Ethical super funds in Australia

Does your current super fund invest your money ethically? If it doesn't and you want to switch to one that does, the good news is that there are many ethical super fund options readily available. And contrary to popular belief, investing your super ethically doesn't mean you'll be getting poor returns.

There's a few things to consider before you make the switch to an ethical super fund, which we'll outline in this guide. Plus, you can also compare a range of socially responsible super investment options side-by-side.

Sunsuper - Socially Conscious Balanced

5.54%

3 Year Performance*

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Sunsuper - Socially Conscious Balanced

This pre-mixed ethical super option excludes investment in companies with a material exposure to the production of tobacco, weapons, alcohol and pornography as well as the provision of gambling or live animal exports.

• Certified by the Responsible Investments Association Australia
• Manage your super online or with the Sunsuper app
• Enjoy member benefits and discounts via Sunsuper's Dream Rewards program

*To June 2020, according to Sunsuper. Investment returns are not guaranteed. Past performance is not a reliable indicator of future returns.

Some ethical super investment options

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Name	Product	Past Performance - 1 Year	Past Performance - 3 Years	Performance - 5 Years	Calculated fees p.a. on $50,000 balance
Sunsuper - Socially Conscious Balanced		0.19%	5.54%	5.97%	$528	Certified by the Responsible Investment Association Australasia. The Sunsuper Socially Conscious Balanced option avoids investment in companies that have significant exposure (more than 5% of revenue) to alcohol, tobacco, gambling, pornography, coal and nuclear power manufacturing. Investment performance as of 30 June 2020.	Go to site More Info	Compare	loading Fetching your data...
AustralianSuper - Socially Aware		-2.07%	4.83%	6.1%	$487	The AustralianSuper Socially Aware option doesn't invest in Australian or international companies that directly own coal and fossil fuel reserves, produce tobacco or those which have single-gender boards. Investment performance as of 30 June 2020.	Go to site More Info	Compare	loading Fetching your data...
Australian Ethical Super Balanced Green Company		2.77%	6.88%	6.88%	$622	Certified by the Responsible Investment Association Australasia. Australian Ethical seeks to invest in companies that have a positive impact on the planet, people and animals, such as renewable energy and healthcare while avoiding investments in coal, oil, tobacco and gambling.	Go to site More Info	Compare	loading Fetching your data...
HESTA - Sustainable Growth		2.66%	7.39%	8.61%	$720	HESTA Sustainable Growth is a pre-mixed, diversified investment option with a high to very high risk level. The investment managers take into account the social and environmental impact of the companies in which it invests, and excludes investment in tobacco, fossil fuels, uranium and weapon manufacturing. Investment performance as of 30 June 2020.	Go to site More Info	Compare	loading Fetching your data...
Future Super Renewables Plus Growth		9.24%	N/A		$958.60	Future Super is Australia's first 100% fossil fuel free super fund and is certified by the Responsible Investments Association Australia. The Renewables Plus Growth option has a 20% asset allocation in renewable energy projects.	More Info	Compare	loading Fetching your data...
LGIAsuper - Socially Responsible Balanced		-1.33%	4.1%	4.04%	$763	The LGIAsuper Socially Responsible Balanced option aims to invest in a mix of asset classes with a focus on growth assets, while taking into account the social impact of the companies in which it invests. Investment performance as of 30 June 2020.	More Info	Compare	loading Fetching your data...
Aware Super - Diversified Socially Responsible Investment		0.55%	5.47%	5.4%	$446	The Aware Super Diversified Socially Responsible Investment is a pre-mixed investment option that excludes companies operating in the tobacco, ammunition, gambling, alcohol, forest logging and pornography industries, as well as companies that attribute 20% or more of their revenue to coal, oil and gas.	More Info	Compare	loading Fetching your data...

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What is an ethical super fund?

An ethical super fund is one that invests its members' money in an ethical or socially responsible way. Ethical can mean different things to different people, depending on your personal values. But generally, ethical investing involves supporting companies and industries that are making a positive impact on our communities and on our environment, while actively excluding those that are making a negative impact.

Types of ethical super investment options

There's two types of ethical super funds. The first option is a super fund which only offers ethical investment options to members, like Australian Ethical Super.

The other option is a retail or industry super fund that offers one dedicated ethical investment option among several other investment options, for example AustralianSuper or Sunsuper. These funds will usually offer a MySuper balanced investment option as the default option to members, and a socially responsible or ethical option for members who want to select this instead.

How ethical super funds invest your money

An ethical super fund is one that chooses investment options based on a set of social, environmental and ethical criteria. If an investment does not satisfy these criteria, it will be excluded. This is known as a negative screen.

What don't ethical super funds invest in?

• Fossil fuel production
• Coal mining
• Tobacco and gambling
• Pornography
• Forest logging
• Companies that test products on animals

Some super funds that offer an ethical investment option also conduct what are known as positive screens. A positive screen involves actively searching for companies that are having a beneficial impact on society or the environment as a whole.

What do ethical super funds invest in?

• Renewable, clean energy projects like wind farms
• Recycling and waste management
• Companies that do not test on animals
• Clean, efficient transport (like electric cars)

Some ethical investment funds also conduct a "best of sector" approach. This involves looking at a particular sector, for example banking, and selecting the companies/s that best meet its ethical criteria. For example looking at all the banks, and instead of deciding that none meet the ethical criteria, investing in the one that is the closest fit. This way, you're still benefiting from the investment diversification and performance of that sector.

Popular superannuation ethical investment funds

An increasing number of Australian super funds offer ethical investment options to their members. Some of these include:

Some of these funds are 100% dedicated to a responsible investment approach, others only offer individual investment options that meet ethical investing criteria. With this in mind, it’s important to research super funds and individual products to get a better idea of whether or not they match your values.

What are the fees like for ethical super funds?

Fees vary between funds, so it pays to do some research and compare the fee structures of different ethical super funds with ordinary retail and industry super funds. Ethical super funds do tend to charge slightly higher fees than some default MySuper funds offered by retail and industry funds. This is because of the comprehensive research that goes into each investment chosen by a responsible or ethical fund. However, you may find that actively-managed retail funds charge higher fees than some ethical super funds.

Fees are only one part of the picture when determining the value for money offered by a super fund. You also need to consider the impact your money will have on the industries you're invested in, the long-term performance of the fund, the insurance options and other member benefits.

Finally, a relatively new ethical super fund may charge higher fees than one that has been established for a longer period of time. This is because an increase in the number of members may allow a fund to lower its investment fees.

Pros and cons of joining an ethical super fund

Pros

• You can invest your money in line with your values
• Know that your super isn't supporting industries you don't agree with
• You don't need to sacrifice investment returns to invest ethically
• There are more and more ethical investments becoming available, giving consumers lots of choice

Cons

• You might need to sacrifice some investment opportunities
• Excluding certain industries means your investment portfolio could be less diversified
• Less choice between super funds, as not all super funds offer an ethical investment option

How do I choose an ethical super fund?

There are several factors you should consider before choosing an ethical super fund, including:

• Accreditation. The Responsible Investment Association of Australasia (RIAA) offers a Responsible Investment Certification to certain funds that meet its criteria. Some fund that have received this accreditation are Australian Ethical, UniSuper, Aware Super, Future Super and SunSuper.
• Performance. While past performance does not indicate future performance, it’s worthwhile examining a super fund’s investment performance to see the returns it has generated over the long term (for example 5-10 years).
• The companies it invests in. Take a closer look at the individual companies the fund will invest your money in. You'll find this information on the fund's website, or by contacting the fund directly. Are there any there that do not align with your values and beliefs?
• Screening process. How rigorously does the super fund screen companies it considers for investment? Does it use negative screening, positive screening and/or a best of sector approach?
• Misleading claims. Keep an eye out for funds that make misleading or exaggerated claims about their ethical status in their marketing materials. For example, even if a fund claims it is “green” it may still invest your money in an industry you may not want to support, for example arms production.
• Fees. The cost of investing will always be a factor worth considering. Compare the fees charged by different funds but remember to consider these in line with each fund’s overall performance.

How to join an ethical super fund

If your current super fund offers an ethical investment option, you can simply switch to this option within your online portal or mobile app. You can do this at any time. If you'd like to switch from your current super fund to a different fund, you can change super funds in four steps.

Ethical super funds

Have you decided an ethical super fund isn't what you're after? Maybe one of our best super funds picks will be right for you instead.