How sustainable investing can pay off


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It is official. Investing responsibly - or along sustainable guidelines - is better for your wallet as well as our society and the planet.

Australian share funds that invest responsibly yield a higher return than those that don't.

Looking over one, three, five and 10 year time frames, responsible funds did much better.

green sustainable investing

The figures are 2.6% better over one year, 3.4%pa over three years, 2.2%pa over five years and 1.3%pa over 10 years, according to the Responsible Investment Association Australasia's (RIAA) annual report on the responsible investing industry.

RIAA says there has been a massive 24% swing to responsible investing over the year to the end of 2014.

Total assets that are either screened or invested along sustainable themes or impact and community investments are 50% of Australian total investment assets under management worth $629.5 billion.

Why is green investing catching on?

The RIAA says there is a spotlight on companies with poor management or environmental, social, governance and ethical issues.

At the same time, superannuation fund members want their retirement savings invested according to their own beliefs and values.

Activist groups are also bringing attention to responsible investing by engaging with the finance sector. Also fiduciaries are taking environmental, social and governance issues into consideration as part of their responsibilities.

For anyone who doubts responsible investing, it is hard to go past the better performance compared to their benchmark index and the average of mainstream funds.

As well as responsible Australian share funds, there are great returns for responsible international share funds and multisector funds too.

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Susan has been a finance journalist for more than 30 years, beginning at the Australian Financial Review before moving to the Sydney Morning Herald. She edited a superannuation magazine, Superfunds, for the Association of Superannuation Funds of Australia, and writes regularly on superannuation and managed funds. She's also author of the best-selling book Women and Money.