Introduction
Good [morning/afternoon], everyone. Thank you for joining today’s CPD session. As
professionals in the financial services industry, we are witnessing a growing emphasis on
ethical investing—driven not only by regulatory and policy shifts but also by an evolving client
base that values sustainability and ethical governance.
Today’s session is designed to deepen your understanding of ethical investment principles,
provide actionable strategies for client engagement, and ensure you remain aligned with the
ethical standards expected of licensed financial professionals.
Section 1: What is Ethical Investment?
Ethical investment, also known as socially responsible investing (SRI) or ESG investing, is an
investment approach that considers environmental, social, and governance factors alongside
financial returns. This strategy seeks to align investment decisions with broader values and
long-term societal goals.
There are three primary approaches to ethical investing:
1. Negative Screening – Excluding companies involved in controversial activities (e.g.,
tobacco, weapons, fossil fuels).
2. Positive Screening – Actively selecting companies with strong ESG performance.
3. Impact Investing – Targeting investments in projects or companies intended to generate
measurable social or environmental impact.
The global shift toward ethical investing is not just a trend; it’s a reflection of growing concern
about climate change, corporate responsibility, and long-term financial sustainability.
Section 2: The Rise of ESG Integration
Over the past decade, ESG integration has moved from the margins to the mainstream.
According to the Global Sustainable Investment Alliance (GSIA), over USD $35 trillion in assets
under management globally now incorporate some form of ESG consideration.
Australia is no exception. The Responsible Investment Association Australasia (RIAA) reports
that responsible investment now represents 43% of the total market. This change is largely
driven by:
• Regulatory pressures from ASIC and APRA
• Demand from younger investors and superannuation funds
• Reputation and risk management among fund managers
From a fiduciary perspective, ESG risks—such as climate risk or governance failures—are
material and must be factored into long-term investment strategies.
Section 3: The Role of the Financial Professional
Your role as a financial advisor or investment professional is central to the growth of ethical
investing. Clients are increasingly expecting their advisers to discuss not only performance but
also purpose.
Key responsibilities include:
• Educating Clients: Provide clear explanations of ESG concepts and how different funds
or companies apply these standards.
• Client Discovery: Use ESG-related questionnaires to assess values-based preferences
alongside risk profiles.
• Product Due Diligence: Scrutinise managed funds, ETFs, and equities claiming ESG
credentials—especially given the rise of “greenwashing”.
• Regulatory Compliance: Stay informed of ASIC’s guidelines on sustainability
disclosure and ensure client files reflect the rationale for ESG-related advice.
Section 4: Addressing Greenwashing and Misrepresentation
One of the major challenges in ethical investing is greenwashing—where companies or funds
exaggerate or falsely claim environmental credentials.
To combat this:
• Rely on independent ESG ratings and third-party certification (e.g., RIAA Certification,
MSCI ESG Ratings).
• Review underlying holdings of ESG-labelled funds.
• Watch for inconsistency between a fund’s marketing and actual investment activity.
• Educate clients on the nuances—ethical investing isn’t perfect or static; it’s evolving.
As ASIC has warned, misleading sustainability claims can expose both clients and advisers to
risk. Due diligence is not just best practice—it’s mandatory.
Section 5: Ethical Investment in Practice – Case Study
Let’s take a brief case study.
Client Profile: Sarah, age 38, tech executive, moderate risk tolerance, prioritises environmental
sustainability.
Scenario: Sarah is interested in investing her $200,000 bonus in a way that avoids fossil fuels
and supports renewable energy innovation.
Adviser Action Plan:
1. Conduct an ESG preferences questionnaire to refine priorities (e.g., environmental
focus vs. social).
2. Present options: Green ETFs, actively managed sustainable funds, or direct equities.
3. Review product disclosure statements (PDS) and sustainability reports.
4. Document advice rationale, including alignment with Sarah’s objectives and risk profile.
Outcome: Sarah selects a diversified ESG fund with exposure to clean tech companies. Her
portfolio reflects both financial goals and ethical values.
Section 6: Looking Ahead – Trends and Skills Development
The future of ethical investment includes:
• Stricter Regulatory Oversight: ASIC, APRA and the ACCC are collaborating on
sustainable finance regulation.
• ESG Data Innovations: Advances in AI and big data will enhance ESG analytics.
• Client Engagement: Younger investors will continue to drive demand for purpose-led
portfolios.
As professionals, your CPD should increasingly focus on:
• Understanding ESG metrics and controversies
• Analysing sustainability reports
• Enhancing client communication on non-financial metrics
• Leveraging technology to assess ESG risk exposure
Conclusion
To conclude: ethical investing is no longer optional—it’s a professional and ethical imperative.
By equipping ourselves with the right knowledge, tools, and mindset, we can guide clients
toward investments that reflect both their financial goals and their values.
Let’s continue to grow as professionals who not only manage money—but help shape the future
responsibly.
Thank you for your attention.
Client Care & Practice
Regulatory Compliance & Consumer Protection
0.50 CPD Pts