Louise Edkins: Ethical Investment Adviser Surviving The Storm
As Australias investors batten down the hatches in the eye of the global financial storm
, times are certainly getting tougher for the financial planning industry. So it was refreshing to hear that ethical investment is alive and well as Ethical Investor met Louise Edkins, Brisbane-based investment adviser with Ethical Investment Advisers.
No one is choosing to no longer be an ethical investor based on price and performance. In fact there is an element of the global financial crisis thats making some people more determined, Edkins tells Ethical Investor over lunch in Maleny, on southern Queenslands Sunshine Coast, after her regular visit to the Maleny Credit Union to counsel clients.
Yes, people are far more pessimistic in general. Im seeing this in the property trust sector in particular thats been severely damaged by the GFC on average a property trust has lost 60 per cent. But clients are still committed to making
ethical investments.
A Guiding Hand
Edkins sees her role as helping clients articulate their ethics, since the structure of the investment market in Australia throws up barriers to those who want to fully exercise their ethical mandate.
These days a lot of people perhaps tend to find it easier to display their ethics as a consumer but not necessarily as an investor, she says. It is perhaps easier to find information on where to shop, how to consume and how to build, or at least information that you can act on. But because investment is so indirect for instance as in superannuation people may not know or have a sense of what they are investing in.
Edkins, who has been an ethical investment adviser for 15 years, hopes for a time when investors and individual shareholders take a much more proactive interest in their investments.
For instance, the US has a huge amount of shareholder meetings on ethical issues. Unfortunately, because we are a wholesale indirect investor base, its not always easy to do that.
A number of shareholders are getting angry about corporate excesses, performance of their investments and corporate responsibility, but barriers in the system prevent them from acting on their discontent.
Do Edkins clients demand action from their super funds? In other words, are they voting with their feet?
A lot of individuals themselves dont realise that super funds are powerful investors and have ethical mandates themselves. I think a lot of investors would be interested in doing something about it if they realised this.
Knowledge is Power
Edkins admits she is sometimes dismayed at the poor level of financial literacy in Australia today.
There is just so much credit out there people just arent as responsible with credit as they used to be, which is contributing to the general economic downturn, she says.
She said she is shocked at how many people just dont know some very fundamental information about their investments such as the yield on their rental properties.
To me, knowing what rental return you are getting as a per cent based on the cost is a fundamental assessment of whether its a good investment or not. And how many people when they are looking for investments dont really make a basic financial assessment?
The issue of climate change crops up more and more in conversations with clients, Edkins says.
As well as looking for fresh investments, clients sometimes want to look at their total investments and ascertain their carbon risk, Edkins says. I get a lot of new investors who come to me with a portfolio they might have inherited for instance and they do want to take stocks out. Most of my clients are very, very strongly green and strong on ethics.
Edkins bemoans the lack of suitable retail clean-technology funds. People are coming to me specifically looking for clean-energy investments. The problem is finding them one of reasonable size and risk for a more medium-risk investor or a balanced-risk investor.
There is demand. But there are not a lot of stocks big enough for a fairly traditional investor. Part [of the reason] is government and legislation in that there is not a big impetus on green energy, on clean energy, so much as there is in Europe where there is so much choice.
The renewable energy and greenhouse gas targets dont create investment in the sector, Edkins complains, citing the move offshore by Pacific Hydro in 2004.
Ethical but Nowhere to Turn
Looking forward, Edkins is fairly optimistic on Australias transition to being a sustainable economy but is disappointed at the general lack of vision.
Financial planners appear to be the last people to be convinced about ethical investments. A lot of them just seem to think its not going to make money for the planner or the client. A lot of them are blinkered. Theres no end of people who want to become an ethical investor but they dont have anywhere to turn to for advice.
by: Oliver Wagg
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