Corporate giving and profit with a purpose

For-profit businesses like Australian Ethical can play an important role in the charitable sector by supporting positive grassroots change. We explain how corporate giving can become part of a company’s culture.

Corporate giving is conspicuously absent from the ‘profit-at-all-costs’ business mentality, which is doing untold damage to the planet and society. It’s pretty clear that the high rates of economic growth we’ve seen in the past are not sustainable. Audrey Choi from Morgan Stanley’s institute of sustainable investing sums up the problem this way:

“By 2050, more than nine billion people will inhabit the planet. The demand for food, energy and water will increase dramatically along with the population. It is easy to say we hope government or philanthropy will figure out a way to help, but private capital can and must play a role in addressing these very large global challenges.”

Global problems like climate change need a collective solution immediately, but world leaders continue to drag their feet. As Audrey says, charities, not-for-profits and governments around the world are working hard to address these issues but ultimately it is up to private capital to fill the gap.

The power of money to do good

Our business operates based on the Australia Ethical Charter which has been in place for over 30 years. As part of our charter all of our investments must fulfil two criteria: they must avoid doing harm, and they must have a positive impact on the planet, people and animals.

The corporate sector needs a new business model that balances purpose with profits if we are going to save the planet. We do this in a number of ways:

  • We deliver investment portfolios for our members that create strong positive impact.
  • We advocate with governments and regulators on issues for positive change.
  • We recognise the important role the not-for-profit space plays in closing the gap.

Ethical investing can help address some of the world’s biggest challenges by avoiding companies causing harm and investing in more sustainable solutions. One of the ways we measure our impact is through the UN’s 17 Sustainable Development Goals, which include climate action, reducing inequality, and responsible consumption and production. Our 2018 Sustainability Report shows that Australian Ethical’s investment portfolio has 3.4 times more sustainable impact than the broader market.

Making corporate giving normal

Australian Ethical directs 10% of its profits (after tax, before bonuses and grant expenses) into the Australian Ethical Foundation, which supports charitable organisations and social impact initiatives. This is one of the highest ratios of corporate giving in Australia and something we are immensely proud of. The Foundation has now given away more than $3 million to not-for-profits that are working to benefit the planet, people and animals. Our Foundation Officer Nick Chadwick puts it this way:

“The Australian Ethical Foundation works with not-for-profit organisations to create systemic and grassroots change. We want to help create communities in Australia and overseas that can transform the planet for the better.”

In September 2018 we granted $620,000 to 26 charities including the Mirima Language Nest in the East Kimberley which is working to preserve Indigenous language and culture. Other recipients included WOTCH, which is protecting native species and temperate forests in Victoria, and NSW-based animal rescue sanctuary Where Pigs Fly. Our Foundation’s grants have tangible impacts on society. As a result of our financial support we’ve contributed to 743 Cambodian girls being protected from sex trafficking, communities and councils being mobilised to protect the Great Australian Bight from oil drilling, and 38,000 hectares of rainforest and 1,600 orangutans being protected in Indonesia.

As our business growth has generated more funding for the Foundation we have developed a more strategic approach to creating social and environmental impact. As such, our Foundation is now working with some not-for-profits on multi-year partnerships to increase our philanthropic support in areas of significant importance. Here are a few examples:

  • Human Rights Watch is an independent, international organisation that works as part of a vibrant movement to advance the cause of human rights for all. We will support Human Rights Watch to explore and expose human rights abuses in supply chains throughout the developing world. Investigative research and an advocacy campaign will seek to improve the conditions and rights for young women.
  • The Wilderness Society is securing better laws for ecosystems that sustain us, and protections for Australia’s wild places. We will support the Wilderness Society to strengthen, build capacity and empower communities across Australia to help protect key areas of forest.
  • Food Frontier works to create a healthy, humane and sustainable food supply in Australia, New Zealand and the broader Asia Pacific Region. They are focused on developing demand for, encouraging supply and advocating consumption of plant-based and ‘clean’ meats. We will support Food Frontier to develop the ecosystem for meat alternatives in Australia by fostering research, innovation, investment readiness and market development.

The time to debate whether business has a social purpose has passed. Business and private capital can and should be used as a force for protecting our planet and shaping our future.

Read more:

Our response to the banking Royal Commission final report

Why do we invest in banks?

Australia needs to kick its pokies addiction

The portfolio benefits of ethical funds

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