Ethical Superannuation & Banking
Are you ready to remove your hard earned cash from climate criminal institutions and put it to good use?
– Written by Jessica Hamilton, originally published on Medium
I’ll preface this post with full disclosure that I am not a financial advisor, and as such this is not intended to be taken as financial advice. I’m a 30-year-old Aussie woman with an average amount of savings and super, and I’d say the average tendency to avoid changing my finances (because “too hard”, “boring”, “what difference would it make”, etc. etc.).
But I figure — as I wipe away the fresh layer of bushfire ash that has blown in through my window today — that even if only a fraction of my money is invested in fossil fuels, then that’s a fraction of responsibility undeniably on my hands.
What follows is the actions I took to learn how I could be investing my money better, and divesting it away from fossil fuels and other industries that don’t align with my values. Keen to do the same? Give yourself a couple of hours, make yourself a nice strong coffee and go forth and (ethically) prosper. Or better yet, get your mates over for a dinner date and do it together and you could turn one fun night of financing into over $3 million (at the very least) invested away from fossil fuels and unethical industries! Holy hot potato.
WHAT IS MY MONEY FUNDING?
Since 2008, Australia’s big four banks (ANZ, NAB, Commbank & Westpac) have loaned $70 billion to fossil fuel projects. Was some of that cashola yours!? Market Forces have a full list of all the banks with a record of fossil fuel investments, and those that don’t. Checking where your bank sits is a good place to start.
If you’re not stoked with what you learn and would rather your hard-earned dough was not harming people or the planet, then as a rookie ethical investor I can recommend starting with this tool by Responsible Returns. It lets you pick your top ethical priorities (like sustainable water, education, renewable energy, climate change solutions, etc.) and top unethical things you want to avoid (I picked fossil fuels and gambling). It then spits out the banking and super options that best suit your personal values (for our kiwi mates over the water, this works for you too).
BUT I THINK I LIKE MY BANK!?
Me too. I was a Dollarmites kid, so banked with CBA for most of my life until I changed to ING a few years ago. I love ING’s user experience, zero fees, interest rates on my savings account, handy dandy app. They also charge a big fat $0 for overseas purchases and transaction fees, and overseas ATM fees which is pretty hard to beat if you’re someone working or living internationally.
I looked up ING’s stance on climate action and was partly relieved to learn they’ve set some pretty hefty transition goals and aim to to “reduce our exposure to coal power generation to close to zero by 2025”. Alas, my eco-anxiety-ridden gut is telling me that I could do better.
After poking around into ethical banks based on my personal values, user experience (I like having multiple accounts and an app) and recommendations of friends who bank ethically, I narrowed my choices down to Bank Australia and ME Bank. I went with Bank Australia (they charge zero fees if you are (a) under 25, (b) have $50K in the bank or (c) deposit $2,000/month into your everyday account).
Setting up the new account took literally six minutes (which can be done over the phone, or online). I needed my tax file number and two forms of ID (e.g. Medicare card, drivers license, passport). Transferring your savings is pretty quick and can generally be done online. I also contacted ING to explain why I was moving.
The more time-consuming part came next, but if you have some time set aside you’ll be right. I wrote a list of everything I have direct debits set up for (phone, internet, bills, credit card, Netflix, freelancer costs like websites etc.) and changed them over to the new account details. Actually, it was a good exercise in canceling random subscriptions I never use and didn’t even realise I was still paying for(!!!).
Mortgages account for 40–60% of loans on the big 4 banks’ books, and the average Aussie will pay $350,000 interest on a new home loan. That is HUGE. If you have a home loan, or are at the start of this journey, getting this right can have a huge difference in terms of the impact your money could have on the planet. Check out this CanStar article about switching home loans, or abfinance who offer free consultations to help ethically navigate the mortgage market.
According to Canstar, for us Aussies to retire “comfortably” (have a home, a mid-range car, high-level house insurance, and some spare dough for recreational activities and a few trips), we’d need $640,000 for couples or $545,000 for singles in our super accounts when we retire. For a 30-year-old, that means having $61,000 in there today.
Never checked your super balance before?
Log on to myGov (register if you haven’t already — you’ll need your tax file number), click on the ATO link, under the “Super” dropdown menu click “fund details”. There it all is.
Is your super looking a little lower than that recommended “comfortable” figure? Australian women retire with 47% less super than men and, on average, women my age are facing a $41K gap between what we have and what we need for that “comfortable” retirement (seriously, check the averages in this article).
HOW DOES ETHICAL SUPERANNUATION WORK?
Like the banks, ethical funds use a process of screening to negative areas of investment they deem unethical (like coal, oil, fossil fuels, gambling, tobacco, live animal export, etc.) and actively include ethical investments (like renewables, recycling, education, responsible banking). Check out this Choice article for more detail on this, as well the screening profile and returns of some of Australia’s leading ethical super funds.
I called my current superannuation company to ask how they invest, and couldn’t get an answer (“oh it’s tricky, privacy, bla bla bla”) but when I checked some of the ethical options, they have full transparency of companies they’re investing in listed online (e.g. Verve, Future and Australian Ethical). If you decide to switch, you might also want to call to ask about their income protection, life insurance and different investment options.
BUT IS IT A BAD MOVE FINANCIALLY??
Actually, ethical funds have been performing as well as, and in some cases better than, traditional funds. The more their customer bases grow, the lower their fees become and the more their clients will have at their retirement. Here’s a nice visual and explainer from Responsible Investment Association Australasia.
SO WHAT DID I CHOOSE?
Based on my values, internet reviews and recommendations from my trusty Facebook bubble I’d personally narrowed my choices down to Future Super, Australian Ethical and Verve. For me, it was a very narrow choice between Future and Verve, who are a super fund by women for women, and who offer free financial coaching which I think is fucking great. I went with Future Super and took them on at their challenge to take only 2 minutes of my time to change supers. It actually took 3 minutes (because I spent one looking for my TFN). My ethical super account was set up, they rolled over my old super over without me having to lift a finger, and emailed me a form to forward to employers with my new super details. EASY AS.
The ATO reckons there is potentially $17.5 billion(!!) in lost super in Aus. Is some of it yours?! Imagine if that amount could be invested ethically AND come back to the people who earned the money in the first place. Holy hot potato.
PARTY TIME, BABYYY
So now I’m thinking… if I got a bunch of my mates together for dinner (let’s say ten of us all in our late 20’s to early 30’s all with an average amount of super and savings) and we all moved our savings and super into ethical funds over a bowl of pasta and a glass of vino, that could be $1 million invested ethically. Is that not huge?!
YOU WILL NEED:
- Mates, pasta, wine. Your drivers license, passport or Medicare card, and Tax File Number. 2 hours.
- 15 minutes to learn where your bank and super fund sit on an ethical scale, and to find ethical alternatives if you’re not stoked.
- 15 minutes to call your bank and super fund, or a new bank and super fund to ask any questions you’re unsure of
- 5 minutes to set up a new super account online (they’ll find your lost super for you) plus another 5 to forward new details to your employer/s.
- 15 minutes to set up your new bank accounts and transfer your money over.
- Another 5 to write a list of your current direct debits and for the sake of making this a nice round number let’s say 30 minutes swapping them all over (unless you get distracted making multiple cups of tea like I did, then call it an hour).
And make sure you tell your old bank and super why you’re outta there and urge them to stop funding the climate crisis.
BONUS: While doing this review of my ethical superannuation and banking options, I also realised I had $553 of annual direct debits funneling out of my savings that I didn’t need, and $120 of miscellaneous charges on various accounts that are now being refunded to me.
Money Grows on Trees
Top ethical investment funds — Canstar
Divest from Climate Change Banks — Business Insider
Verve Academy The Pineapple Project podcast (season 1 — finance)
The Divestment Movement to Combat Climate Change — The New Yorker
GREENPEACE These huge banks are walking away from fossil fuels
If you’re Australian, chances are your bank and super fund are helping make climate change worse — here’s how to find out — Business Insider
For more environment & money-saving articles, have a read of: