Australian Ethical Investment

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Australian Ethical Investment Limited
Stock Symbol: AEF, Stock exchange(s): ASX
Industry Financial Services
Founded 1986
Headquarters Sydney, Australia
Key people
Phillip Vernon (CEO), Trevor Lee (former CEO)
Products superannuation, managed funds, pensions, self-managed super
Revenue A$16.4 million (Y.E. 30 June 2013)[1]
Number of employees
About 30

Australian Ethical Investment Limited is an Australian owned company established in 1986 for the purpose of environmental and socially responsible investing. The company is based in Sydney and Canberra and is listed on the Australian Stock Exchange (ASX). The company's main products are a retail superannuation fund and a series of managed investment funds across Australian and international shares, fixed interest, property and cash. The superannuation fund is predominantly used by individuals as well as by responsible companies and not-for-profit organisations as the default option for their employees.

Investment philosophy[edit]

The company offers a number of managed investment trust funds and superannuation with all investments guided by the Ethical Charter. The charter seeks out investments which support quality, people or the environment and seek to avoid investments which cause harm. The company is overweight in sectors like breakthrough healthcare, energy efficiency, renewable energy and innovative technology and avoids sectors like mining, weapons, tobacco, logging and companies with involvement in human exploitation or cruelty to animals. The Ethical Charter is commonly known as the most stringent ethical investment test in the industry.

Australian Ethical donates 10% of its company profit to Australian charitable, benevolent and conservation projects through a community grants program. In total almost $1.5 million has been donated (as at 30 June 2013).

Ethical investment funds offer different degrees of socially responsible investing, sometimes differentiated within the industry as "deep green", "green" and "light green" funds. According to Credit agency Standard & Poor's Australian Ethical Investment is arguably the only true green fund operating in Australia as of early 2007.[2][3]


One of the main myths of ethical investment is that it does not perform as well as conventional investment, which can be measured by the return of a market index. Australian Ethical have consistently demonstrated competitive returns (after fees) across all of their investment funds. Australian Ethical's funds tend to concentrate on long term returns (especially superannuation). For example, in the 10 years to 31 October 2012, the Australian Ethical Retail Smaller Companies Trust produced an average annual return of 9.8% (after fees), higher than the mainstream market indices, the S&P/ASX200 (8.7%) and S&P/ASX All Ordinaries (3.7%).

Research by the Responsible Investment Association of Australasia and Morningstar also found that ethical funds continue to outperform conventional funds across multiple asset classes in the short, medium and long term.[4]

Differences with ESG[edit]

ESG is a growing global and Australian trend in investment management. It stands for Environment, Social & Governance and generally describes a fund that integrates factors associated with each into the investment decision making process. ESG is important when assessing the future risks and opportunities of an investment (as examples by BP and the Gulf of Mexico oil spill). The key difference between ethical investment and ESG is that ethical investment starts with a values-based decision - is this investment good for society and/or the planet? Once that question is answered then ethical investors will use ESG factors and traditional investment analysis to invest for performance. ESG does not include a values-based decision, it is chiefly concerned with how environmental, social and governance factors will impact the future share price. This can lead to good outcomes and change of corporate behaviour but investors should be wary not to view ESG and ethical investment as the same thing.


  1. ^ Australian Ethical: Annual Report 2012
  2. ^ Keen to be green? Follow your values with your money Sydney Morning Herald, 22 April 2007 Accessed 28 April 2007
  3. ^ Ethical Investing Choice: The People's Watchdog, 26 August 2007
  4. ^ Ethical funds outperform Sydney Morning Herald, 12 July 2013

External links[edit]