ACA warning on ethical funds

The Australian Consumers' Association says that so-called ethical and socially responsible investment funds may not be quite what they claim to be and that investors should look at them carefully before handing over their money. A common belief amongst investors is that ethical funds only invest in “clean, green and sustainable industries” but in fact they mainly invest in Australia's top 200 listed companies, the ACA says.

While some funds have more stringent criteria than others when it comes to ethical and environmental issues, others select companies from all industry sectors. This can lead to ethical compromises such as investments in tobacco and alcohol companies. Out of Australia's total superannuation pool of over $500 billion about $2 billion is invested in ethical funds.