Super funds use many different labels — ethical, sustainable, responsible, ESG — and they don’t all mean the same thing. That can make it difficult to quickly work out whether a fund truly aligns with your values.

Some approaches sound positive but may not deliver what you expect. For example, applying an ESG (environmental, social and governance) filter is often about identifying financial risk, not whether a company’s activities align with your ethics. This means ethical or ESG‑labelled portfolios can still include companies you personally wouldn’t support.

It helps to think about ethical investing along a spectrum, where ethical considerations move from being a secondary input to a clearly defined driver for investment decisions.

The Responsible Investment Association Australasia (RIAA) describes this as a progression – starting with ESG integration, where ESG factors are considered as part of investment decisions, and moving through ethical and responsible investing. These approaches - sometimes used interchangeably with sustainable investing – involve investors actively seek to avoid harm and support companies that outperform their peers on key sustainability or ethical metrics, typically through a combination of negative and positive screening.

Further along, the RIAA spectrum also describes, approaches that take a more deliberate role – focusing on specific themes and engaging with companies to encourage positive change. At the very end of the spectrum is impact investing, where investments are made specifically to create measurable positive outcomes alongside financial returns.

To add to the complexity, ethics differ from person to person, and between organisations — so what feels ethical to you may not match the definitions used by a fund.

Super funds usually design investment options around risk and return — not values – and those choices are often framed around different investment objectives and time horizons. So you’ll often see choices like “growth”, “balanced”, or “conservative”, with only a small number of options labelled ethical or sustainable.

Very few funds start with ethics first. Australian Ethical is one of the exceptions:

• We only invest ethically.
• Every investment option is built on the same ethical foundation.
• You can choose the risk level that suits your stage of life, objectives and time horizon — without compromising your values.

Since 2022, all super funds must publish twice‑yearly portfolio holdings so you can see exactly where your money is invested. But these lists can be overwhelming if you’re not a finance expert.

Helpful ways to dig deeper:

• Look at how a fund defines its approach to ethical, sustainable or responsible investing.

• Check if they explain how they make decisions, not just the labels they use.

• Look for clear, publicly available information on what they invest in and why.

Labels like ethical, sustainable or responsible investing and ESG integration can mean very different things in practice — so here’s what ethical investing means to us.

1. Ethics first

We don’t rely on labels alone.

Every potential investment is assessed against our Ethical Charter and Ethical Criteria before our investment team begins any financial analysis. This determines whether a company is suitable for our portfolios.

2. A clear view of positive and negative impacts

We look at:

• What a company does
• How it operates
• The impact of its products and practices on people, animals and the environment

Only companies with stronger positive contributions than negative impacts make it through.

3. A different investment universe

Our ethics‑first process means we:

• Restrict⁺ in weapons manufacturers, tobacco or alcohol companies
• Have less exposure to carbon‑intensive industries
• Have more exposure to long‑term solution sectors like renewables, healthcare and technology

4. Ongoing stewardship

Our responsibility doesn’t end when we invest.

We actively engage with companies to encourage better practices — using the collective voice of our members to drive improvement over time. If a company becomes misaligned with our ethical expectations, divestment remains an option.

Being intentional about where money is invested helps shape the world we live in.

Our approach aims to:

• Support positive environmental and social outcomes
• Reduce investment in harmful activities
• Encourage businesses to continuously improve through active engagement and accountability

You can choose an investment option for your financial circumstances and objectives and know that your money is invested for a better world.