Socially responsible investing - what it really means

What is socially responsible investment, and are environmental and social issues important to you when investing? QSuper, National Seniors’ preferred superannuation partner, helps explain.

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There are many terms and descriptions associated with investment strategies that are labelled as socially responsible.

Because it is a strategy, socially responsible investing does not necessarily mean investing only in products or businesses that work in the environmental, sustainability or social fields.

Rather, key to QSuper’s socially responsible investment approach is considering the impacts of an investment as well as the financial performance.

Most companies and investments have negative and positive impacts on people and the planet.

According to the Responsible Investment Association Australasia (RIAA), responsible investment is the belief that companies or assets won’t thrive while ignoring issues around the environment such as pollution, climate change and water resources, as well as social issues like local communities, employees, or health and safety.

There are numerous approaches to investing responsibly, including targeting positive impacts. This approach aims to measure and generate positive impacts of an investment and reduce the negative impacts.

What is the demand for socially responsible investing?

Globally, more than US$30.7 trillion of assets are being professionally managed under responsible investment strategies, according to the RIAA.

Australians share this interest in wanting savings and super to be ethically and responsibly invested. A survey on socially responsible investing attitudes of 1,135 Australians aged over 18 commissioned by the RIAA in February 2020, found 86% of Australians expected their savings and super to be invested responsibly and ethically.

Of the issues it found Australians cared about, more than two in three Australians did not want their investments to cause harm by environmental degradation, fossil fuels, or logging.

The research showed younger generations were prepared to back their concerns with their money - 73% of Gen Z respondents and 71% of Millennials (also known as Gen Y) said they would save and invest more if they knew that their money would make a positive difference. The study found this compared to 31% of Baby Boomers.

A survey of QSuper members* also found that members prefer a socially responsible investment philosophy oriented towards maximising positive impact, with the most important issue being a positive impact on the environment.

QSuper and socially responsible investing

QSuper has managed its Socially Responsible investment option since 1 July 2020, making changes to management of the option and the assets it invests in.

The QSuper Socially Responsible investment option seeks to contribute positively to the environmental and social challenges QSuper members have identified and prioritised.

The QSuper Socially Responsible investment option targets assets with positive environmental and social impacts, rather than just avoiding assets with negative impacts.

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Check out our superannuation page to learn more about the basics, as well as the ways you can boost your super and stay on track for your ideal retirement.

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Investing in large-scale renewable energy projects can help address climate change concerns, while also boosting older Australians' retirement income.

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*An online survey of 875 QSuper members carried out between 27 August and 9 September 2019.  The views expressed by the above-mentioned survey do not necessarily reflect the opinions of the QSuper Board. No responsibility is taken for the accuracy of any of the information supplied and you should seek advice for your circumstances.