 3: make an investment or a financial decision.
27:45
Speaker 1: Maybe make an ethical one though, yeah, well.
27:47
Speaker 3: Exactly right, and we promise, guys. Victoria Devine is an
27:51
Speaker 3: authorized representative of in Focus Securities Australia Propriety Limited ABN
27:56
Speaker 3: four seven zero ninety seven seven nine seven zero four
27:59
Speaker 3: nine for sell two three six five two.
28:02
Speaker 1: Three And my friends, we would love it if we
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28:21
Speaker 1: review and subscribe because we're quite clearly your favorite podcast.
28:25
Speaker 1: That would be nice, if very nice, See soon, guys.
28:27
Speaker 3: Bye bye bye