Explained: Ethical Super Options
Introduction
Ethical super options allow members to align their retirement investments with social and environmental values. This article explores how ESG criteria shape fund choices and what to consider when opting in.
1. Understanding ESG Criteria
ESG stands for Environmental, Social, and Governance factors. Funds assess companies on metrics like carbon footprint, labor practices, and board diversity.
2. How Ethical Options Are Constructed
Funds screen out industries such as fossil fuels and tobacco, and may overweight companies with strong sustainability credentials. Portfolios often blend passive and active strategies.
3. Performance and Costs
Ethical options can have slightly higher fees due to research and screening. Historical returns often align closely with standard options over the long term.
4. Choosing the Right Ethical Fund
Consider personal values, risk tolerance, and fee structures. Review fund reports for transparency on ESG ratings and exclusions.
Conclusion
Ethical super options empower members to invest responsibly without sacrificing returns. Evaluate offerings carefully to ensure they reflect your values and financial objectives.