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Ethical Investment Advisers 2022 Share Market Update

Long-term investment strategies sustain profitable growth into an uncertain future.Since the start of 2022, the Australian sharemarket has declined 6%,  this has impacted the performance of your investments.  The Australian sharemarket performance has been fundamentally unsustainable over the last 3-4 years, providing you with much higher than usual returns.  A market decline still provides a good medium term return and ensures that the market does not get so strong that an even more volatile correction occurs in markets.  We view this as a positive market adjustment and continue to believe that retaining your risk profile, maintaining perspective and staying invested, rather than timing markets, will ensure medium to longer term wealth accumulation.The rise of inflation affecting Global economies and share marketsAccording to Alan Polley, at Pendal GroupWe are now seeing the start of a new set of forces for the coming decade, which will conspire to put upwards pressure on prices.First among the changes is the unwinding of the rate of globalisation, says Polley.“Pretty much all the developed economies have been comfortable outsourcing their manufacturing to lower-cost countries like China.“But geopolitical and national security concerns mean the rate of outsourcing is going to diminish — or at least become less efficient.“World governments are starting to understand the risk as China starts to flex its muscle.“And increased income inequality in developed nations — resulting from a hollowed-out and unhappy middle class with zero real income growth — will need to be politically and practically addressed.“Onshoring manufacturing and finding alternative suppliers to China will drive a reduction in the rate of globalisation and thus the global supply of labour.”At the same time, the world move away from fossil fuels will impose new costs through the global economy, from the expense of building a new renewable energy system to an increasing carbon price on emitters.Government policies are another new driver of higher price pressures as the post-GFC austerity policies give way to a political willingness to run higher deficits and monetary policymakers allow inflation to run higher than previously.How to position investments for a rising inflation economy?Focus on real assets and a focus on value based stock market strategies rather than growth.A history of volatility and long-term gains

Sources: Ausiex S&P ASX All Ord Index 3 Year timelinePlease feel free to contact us if you wish to discuss your concerns.

Our Ethical SMA Impact Calculator

Ethical Advisers Funds Management a wholly owned subsidiary of Ethical Investment Advisers  provides access to investments which are actively making a positive contribution to a sustainable future.The Ethical SMA impact calculator illustrates the underlying positive impact companies in our Ethical Investment Managed Portfolios help create.For example the positive impact associated with A$100,000 invested in our Ethical Investment Mid-Cap Portfolio is illustrated below: 

Global business leaders see world at tipping point for climate action

According to a Deloitte 2022 Sustainability Report, 79% of Global business leaders that responded see the world at a tipping point for responding to climate change, compared to just 59% eight months ago. The survey also shows that executives unanimously feel tangible pressure to act on climate change, as 97% of respondents say that their companies have already been negatively impacted by climate related issues, with operations being the first affected.Despite the gravity of the moment, there is a sense of rising optimism among executives, as 88% of respondents currently (compared to 63% eight months ago) agreed that with immediate action, the world can limit the worst impacts of climate change to the planet and move towards an improved future.  Companies are taking actions when it comes to tackling climate change impact, the report points out, as executives say that their organizations are using more sustainable materials, increasing the efficiency of energy use, training employees on their climate actions and impact, adopting energy-efficient or climate-friendly machinery, technologies and equipment and intentionally reducing air travel.The survey revealed a group of leaders (19% of the respondents) whose organizations are in an advanced stage of the climate journey, as they implemented a deeper understanding of the business benefits of sustainability.Deloitte study

The Arctic Treeline is on the move

The Arctic Treeline is the shifting region of forest that encircles the globe in an almost unbroken green ring. It is the second largest biome on our planet and is – quite literally – on the frontline of global warming.
The treelineis on the move, moving north. Most treelines are temperature limited and warmer climate expands the area in which trees are capable of growing. Hence, climate change has been assumed to be the main driver behind this treeline movement.
The six trees that characterise this little-known region (Larch, Spruce, Mountain Ash, Downy Birch, Poplar and Scots Pine) form the protagonists of Ben Rawlence’s story. He travels to Scotland, northern Scandinavia, Siberia, Canada, Alaska and Greenland to discover what these trees and the people who live and work with them have to tell us about the future of our planet.How the species in this zone respond to warming will shape the ability of the boreal forest to produce the fresh air and fresh water that sustains life on earth.The Treeline offers insights into the nature of our changing climate over the coming decades and a stark vision of the future.You can purchase this book through this website 

Tackling biodiversity loss and responsible investment

Over half of the world’s GDP is generated by industries that are either highly or moderately dependent on nature and its services.The World Economic Forum’s Global Risks Report this year ranks two nature risks:

biodiversity loss and ecosystem collapse – as among the top five economic risks for this decade.Most recently, Covid-19 has demonstrated that the fate of our health, communities and economies are inextricably linked to nature, and that reducing biodiversity risks creating conditions in which a pandemic can emerge.Biodiversity is of course fundamental to human life on earth and is being destroyed at an unprecedented rate. Until 1970, humanity’s impact upon biodiversity was smaller than the Earth’s rate of regeneration. As WWF’s latest Living Planet Report makes clear, society’s current rate of consumption means that Earth’s biological resources are being overused by at least 56%.The financial sector is tied to nature in two ways: by financing companies that depend on nature for the production of their goods and services; and by financing companies that impact nature positively (eg regenerative agriculture) and negatively (eg overexploitation of resources).As a result, the finance sector is ramping up its work to better understand this intersection of nature and the economy, but also to influence companies and government to strengthen the protection of our natural environment.As international developments gather momentum, The Australian Council of Superannuation Investors (ACSI) is calling on its members, which manage more than $1 trillion, to start prioritising biodiversity loss in boardroom conversations.One of the fund managers we invest in, considers how its investment companies are impacting biodiversity through their own operations.  The Fund manager acknowledges that biodiversity loss is not considered a material issue by a number of these companies with only a small group of companies providing a comprehensive response.  The Fund is engaging further with companies to encourage them to give the issue a higher priority.source and Pengana WHEB

Lendlease’s decarbonisation commitments

Lendlease a construction, property and infrastructure group we invest in announced its Victoria Cross Tower at North Sydney will be fully electric – and so will all its future buildings – key will be to enable the occupants to flag they are using 100 per cent renewable energy.In its public statements the company says it forms part of the company’s Mission Zero Roadmap with the big promise: “All Lendlease developments are set to follow the Victoria Cross Tower decarbonisation commitments as essential actions to live up to the promise to be a 1.5 degree aligned company.”Through eliminating gas and diesel from designs and existing assets; switching to 100 per cent renewable electricity; and partnering with suppliers and industry to eliminate embodied carbon in materials such as steel, aluminium and cement, the company hopes to achieve its sustainability ambitions in Australia.The development of a new rating tool for embodied carbon is currently underway by NABERS (National Australian Built Environment Rating System) , with the aim of creating a national baseline with the ability to compare building’s carbon footprints with those around them.source: TheFithEstate

Disclaimer The contents of this newsletter are intended as general advice only. No specific person’s circumstances, financial situation or objectives have been taken into consideration. You should not act on the information provided without seeking personal advice from an appropriately qualified financial planner. Research sources: CAER Corporate Monitor. While the source has been verified as reliable, the actual content has not been checked for accuracy. Consequently Ethical Investment Advisers does not warrant the accuracy of the information nor accept liability for any errors in the data.

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