Invest
Why green is good for savvy investors
Focusing on environmental, social, and governance factors (ESG) can provide investors with strong gains in the current market, according to a CEO.
Why green is good for savvy investors
Focusing on environmental, social, and governance factors (ESG) can provide investors with strong gains in the current market, according to a CEO.
In a conversation with nestegg, CEO and founder of Future Super, Simon Sheikh, has explained why investing ethically will provide more green arrows for investors’ portfolios.
How are ethical investments performing in the market?
According to Mr Sheikh, ethical funds are outperforming the rest of the market due to the avoidance of risks that have been acting as a drag on other fund managers.
“If you take a step back and look at why ethical funds are doing well - you find two sources when you do the attribution analysis,” Mr Sheikh said.
“The first, is [that] ethical investment funds have been delivering similar or better returns with less risk and that’s a function of removing the exposure to the commodity cycle. By simply reducing your exposure to the commodity sector, you are going to reduce the volatility and therefore the risk associated with generating those returns,” he said.
In part, Mr Sheikh said it is a sector that’s emerged from an ethical investment screen.
The second aspect, according to the CEO is that more ethical investments avoid “controversial companies that can be whacked by the share market when their ethical concerns become mainstream concerns”.
“We saw that for example in the aged care sector when the royal commission process kicked off,” he continued.
What is driving the change?
The Future Super CEO said he believed it's a push from fund members wanting to invest in a renewable world that is causing funds to think more ESG-aligned, rather than institutions pushing investors in that direction.
“Our members want stable, long-term returns underpinned by knowing their money isn't just out of vice industries, but that it is actively being put to work to build a clean energy future,” he said.
Mainstream sector follows suit
Mr Sheikh has observed that the mainstream superannuation funds are beginning to pour money into the ethical sector as investing ethically continues to gain strong returns for members.
Calling it “positive news”, the CEO said large Australian superannuation funds are taking ethical investment more seriously than they ever had before.
“We are seeing more of a focus on climate change [and] tighter screens,” he continued.
Most importantly, for the CEO, “ we are seeing more transparency”.
Superannuation to fund green projects
Mr Sheikh believes members who have seen the impact of their investments first hand would be more than willing to use their capital for future good for just a fraction of the total money invested by superannuation funds.
He cited University of Technology Sydney research that showed just 7.7 per cent of Australian retirement savings could fully fund an Australia-wide transition to a 100 per cent renewable powered energy sector by 2030.
Despite evidence of stronger returns, nestegg has shown that Australians aged between 53 to 72 are the most likely to regard social factors as irrelevant or only a minor consideration of their investing behaviour.
RELATED ARTICLES
About the author
About the author
Property
First‑home buyers now anchor Australia’s mortgage growth — but the risk maths is changing
Great Southern Bank’s revelation that nearly one in three of its new mortgages went to first‑home buyers is not an outlier. It is the leading edge of a broader market realignment powered by government ...Read more
Property
Home guarantee scheme shake-up challenges Australia’s housing market players
From 1 October 2025, the expanded Home Guarantee Scheme (HGS) materially widens what first-home buyers can purchase and where. By sharply lifting price caps and relaxing eligibility settings, the ...Read more
Property
GSB’s first‑home buyer play: turning policy tailwinds into market share
Great Southern Bank’s latest results show that nearly one in three of its new mortgages now go to first‑home buyers—evidence of a fast‑moving market reshaped by government guarantees, easing rates and ...Read more
Property
Why investors are fleeing and renters are scrambling in Australia's housing maze
Australia’s rental market is tightening even as individual landlords sell down. New data points to a multi‑year investor retreat tied to higher holding costs and regulatory uncertainty, while prices ...Read more
Property
Australia's 5% deposit guarantee: Unlocking gains while balancing risks in the market share race
Can a bigger government guarantee fix housing access without fuelling prices? Australia is about to find out. The Albanese government’s expanded 5% deposit pathway aims to help 70,000 buyers, remove ...Read more
Property
Australia's bold move the 5% deposit scheme shaking up the housing market
Can a government guarantee replace lenders mortgage insurance without inflating prices or risk? Canberra’s accelerated 5% deposit scheme is a bold demand-side nudge in a supply‑constrained marketRead more
Property
When rates drop but stress sticks: exploring Australia's mortgage arrears dilemma
Headline numbers suggest arrears ease as rates come down. The reality in Australia is messier: broad measures dipped into mid‑2025, yet severe delinquencies and non‑bank portfolios remain under ...Read more
Property
Property advice goes rogue as risks and opportunities knock on every door
A warning from the Property Investors Council of Australia has put a spotlight on the surge of unlicensed financial advice around property strategies. This is no niche compliance issue—it’s a ...Read more
Property
First‑home buyers now anchor Australia’s mortgage growth — but the risk maths is changing
Great Southern Bank’s revelation that nearly one in three of its new mortgages went to first‑home buyers is not an outlier. It is the leading edge of a broader market realignment powered by government ...Read more
Property
Home guarantee scheme shake-up challenges Australia’s housing market players
From 1 October 2025, the expanded Home Guarantee Scheme (HGS) materially widens what first-home buyers can purchase and where. By sharply lifting price caps and relaxing eligibility settings, the ...Read more
Property
GSB’s first‑home buyer play: turning policy tailwinds into market share
Great Southern Bank’s latest results show that nearly one in three of its new mortgages now go to first‑home buyers—evidence of a fast‑moving market reshaped by government guarantees, easing rates and ...Read more
Property
Why investors are fleeing and renters are scrambling in Australia's housing maze
Australia’s rental market is tightening even as individual landlords sell down. New data points to a multi‑year investor retreat tied to higher holding costs and regulatory uncertainty, while prices ...Read more
Property
Australia's 5% deposit guarantee: Unlocking gains while balancing risks in the market share race
Can a bigger government guarantee fix housing access without fuelling prices? Australia is about to find out. The Albanese government’s expanded 5% deposit pathway aims to help 70,000 buyers, remove ...Read more
Property
Australia's bold move the 5% deposit scheme shaking up the housing market
Can a government guarantee replace lenders mortgage insurance without inflating prices or risk? Canberra’s accelerated 5% deposit scheme is a bold demand-side nudge in a supply‑constrained marketRead more
Property
When rates drop but stress sticks: exploring Australia's mortgage arrears dilemma
Headline numbers suggest arrears ease as rates come down. The reality in Australia is messier: broad measures dipped into mid‑2025, yet severe delinquencies and non‑bank portfolios remain under ...Read more
Property
Property advice goes rogue as risks and opportunities knock on every door
A warning from the Property Investors Council of Australia has put a spotlight on the surge of unlicensed financial advice around property strategies. This is no niche compliance issue—it’s a ...Read more
