Ethical Investment Week 2024
Ethical Investment Week, held 30 September - 6 October 2024, was an opportunity to learn more about how to make sure your money matters. The theme ‘What Type of Ethical Investor Are You?’ encouraged inquiring into where you sit on the ethical investment spectrum and whether the advice you receive and are the funds you invest in are aligned with your ethics.
As an annual event that aims to help people understand ethical investing and make informed investment decisions, Ethical Investment Week is coordinated by the Ethical Advisers' Co-op which comprises of a group of leading ethical advisers, including Money Matters. As part of Ethical Investment Week, members of the Ethical Adviser’s Co-op presented a range of webinars and podcasts. Activities are listed on the Co-op’s website at this link and included the following with Money Matters:
An Introduction to Ethical Investment - The Wide Open Air Exchange
Providing an introduction to ethical investment and Ethical Investment Week, Christine Gallagher host and producer of The Wide Open Air Exchange, interviewed Dr Rodger Spiller. This included a discussion of his early inspirations. At a young age, Rodger realised that the way money is invested matters and has a major influence in the way the world works – for better or often worse. In the 1970s he was inspired by New Zealand’s earliest ethical investors who were focused on anti-apartheid activism, and by calls from Nelson Mandela for more ethical investment. He chose to focus his career on encouraging more ethical investment and ethical business.
Rodger recognised the need for a change in mindset from investors and businesses. He wanted to create a shift from the conventional two dimensional (risk and return only) to a three-dimensional approach; adding to risk and return the consideration by investors and businesses of their impact on society and the environment. You can listen to the full interview at this link.
Christine describes the Wide Open Air Exchange as “A program for lifelong learners. A place to meet people with fascinating vocations, interesting ideas, and special interests”. She adds: “The conversations featured are guided by sincere curiosity and informed by an approach of seeking to make information and ideas accessible to non-specialists. We learn from the guest’s speciality knowledge and explore themes related to vocational identity and vocational choices. Conversations are respectful and non-adversarial with a thought that there is more to learn from listening.”
How to Engage with an Ethical Investment Adviser – Money Matters and Mindful Money
Financial advisers who understand ethical investing can play a crucial role in supporting investors in making good decisions. For Ethical Investment Week, Mindful Money co-CEO Kate Venell interviewed ethical investment adviser Dr Rodger Spiller. This interview explored what ethical investment advice is and how to work effectively with an adviser.
Rodger explains how like a specialist medical doctor, an expert adviser can draw on their extensive experience and advanced education and knowledge of financial planning, clients, markets and funds to:
diagnose your situation, including your current personal and financial situation, goals, and investment timelines, investment risk profile and ethical investment profile, then
prescribe a customised Plan showing how your goals can be achieved and Portfolio of the optimal ethical investment funds (much like a doctor prescribes medications), then
monitor again like a doctor, changes in your personal situation and goals, changes in in financial markets and funds, and recommend changes to your plan and the prescribed investment as needed
A recent report from Russell Investments concluded that “the total value of an adviser in New Zealand is approximately 4.7% per annum in 2024”. This value includes optimal asset allocation that may involve investing more in shares. A significant part of the value added can be behavioural coaching helping investors navigate the emotions that can cloud financial decision making.
Different types of ethical investors can be defined based on their focus. Some investors are solely focused on financial returns. These investors may simply not consider the environmental and social impact of their investments, or they might believe that doing so could increase their risk and/or reduce their return. So they either don't consider real world impact or feel it's not something that they can influence through their particular investments.
Ethical investors, also known as responsible investors, want to make money, of course, and also make a difference. They really want the best of both. Where some investors focus only on risk and return, ethical, responsible investors add impact to the mix, creating a sort of a shift from a two dimensional mindset to a three dimensional mindset where we think about risk and return and impact in a way that opens up the world of possibilities to make money and make a difference in an ethical way. Money Matters helps ethical investors decide if they want to be ‘light’, ‘medium’ or ‘strong’ ethical investors.
Ethical Investing in International Shares – Money Matters and Stewart Investors
In this interview, we explored sustainable and ethical investing in the shares of overseas-based companies. An allocation to these ‘international shares’ is an important part of most long-term investors’ diversified portfolios. However, investing internationally brings additional challenges for all investors and particularly ethical investors. So, it can pay to learn more about this subject.
In the interview, the Stewart Investors Worldwide Leaders Sustainability Strategy is provided as a case study of investing in international shares. A way of considering the ethical investment dimensions and the overall ethical investment strength of funds and strategies is through the lens of the Money Matters’ Four Ps approach drawn from Rodger’s PhD research. The Four P’s are Purpose, Principles, Practices and Performance Measurement.
Joining Rodger to discuss this subject is Pablo Berrutti, a Sydney-based Senior Portfolio Investment Specialist with Stewart Investors. Pablo is a highly regarded leader in the sustainable investment field. He is the former chair and a director of the Responsible Investment Association of Australasia (RIAA) – a role in which Rodger was fortunate to work together with Pablo for many years in his capacity as a director of RIAA. Please note that Money Matters is not endorsing or recommending this strategy; you are encouraged to consult with a qualified financial advisor before making any investment decisions.
Stewart Investors has an overarching approach of wanting to include companies well positioned for long-term sustainable development, and in a section on the Stewart Investors website titled ‘How We Select Companies’, an analogy is provided of, ‘Walking along a beach looking for 50 of our favourite shells’. In responding to Rodger’s request for him to expand on this Pablo says:
“We like to use analogies and metaphors to help describe the way we do things because we think it makes it more relatable for our clients and for other stakeholders. It's also different to what finance writ large is. When you generally see the way the managed funds operate in the market, they're starting with the entire world of all of the different companies and then trying to get rid of the ones that they don't want through various screens and whatnot. Whereas we feel that our pockets can only take so many shells on the beach to use that metaphor. What that means is that we actually start with no companies rather than all companies, and we're just trying to find the 30 to 50 companies, somewhere in that range, that we think most exhibit those qualities that we're looking for, of high quality and contribution to sustainable development, and benefiting from that through their business models.”
What type of ethical investor am I? Money Matters and the Ethical Invest Group
This webinar was aimed at individual investors keen to learn how to align their money with their values, find sustainable options, and be an informed ethical investor. Structured as a live Q&A webinar it explored several ways you can invest in the environmental and social issues that are most important to you. A panel of experts dove into the latest trends in sustainable investing for individual investors for an Ethical Investment Week Webinar.
Hosted by sustainable investment educator Alexandra Brown of Ethical Invest Group this webinar involved three financial advisers: Dr Rodger Spiller from Money Matters (NZ), Karen McLeod from Brisbane-based Ethical Investment Advisers and Justin Metcalf from Sydney-based Ethinvest.
The discussion included each adviser answering:
What is your process for finding out the ethical values of clients - do you use a questionnaire, open-ended discussion, online fact find, or other process. Is this repeatable and same for each client, or more dynamic and dependent on the client.
What type of ethical values and sustainability issues do you discuss with clients - this is to bring investor awareness to the types of social and environmental themes that can be considered in investments and super/KiwiSaver.
The focus of this webinar was how advisers work with clients to determine their ethical values and sustainability objectives.
Next Steps
If you want to learn more about ethical investing, we encourage you to listen to the above conversations. There's something for everyone, whether you're a beginner or an experienced investor.
Here are some steps you can take towards ethical investing:
Find out about ethical investing by visiting the Ethical Advisors Co-operative and the Money Matters Resources page.
Talk to Money Matters about reinvesting your portfolio into more ethical investments.
Contact the funds and/or companies that you invest in and ask them what they are doing about environmental and social issues.
Investing ethically can be a great way to positively impact the world and build a sustainable future. Learn more at Ethical Investment Week 2024.