Dianne Charman

The climate change debate has made it to the top of the news agenda, with many Australians now considering what they can do to help the environment. For some, this will include making changes to their finances in line with their environmental values.

AMP financial adviser Di Charman said: “Every little bit counts and for those wanting to take action on the environment, money is a powerful language that can be a force for good.

“Whether it’s through super, investments or savings, more and more people are reviewing their financial arrangements to ensure their funds are put to work in a way that does no harm, and ideally leaves the world in a better place.

“Responsible investment is a process that takes into account environmental, social and governance (ESG) factors into the investment process of research, analysis, selection and monitoring of investments.

“It has become a major part of the investment landscape across Australia. More than half of all investments in Australia are now being invested responsibly and ethically according to the Responsible Investment Association of Australia (RIAA).”

To help those Australians who want their finances to be environmentally friendly, here are some top tips from AMP:

1. Understand what matters to you – Everyone’s values are different so you need to first work out what’s most important to you. Do you feel strongly about not investing in fossil fuels? Are you interested in discovering cutting-edge solutions for climate change or is improving energy efficiency a greater priority for you? How will these preferences impact your investment performance?

From here you can identify the areas where you don’t want to invest or, conversely, where you’d rather put your money to make a positive impact.

2. Do your research and get to know the ESG principles – While the E in ESG may be your number-one concern, you may want to take into account a broader set of criteria when making decisions about your money and get to know what the S and the G stand for.

Each investment manager has its own investment policy when it comes to ESG investing. For instance, some may apply a “negative screening” or “exclusion” policy, meaning that they steer clear of certain sectors (e.g. fossil fuels). Be mindful of exclusion policies as they may lead to increased volatility in your portfolio. A chat with an advisor on the implications of this approach is recommended.

Climate change investing tends to be a form of positive screening. In other words actively choosing to invest in companies that are making a difference (e.g. renewable energy).

RIAA is a good resource to use when you’re starting on this journey as it details the investment strategies of ethical and sustainable funds. Many super funds or investment managers also now have information about sustainability and ESG on their websites.

Look to see if they have signed the United Nations backed Principles of Responsible Investing and whether they have published their scorecard.

3. Start with super – Do you know where your super is invested? Does it offer a Socially Responsible Investment (SRI) option? Make sure you read all the information provided by your super fund about the particular sectors, businesses and/or investment activities which are considered for investment.

It’s worthwhile knowing that some people believe many SRI options don’t go far enough. Again, it pays to know what matters most to you and then you can find an option that aligns with your values.

4. Don’t forget the eggs rule – One of the key principles of good investing is diversification – not putting all your eggs in one basket. Diversification is key to any investment strategy. It spreads risks and ensures you are not exposed to any single investment or asset class. So consider the risks of crafting a portfolio that’s too narrow and concentrated. Climate-themed funds also haven’t been around for a long time, with many having only launched several years ago. This makes their performance hard to assess.

5. Ask for help – Being a more responsible investor involves a lot of research and working out exactly how far you want your investment decisions to reflect your sustainable and ethical concerns and can be a minefield (pun intended). For example, you might not want to invest in coal companies, metallurgical coal miners and mining companies, but what about transport companies that freight coal, coal seam gas, oil and conventional gas, electricity generators, or diversified energy generators that may have large investments in renewables as well as coal?
If you need assistance finding out what you’re invested in or how to access more responsible investment options, you can talk to a financial adviser.

The post AMP’s top tips for green investing and beyond appeared first on AdviserVoice.

Bianca Hartge-Hazelman

The economic progress of Australian women marched higher over the past 12 months, helped by wages growth, more women in full-time work and occupying top company board positions.

The Financy Women’s Index, supported by Data Digger, gained 1.4 points or 1.1% to 126 points in the three months to September, from a revised 124.6 points in June 2018.

The Financy Women’s Index, supported by Data Digger, gained 1.4 points or 1.1% to 126 points in the three months to September, from a revised 124.6 points in June 2018.

But when compared to the Financy Women’s Index (FWX) Progress Target of 173.3 points, the September result falls short by 37.5%.

“The FWX Progress Target is a new aspirational guide on economic equality which could be here in the next decade if women’s progress is maintained and uninterrupted,” said Financy Women’s Index founder Bianca Hartge-Hazelman.

Nicki Hutley partner Deloitte Access Economics said that it was “both remarkable and unexpected that economic gender equality is within our grasp.”

“There are still many barriers and examples of outdated attitudes. To ensure greater equality is reached as soon as possible, we must be vigilant. And governors and organisations need to continue to develop and support programs for diversity and inclusion,” said Ms Hutley.

Key findings of the September Women’s index:

• The Financy Women’s Index edged 1.4 points or 1.1% higher to 126 points in the September quarter.
• Record full-time employment, more women on ASX 200 boards and a 20-year low in the gender pay gap assisted the progress score.
• Despite the gains, the latest result is 37.5% below the FWX Progress Target, and economic equality is still at least a decade away.

Among the key drivers of economic progress for the September quarter was an increase in female full-time employment to over 3.16 million and a 20-year low in the average wage disparity between men and women.

The expansion of the Women’s Index to include the ASX 200 with the help of the Australian Institution of Company Directors (AICD) positively affected progress. Women now occupy 28.5% of ASX 200 board positions.

OneVue Managing Director Connie McKeage said “we need to continue to discuss important issues like inclusion and gender balance around board room tables and management, however we also need to increase the activity around these matters.

“We need sustainable change and Financy’s Women’s Index is one of the levers we can rely on to provide facts to support our calls to action. Every step forward we take as organisations that care, no matter how small those steps may seem at the time, can contribute to creating a better more balanced future.”

There are also signs that the superannuation gap between men and women may be closing, although in absolute terms the gap is still very substantial.

The country’s biggest super fund, AustralianSuper reported that the gap between the life time retirement savings of men and women fell to 28% at the end of the 2018 financial year, from 30% in 2017.

AMP Financial Planning adviser Di Charman said the recent legislative change allowing people to “carry forward” their unused concessional contribution caps for up to five years was a positive measure for women.

“It will give women the opportunity to top up their super in years where they have more income and will help bridge the retirement gap,” said Ms Charman.

She added women should also remember that they can make additional after tax contributions to their super and claim them as a tax deduction.

“The key for women is to engage with their super and now is perfect timing with end of financial year statements being issued to fund members,” she said.

Education data suggests that wages and graduate salaries could be having an impact on the types of courses that women study beyond high school.

Female engineering graduates are earning more than male graduates, and are enrolling in this field at more than three-times the pace of more traditional female-dominated courses like Education.

Despite this, the average female graduate is still paid less than male graduates across all course areas.

Meanwhile Mining and Information Media and Telecommunications, which are among the highest paying sectors, stood out as having links to the fastest growing education pathways for women.

Improved wages and job outcomes helped the national gender pay gap fall to 14.6% in May, as reported in the September quarter, down from 15.2% in November 2017.

Health Care and Social Assistance recorded the biggest gender pay gap increase of any sector, up 9.6% to 25% in May compared to 22.8% in November.

Download the full report: Financy Women’s Index – September 2018

The post Women’s Index improves but falls 37.5% short of new economic progress target appeared first on AdviserVoice.