6 ways to have a positive impact with your money

6 ways to have a positive impact with your money

By Lucy Jones  September 13th, 2021

Simple actions you can take to align your finances with your personal values.

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The pandemic has seen a surge in trading on the stock market, with more young people that ever before turning to investment to generate savings. This new generation of investors is also driving ethical and sustainable investment trends across the globe. In Australasia, sustainable investing grew by 25 per cent between 2018 and 2020 and a recent report from Responsible Investment Association Australasia (RIAA) found 69 per cent of millennials consider social issues when investing.  

Values-based investing takes many forms — socially responsible investing (SRI), environmental, social and governance (ESG) investing, ethical investing and impact investing. In addition to these investment strategies, there are simple steps you can take to ensure your money is having a positive impact such as switching banks or energy providers.   

Below, we outline six ways to align your finances and personal values. For more in-depth information on this topic, watch our recent session on the role of regenerative finance in a circular economy with Darren Dawson from Bank Australia. 

1. Reconsider where you bank   

This might seem basic, but research shows many young Australians still use the same bank as their parents. A 2019 survey by Credit Union Australia found 50 per cent of Australians between the ages of 18 and 24 opt for the same bank as their mum and dad. This helps explain the continued dominance of the ‘big four’ banks — ANZ, Westpac, CommBank and NAB — which hold more than 80 per cent of loans from mortgage borrowers in Australia.   

What is your bank doing with your money? It might seem simple, but when considering the ethics of the institution you give your cash to it should be the first question you ask. Lack of transparency can make it difficult to find an answer, but there are online resources that show what industries banks invest in. Market analysis released in 2019 revealed that, despite making public climate commitments, the big four Australian banks loaned $7 billion to 33 new or expansionary fossil fuel projects between 2016 and 2019.  

You have a few options as a consumer in terms of how to approach this. Firstly, you could send a strong message to the big banks by taking your money elsewhere. There are several Australian banks that do not invest in destructive industries like fossil fuels and gambling, and even some that only invest in projects that have a positive environmental and social impact, such as Bank Australia.   

However, for some people (such as those with existing mortgages), it may not be viable to switch banks right now. But that doesn’t mean you can’t act. Sometimes change must come from within the system and as a customer you do have the power to lobby against your bank’s investments. Due to shifts in the market and increasing social pressure, Australia’s big four banks recently announced they would stop financing thermal coal projects.  

A good starting point when searching for a new bank is deciding which industries you personally support and looking for a bank with an investment portfolio that matches. As a first step, you might want to rule out any banks that fund fossil fuels using this tool. When searching for an ethical bank, you can also check if they are a B Corporation or a member of the Global Alliance for Banking on Values — an international network of banks committed to sustainable social, environmental and economic development.   

2. Switch to an ethical super fund  

Another way to have a positive impact in your money is switching to an ethical super fund. Again, start by doing some research into your current fund’s investments and seeking out ethical alternatives. The Responsible Investment Association Australasia (RIAA) website has fact sheets and guides to help you learn the basics of responsible investing. They have also published a research paper on the Australian super funds engaging in this practice. The RIAA run website Responsible Returns allows you to search for super or other investment products based on your vales.

Once you’ve compiled a short-list of super funds you’re interested in, head to their websites to read more about the specific projects they support. Look for a fund’s investment policy, charter or criteria to find specific information about their screening process and the impacts of their investments.  

Ethical super funds (and banks) generally conduct negative and positive screening processes. Negative screening identifies companies that don’t meet a fund’s environmental, social or governance standards and positive screening identifies companies that do. When you switch to these providers, you are guaranteed that your money will never go towards the industries that they screen out such as animal exports and fossil fuels. But you also know what kind of projects you are helping fund, whether that be renewable energy or disability services.  

You can also check for the B Corporation certification, which guarantees a high standard of social and environmental performance, transparency and legal accountability. 

3. Explore impact investing 

While there are many types of ethical and sustainable investing, impact investment is perhaps most closely aligned with the principles of a circular economy. Impact investing goes beyond screening out negative investments to actively invest in projects that have social and environmental benefits. This type of investment is part of a new regenerative finance paradigm which reconceptualises money as a force for positive systems change.   

Impact investment supports projects that generate measurable social, environmental or cultural outcomes alongside financial returns, from renewable energy to social housing. Impact investing finances both biological and social regeneration projects, with the underlying aim of improving equity and wellbeing.   

If you’re interested in impact investment as an individual or company, the first step is to learn more about the topic. The Impact Investing Australia website provides some useful definitions and guides as well as suggestions of advisors, funds and online networks you can connect with. For those who can’t afford professional financial advice, there are hundreds of finance podcasts providing education on ethical investment. You might also want to explore some of the short courses offered online through universities.  

4. Use sustainable investment platforms 

Once you are confident you know enough about investing to give it a go, the next step is to determine what platforms to use. This will also require some research into the robo-advisor platforms and micro-investment apps offering ethical investment opportunities.   

Robo-advisors are digital platforms that provide algorithm-generated investment services. A number of these platforms are dedicated to specific social or environmental causes, such as Ellevest, which aims to improve gender equality, or EarthFolio, which invests in funds with strong ESG (environment, social and governance) practices.   

Many micro-investment apps also come with the option of building ethical or sustainable investment portfolios. These apps allow you to invest small amounts of money over time, with minimum investments starting at $1.   

5. Switch energy providers  

One very direct way to divert money from fossil fuels is to switch to an energy provider that prioritises renewables like Powershop or Enova. Powershop Australia is a carbon-neutral energy provider owned by a 100 per cent renewable energy company that offsets all customer energy use. Social enterprise Enova is owned by over 1,600 community shareholders and generates renewable energy from customer rooftops. It is currently available in NSW and southeast Queensland. If switching providers isn’t an option for you right now, find out whether you can offset your energy use through your current provider. 

6. Use your purchasing power for good  

Last but definitely not least is using your purchasing power for good. Every time you shop for food, clothes or other goods is an opportunity to support local, ethical and sustainable businesses. This might mean buying your fruit and veg from a local market — giving money directly to producers and avoiding all the carbon miles and packaging associated with supermarket veg — or buying from a small company that uses recycled materials to make its products. As consumers we can vote with our dollar for the businesses that are creating the kind of world we want to live in.  

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Lucy Jones

Lucy started her career working as a writer and editor in print and digital publishing. She went on to create content for Australia's leading sustainable fashion platform while completing her Master of Cultural Studies. Lucy spends her downtime at the beach, crocheting and hanging out with her cat Larry. She believes words can change the world and is stoked to help Planet Ark spread the message of positive environmental change.

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