Australians are increasingly demanding more from their investments than just healthy returns. With climate change, social justice, and corporate governance issues dominating headlines, ethical investing has surged from niche to mainstream. But what does ethical investing really mean in 2025, and how can you ensure your portfolio matches your personal values without sacrificing performance?
What Is Ethical Investing? The 2025 Perspective
Ethical investing—also known as responsible or sustainable investing—goes beyond traditional financial analysis. It considers environmental, social, and governance (ESG) factors when choosing where to put your money. In practical terms, this means avoiding companies involved in fossil fuels, tobacco, gambling, or weapons, while favouring those leading on clean energy, diversity, and transparency.
The Australian market has evolved rapidly in recent years. New regulations, such as the 2024 ASIC greenwashing crackdown, have pushed super funds and fund managers to be more transparent about their ethical claims. In 2025, many major super funds now offer clearly-labelled ethical options, and there’s a wealth of ETFs and managed funds focused on ESG criteria.
- Environmental: Climate impact, renewable energy, pollution, resource management
- Social: Human rights, labour standards, community engagement, gender diversity
- Governance: Board diversity, executive pay, anti-corruption policies, transparency
Why Australians Are Flocking to Ethical Investments
Ethical investing is no longer just about ‘doing good’—it’s about smart risk management and future-proofing your wealth. In 2025, there’s mounting evidence that ESG-focused funds can match or even outperform their traditional peers. For example, the BetaShares Australian Sustainability Leaders ETF (ASX: FAIR) has outperformed the broader ASX 200 over several recent years, driven by surging interest in renewables and tech.
Key drivers behind the shift include:
- Stronger regulation: ASIC now requires investment products to justify their ESG claims, reducing ‘greenwashing’ and giving investors more confidence.
- Consumer pressure: Australians are demanding transparency—2025 surveys from Responsible Investment Association Australasia (RIAA) show that nearly 80% of investors want their money to have a positive impact.
- Global trends: Global capital is flowing towards sustainable assets, with large pension and sovereign wealth funds shifting their mandates.
How To Start Ethical Investing in 2025
Getting started is easier than ever, thanks to a wider range of products and better information. Here’s a step-by-step guide to building an ethical portfolio that fits your values and financial goals:
- Define your values: Do you want to avoid fossil fuels? Support gender equity? Prioritise animal welfare? Your priorities will shape your investment choices.
- Check your super fund: Most major Australian super funds now offer ethical or sustainable options. Review your current fund’s holdings and ask for their latest ESG policy and performance data.
- Explore ethical ETFs and managed funds: Popular options include the BetaShares FAIR, Vanguard Ethically Conscious International Shares Index (VESG), and Australian Ethical Managed Funds. Look for funds certified by the RIAA for added credibility.
- Research direct shares: If you prefer picking your own stocks, tools like the Ethical Investors Australia database or ESG ratings from Refinitiv and Morningstar can help you assess companies’ credentials.
- Stay informed: Regulations and standards are changing quickly. In 2025, keep an eye on ASIC updates, new fund launches, and emerging issues like biodiversity and Indigenous rights in investment frameworks.
Some practical platforms for everyday investors:
- Super funds: AustralianSuper, Rest, UniSuper, and Australian Ethical all offer strong ESG options.
- Brokerage apps: Stake, Pearler, and CommSec offer access to ESG ETFs and stocks with transparent screening tools.
- Robo-advisors: Raiz and Six Park now provide automated portfolios with ethical screens.
Challenges and What to Watch For
Despite its popularity, ethical investing isn’t without challenges. The main pitfalls in 2025 include:
- Greenwashing risk: Some funds still overstate their ethical credentials. ASIC’s 2024 reforms help, but always check the underlying holdings and methodology.
- Performance trade-offs: Not all ethical funds outperform every year. Diversification and a long-term perspective remain crucial.
- Complexity: ‘Ethical’ means different things to different people. Read fund documents carefully to ensure alignment with your values.
One real-world example: In 2025, a wave of funds expanded their negative screens to include companies with poor Indigenous engagement records, following pressure from both investors and policymakers. This demonstrates how ethical investing is dynamic, reflecting evolving social expectations.
The Future of Ethical Investing in Australia
With growing demand, regulatory backing, and an ever-expanding menu of options, ethical investing is set to become the default—not the exception—in Australian finance. Whether you’re just starting out or refining your approach, 2025 is a pivotal year to make your money matter.
