HomeFinanceHow to be more ethical with your money

How to be more ethical with your money

The pandemic is prompting people to consider more ethical places to keep their money, according to research.

Triodos Bank found over a fifth (22 per cent) of investors say they now feel motivated to explore investing in ethical funds, rising to 35 per cent of under-35s.

Investing is just one of the ways you can use your hard-earned money to support good causes, as well as the environment. There could be plenty of other options for giving your finances an ethical makeover – and it may not be as hard as you think to get started.

Charlene Cranny, who is a strong advocate for a more sustainable and regenerative economy and aims to help grow and raise awareness of responsible and ethical finance, says: “It’s easy to get bogged down with where to start when planning to give your finances a green overhaul, but there’s no need to be overwhelmed. There are so many easy ways to make greener, cleaner and kinder decisions with our money.

“People who are taking steps to reduce their personal impact on the environment might already be reusing coffee cups, bags and bottles, cycling rather than driving, but might not have even thought about where their money is being invested, spent and banked, which can have a huge impact on the environment.”

Here are 10 suggestions on how to give your finances an ethical overhaul.

1. Switch current account
Banks use the deposits in the accounts held with them to fund their other banking activities, from loans to investments. This means your money could be funding all sorts of projects that you don’t agree with.

Research by investor action group Market Forces shows Australia’s big banks invested $7 billion more in fossil fuels than renewables as recently as 2016.

Here are a couple of noteworthy banks, but do your own research to find the best place for your money.

Bank Australia has made responsible investing a core part of their business model and public image. They only lend to industries that advance social and environmental causes, meaning areas such as weapons, tobacco, fossil fuels and environmental deforestation are off-limits.

Teachers Mutual Bank has been recognised as one of the world’s most ethical companies by the Ethisphere Institute for eight years in a row.

It’s also the only Australian bank to receive Certification from the Responsible Investment Association of Australasia for all retail products deposits, mortgages and wholesale funding.

2. Change energy provider
The number of providers supplying renewable energy in Australia has increased in recent years. But what makes a green energy company?

Read more: It’s time for Australia to be more energy efficient

Look for providers offering green energy products such as GreenPower or carbon offsetting. Do some research into whether the company owns any renewable energy assists such as solar farms, wind farms, or hydroelectricity plants that contribute clean power to the grid.

Try to find out the company’s public position on renewable energy and its plans for the future.

The reality is that all retailers sell electricity from an energy grid made up of both clean and dirty energy, so even if you wanted to, you can’t opt in to only buy green energy. The best you can do is support one or more of the renewable energy initiatives that are available.

3. Shop local
We should all be shopping mindfully and avoiding wasteful purchasing, but when you do need to shop, try going local. Plus, when you shop at the local butcher’s, baker’s, farm shop and greengrocer, a good bulk of the produce has had a relatively short ‘field to fork’ journey. As well as supporting local farmers, this means the food could be wrapped in less single-use plastic packaging.

Read more: The ‘seismic shift’ in our shopping behaviour

4. Choose an ethical superannuation fund
Ethical super funds will invest your savings into ethically responsible companies that have good environmental, social and governance (ESG) standards and principles in place, including:

  • healthcare
  • renewable energy
  • sustainable products
  • social wellbeing
  • recycling
  • supporters of action on climate change.

5. Consider ethical investments
There is no single perfect way to do ethical investing as everyone’s values vary. For example, some people may feel strongly about avoiding fossil fuel-based companies in their portfolio but be unconcerned by having investments in the gambling industry. One person may want to ensure they aren’t shareholders in companies connected to child labour, while others are more focused on not supporting uranium mining.

6. Borrow rather than buy
Borrowing existing items, rather than buying new, is kinder to the planet. Some websites will also allow people to borrow items for a set period of time. And if you don’t want to borrow, there are also websites such as Freecycle, where you can get unwanted items free.

Read more: Common mistakes Aussies make with their super

7. Lend a small amount of money
If you are fortunate to be able to, you may want to consider lending a little money to someone in the developing world, who is trying to lift themselves out of poverty by running their own business. Lendwithcare.org allows people to lend relatively small sums to people and the money is later repaid. The website cautions though that due to the pandemic, there is a higher risk than normal that repayments will be late or deferred, and in some ‘rare cases’ loans may be written off.

8. Donate to foodbanks
If you are able, buying supplies for your local food bank can be a real help to people in need in your local area, or you could give monthly through their website.

How do you ensure you are using your money ethically? What’s the most important thing to you on this list?

– With PA

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Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.

YourLifeChoices Writers
YourLifeChoices Writershttp://www.yourlifechoices.com.au/
YourLifeChoices' team of writers specialise in content that helps Australian over-50s make better decisions about wealth, health, travel and life. It's all in the name. For 22 years, we've been helping older Australians live their best lives.
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