Are youth advisory committees the key to helping financial firms understand what’s ‘ethical’ ?
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When you’re managing someone else’s money, the main concern is not losing it. But clients want a certain impact with their money and no two are the same.
Yesterday, Stockhead was a guest of an AMP Capital roundtable on ESG and ethical investing. The firm revealed it was establishing a ‘youth advisory committee’ as it ramps up its ethical investing products.
The roundtable will consist of clients from second year university students up to the age of 30. The first meeting will be held in August and the first discussion topic will be animal welfare.
AMP Capital has over $2.8 billion in funds across seven ethical and ESG strategies. Its entire range is certified by the Responsible Investment Association Australia (RIAA), whom Stockhead spoke with last month about its certification process.
“We’re not just catering to just the younger Australians,” said AMP Capital portfolio manager Kirsten Le Mesurier. “But we feel it’s the voice we don’t hear enough of.
“We’d like the funds to reflect the broad spectrum of investors we have. We’re not just sitting here in a building, managing their money without the open and honest communication with how they want their money managed.”
With ethical investing’s rise, green washing (or as AMP called it ‘impact washing’) is a subsequently rising concern among clients. Recognising younger people want their investments to have a positive impact, firms can consequently over-state the impact investments are having.
“There’s intention to create a positive impact, whether it be a social of environmental issue, it’s not just feel-good, its an accountability aspect,” said Le Mesurier.
She said impact washing was “a great concern for us” and noted the need for ethical certification.
“(Certification) helps that clarity for customers or members on what you’re actually getting,” she said.
However, as the RIAA told Stockhead, there is little consensus about what is or not ethical with a few exemptions.
While mining was not one, AMP was cutting its threshold for revenue an ‘ethical’ company can generate from fossil fuels to 10 per cent.
Moreover, the RIAA’s concern was standards the certified companies set on themselves. CEO Simon O’Connor told Stockhead that including ExxonMobil would only be bad for them if the fund provider said “no miners”.