Key Takeaways
- Ethical investing has lost visibility due to economic pressures, greenwashing concerns, and political influences.
- The anti-DEI movement has indirectly affected ESG and SRI investment trends.
- There are still ethical ETFs in Australia, both domestic and international, that allow investors to align their portfolios with their values.
- Investors can continue ethical investing through carefully selected ETFs or by consulting a financial adviser for sustainable investment strategies.
- Managed funds and ethical ETFs can complement your broader wealth management goals.
In recent years, ethical investing seemed to be on the rise, with more investors looking to align their portfolios with their values. However, it appears that ethical investing has somewhat faded from the public discourse. What happened to this once-prominent movement and what options are out there for ethically-minded investors?
The Decline in Public Discourse
Ethical investing, also known as socially responsible investing (SRI) or environmental, social, and governance (ESG) investing, involves selecting investments based on ethical principles. This approach gained significant traction as investors became more aware of issues like climate change, social justice, and corporate governance (riaa n.d.). However, the conversation around ethical investing has diminished recently. Several factors contribute to this decline:
- Economic Pressures: The global economic landscape has faced numerous challenges, including inflation, geopolitical tensions, and market volatility. These pressures have shifted investor focus towards more immediate financial returns rather than long-term ethical considerations (Burghof & Gehrung 2021).
- Greenwashing Concerns: Growing skepticism about the authenticity of some ESG claims has eroded trust in ethical investing (riaa n.d.).
- Political Climate: The political environment, particularly in the United States, has also played a role. The anti-DEI (Diversity, Equity, and Inclusion) movement has caused some investors to shy away from ESG-focused funds (Guynn 2025).
The Anti-DEI Movement
The anti-DEI movement has gained momentum, particularly in the US, where Trump and his allies have actively campaigned against diversity and inclusion initiatives. This has included executive orders to dismantle DEI programs and pressure on companies to end DEI-related activities (Guynn 2025). The result has been a chilling effect on ethical investing, as companies and investors alike navigate this politically charged landscape (Gasman 2025).
Ethical ETF Options in Australia
Despite these challenges, there are still viable options for those interested in ethical investing. Australia offers several ethical ETFs that align with ESG criteria. Some to consider include:
BetaShares Global Sustainability Leaders ETF (ASX: ETHI): Focuses on global companies that are leaders in climate sustainability and excludes those involved in fossil fuels.
Vanguard Ethically Conscious International Shares Index ETF (ASX: VESG): Offers exposure to international companies while excluding those involved in fossil fuels, nuclear power, and other non-ethical activities.
VanEck MSCI International Sustainable Equity ETF (ASX: ESGI): Invests in sustainable international companies and excludes those involved in fossil fuels and other socially irresponsible activities.
BetaShares Australian Sustainability Leaders ETF (ASX: FAIR): Focuses on Australian companies with no significant exposure to fossil fuels and prioritises sustainable business practices.
Russell Investments Australian Responsible Investment ETF (ASX: RARI): Invests in Australian companies that meet specific ESG criteria.
These ETFs can complement your broader wealth management strategy and provide ethical options alongside other managed funds and superannuation solutions.
Explore Your Ethical Investing Options
For more information on ethical investing and sustainable portfolio strategies, speak with our financial advisers to explore suitable managed funds, superannuation options, or wealth management solutions that align with your values.
FAQs
What is ethical investing?
Ethical investing, also called socially responsible investing (SRI) or ESG investing, involves choosing investments that align with ethical, social, and environmental values.
Why has ethical investing declined recently?
Factors include economic pressures, concerns about greenwashing, and political influences, particularly the anti-DEI movement.
What are some Australian ethical ETFs?
Options include BetaShares ETHI, Vanguard VESG, VanEck ESGI, BetaShares FAIR, and Russell RARI ETFs.
Can I invest ethically and still get good returns?
Yes, ethical investments can still offer competitive returns while aligning with your values, particularly through diversified ETFs and managed funds.
Do I need a financial adviser to invest ethically?
While not required, a financial adviser can help identify suitable ethical investment opportunities and ensure your portfolio aligns with both your financial goals and values.
1. Burghof, HP & Gehrung, M 2021, Investing Ethical: Harder Than You Think. In: Minhat, M., Dzolkarnaini, N. (eds) Ethical Discourse in Finance. Palgrave Studies in Impact Finance. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-81596-7_8.
2. Gasman, M 2025, How Leaders Are Unpacking Trump’s Anti-DEI Actions, Forbes, viewed 7 March 2025, <https://www.forbes.com/sites/marybethgasman/2025/02/23/how-leaders-are-unpacking-trumps-anti-dei-actions/>.
3. Guynn, J 2025, DEI explained: What is DEI and why is it so divisive? What you need to know., USA TODAY, viewed 7 March 2025, <https://www.usatoday.com/story/money/2025/03/04/trump-dei-backlash-explained/81170427007/>.
4. Responsible Investment Association Australasia [riaa] n.d., Responsible Investment Explained, Responsible Investment Association Australasia, viewed 7 March 2025, <https://responsibleinvestment.org/what-is-ri/ri-explained/>.
Further Information on the Investments Listed Above
BetaShares Global Sustainability Leaders ETF: https://www.betashares.com.au/fund/global-sustainability-leaders-etf/
Vanguard Ethically Conscious International Shares Index ETF: https://www.vanguard.com.au/personal/invest-with-us/etf?portId=8226
VanEck MSCI International Sustainable Equity ETF: https://www.vaneck.com.au/etf/equity/esgi/snapshot/
BetaShares Australian Sustainability Leaders ETF: https://www.betashares.com.au/fund/australian-sustainability-leaders-etf/
Russell Investments Australian Responsible Investment ETF: https://russellinvestments.com/au/fund-centre-etf/performance-pricing/exchange-traded-funds/etf/responsible-investing/rari-russell-australian-responsible-investment
Jahanne is a Senior Investment Adviser who specialises in providing a holistic approach to wealth advice. Contact Jahanne today to discuss your investment strategy via [email protected] or 03 9947 4156.
