Crystal Wealth Newsroom

Responsible and ethical investment trends


Over the past few years, many people have become increasingly aware of the corporate social responsibility (CSR) and ethical behaviour of companies. Whether a company is seen to be doing the right or wrong thing – from its area of business and its supply chain to the way it treats its employees – can affect the level of engagement you have with that organisation.

The same principle applies to investment opportunities, with many of us choosing to only invest in companies that are going about their business in a way we perceive to be right or responsible.

Not only does it align with personal beliefs and attitudes, but it can also lead to strong returns.

This is a continually evolving area of the market, and as such it’s smart to keep up with the latest developments as businesses across the world see the benefits of becoming ‘responsible’ businesses.

“There’s been an increased emphasis on Board diversity,” says Crystal Wealth Partners Investment & Advice Manager Lisa De Franck. “There’s been a lot of scrutiny over Board composition and that of senior leadership teams too.

“Female appointments have increased fairly rapidly in Australia. In 2009, ASX200 Boards had 8.3 per cent female representation, and in February this year that figure was 32.9 per cent.”

Of course, diversity isn’t just about female representation – ethnicity, age, tenure and skill set all come into it too.

“We’re seeing a growing interest in Board makeup from multiple levels, and some of these factors are changing at a slower rate than female representation, certainly.”

Today, we have more data, studies and insights into Board composition and financial performance, and there are clear links between the two.

“Diverse Boards improve performance by helping companies adapt to change, and it’s important that new Board members are appointed on the basis of the skills they bring that complement what the existing members have, rather than their skills in isolation,” says Lisa.

Another element of diversity that’s worth considering when looking at responsible companies to invest in is their approach to biodiversity, which Lisa says has really risen in prominence over the past 12 months.

“COVID-19 has really highlighted this – we’ve been working from home, the skies are clear, fewer cars are being driven around, and it’s really brought home the impact we’re having on the environment.

“A quarter of existing plant and animal species face extinction, and continued losses are going to have a devastating impact on humanity, and there’s going to be an economic impact too.

“There’s a UN biodiversity conference in Kunming, China, later this year to build a path to tackle the biodiversity challenge, and this will have an impact on investors. It’ll affect mining and energy companies, and particularly the food industry, given fresh-food producers are so reliant on healthy soil, crop diversity, pollinators, fresh water and climate stability.”

From an investment point of view, it’s important that companies aren’t undertaking practises that put themselves at financial risk. And with increasing scrutiny on supply chains and their ability to negatively affect any commitment companies may have made to achieve certain targets, the outcome of the Kunming conference is certainly one to keep a watching brief on.

Interested in learning more about Crystal Wealth Partners’ Responsible Investment portfolios? Click here or call 02 8599 1790.

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