Finance Dollars & Sense Six ways to invest in renewable energy and support the fight against climate change
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Six ways to invest in renewable energy and support the fight against climate change

climate change ethical investing smiling woman
Australians can use their investments to support the fight against climate change. Photo: Getty
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Climate change is an issue so big, you can feel powerless to make any sort of difference as just one human.

But there are things you can do with your money to ensure you are supporting the planet rather than adding to the problem – one that was so starkly laid out by the Intergovernmental Panel on Climate Change report earlier this month.

As the world’s largest mining company, BHP, announced it would sell out of gas and oil, Centaur Financial Services managing director Hugh Robertson said using wealth to support advances such as renewable energy was the future of investing.

“I’m not a greenie or anything like that, and I certainly have never been, but when I start thinking about the future of my children it’s a pretty scary place and I think, ‘Alright, I need to do what I can to help’,” he said.

“We can be the people who say we want something a little bit better for the next generation.”

So, if you want to use your money to support renewable energy and reduce the effects of climate change, what are your options?

Actively managed ethical funds

If you want fund managers to make investment decisions on your behalf that support reducing pollution, preserving endangered ecosystems and the development of sustainable land use, an actively managed fund with an ethical charter, such as Australian Ethical, can be a good place to start.

Passively managed ethical ETF

Passively managed exchange-traded funds also offer ethical investment options, such as the Vanguard Ethically Conscious Australian Shares Fund, which excludes companies involved in products such as alcohol and tobacco.

But the fund’s largest holdings are in the big banks, biotech company CSL, retailer Wesfarmers and iron ore miner Fortescue Metals, so not everyone will consider it ethical or useful in the fight against climate change.

Mr Robertson said it is important to dig into exactly which stocks an ETF holds, as you cannot assume resource companies will be off limits, for example.

IPCC climate report
The IPCC report found global temperatures were set to rise by 1.5 degrees above pre-industrial levels within 10 years. Photo: Getty

Individual shares

Another option is buying individual stocks and there are plenty of Australian renewable energy companies listed on the ASX including: New Energy Solar (owns solar power plants in the US), Magnis Resources (makes lithium-ion batteries) and Genex Power (solar and hydro energy projects).

Sofcorp financial adviser Tracey Sofra said some ASX-listed clean energy companies are in their infancy and have small market capitalisations.

This means they have the potential to deliver higher returns but make for riskier investments than more established companies.

“You’ve got to look at the risks associated with going into those sorts of investments … because renewable energy stocks might expose you to a little bit higher risk, it just depends on the industry,” she said.

“They’re smaller cap …. they are relatively new (and) there isn’t a massive track record there.

“It’s uncharted waters, I suppose, so there may be an element of risk there but there is an element of risk in any kind of investing.”

Superannuation

You can check whether your superannuation fund excludes fossil fuels from its investment options by reading its ESG (environment, social and governance) policy on its website.

The Responsible Returns website also lists products certified by the Responsible Investment Association of Australasia.

Solar panels

More than 2.8 million Australians have bought into clean energy by installing their own solar panels.

A 5kW system, which is a size commonly installed in Australia, costs between $4500 and $8000 after factoring in government rebates and incentives, according to consumer group Choice.

The combination of high electricity prices and falling solar panel costs means the amount of time it takes for energy savings to offset purchase and installation costs is now around four to six years, according to the Reserve Bank of Australia.

But before you get some panels installed, it’s a good idea to check your prospective supplier and installer are approved by the Clean Energy Council.

Clean power

You can still buy into renewable energy if you can’t afford solar panels through GreenPower products offered by most electricity retailers.

GreenPower is a government-managed program that independently audits electricity providers to ensure the right amount of renewable energy is fed into the grid on the customers’ behalf.

The New Daily is owned by Industry Super Holdings

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