Quantum was one of the early investments for Australian Ethical. It was a prime example of putting the ethical charter into practice – not only was the company successful, but the investment directly benefitted many thousands of children and adults who were blind, had low vision or a learning disability.
In August this year Australian Ethical celebrated its 25 year anniversary – an amazing achievement for a niche investment company. It has been a long journey for those behind the fund to grow it from an idealistic concept to a vehicle with more than $600 million in funds under management.
In 1985 a group of committed environmental entrepreneurs came up with the concept of creating a fund that would base its investments on ethical principles. The group raised capital among friends and associates and about 50 people invested between $2000 and $50,000 each.
The group used permaculture ideas to set up a system for investing money – they wanted to know what their money was doing so they could use the returns from one ethically sound business to sustain other projects.
By 1987 a private investment trust was created with an investment philosophy based on the ethical charter still in use today. Reflecting on those early years, former director James Thier said it was hard going.
‘The fund first operated out of an office in Broadway in Sydney. We had initial inflow projections that we would receive $10 million of investment in the first six months but it ended up taking six years to get to that level.
‘Although the fund’s investments were sound, the operating costs were onerous. We almost went out of business in 1991. There were a lot of people who loved the company but who didn’t have the abilities or knowledge to run it as an investment company.’
The board was revamped in 1991 and the headquarters moved to Canberra. Capital was raised twice and by 1994 the company was on a sound footing with funds under management escalating.
Considering the low starting base, growth has been exponential. In 1987 funds under management were $500,000. By 1989, this had grown to over $2 million. The figure is now almost $700 million.
Thier says Australian Ethical is still one of the few companies dedicated to sustainability issues for retail investors in both managed funds and superannuation.
‘Its deep green credentials make it unique. Australian Ethical has always been about the values premise, but it is equally about the business case.
‘Most other funds which now label themselves socially responsible or sustainable are spun off from a parent fund from a mainstream institution. Most funds still only invest in large listed companies but we invest in smaller companies as well, internationally and locally. We also invest in some unlisted private companies and property.’
The aim of Australian Ethical was also to influence investment thinking and practices of mainstream companies. This could range from active engagement with company directors through to an actual divestment in a company based on their unethical practices. A recent example of this approach has been the creation of the Climate Advocacy Fund, where Australian Ethical constructively engages with listed Australian companies to improve corporate behaviour, financial performance and sustainability.
Thier says Australian Ethical has never been one to shy away from engagement to influence change for the better of society and the environment.
‘Initially, people used to tell us that government should be responsible for influencing the ethics of companies. We think people are meant to do it. As anthropologist Margaret Mead said: Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it’s the only thing that ever has.’
For more information, see our chronological history of Australian Ethical.