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A guide to ethical investing

The festive season often brings us back to what matters - connection, giving and purpose - so it’s no surprise more Australians are now thinking carefully about how they invest their money.

By Brooke Le Poer Trench

  • Purpose-driven investing can help you grow your wealth while supporting causes you care about - from environmental action to social impact - by choosing investments aligned to your personal values.
  • Once you clarify what’s important to you, you can explore ESG screening methods to help you select funds of companies that genuinely reflect what matters most.
  • A good way to build your confidence is to start small. CommSec Pocket can help you invest anytime, anywhere, with as little as $50.

Purpose-driven investing is a way to grow your wealth while backing causes and companies that complement your values. “It involves putting your money into stocks or other investments that might be better aligned with your personal values or ethics,” says CommSec analyst Steven Daghlian. “These are companies that aim to turn a profit while also leaving a positive impact on the environment or supporting social causes.” Also known as sustainable, ethical or ESG (environmental, social and governance) investing, this approach lets you support the world you want to live in and potentially reap solid returns along the way.

Define your values before investing

Before investing, Daghlian suggests taking time to define your personal values. “Are you passionate about climate action, clean technologies or board diversity in business? Being clear on what’s most important to you can help guide your choices.” It’s also worth understanding how ethical funds screen their investments. Some use positive screening (picking companies that lead in ESG), while others use negative screening (excluding industries or behaviours that clash with certain ethics). “Educating yourself on different ESG methodologies can help you understand why some companies are included or excluded from a fund.”

Consider ETFs

Thanks to platforms like CommBank’s in-app investing feature (which lets you invest from just $50), building a share portfolio has never been easier. “One option is exchange-traded funds (ETFs), which hold a bundle of different assets and often focus on a particular theme, such as sustainability,” says Daghlian. From ETFs focused on clean energy or gender equality to portfolios that avoid industries like fossil fuels, gambling or tobacco, the options are broad and growing.

Assess performance and diversify

One common question is whether this type of investing means giving up growth. The answer: not necessarily. “Many stocks that are ethically screened are some of the world’s largest companies,” says Daghlian. “If you’re investing in a sustainable-themed ETF, head to the issuer’s website to check out performance history and what’s included.” He adds that it’s smart to diversify, blending values-aligned funds with more traditional investments can help spread risk and broaden your opportunities. “ESG investing exclusively can limit your choices so mixing it with traditional options is a great way to stay balanced.”

Three stand-out companies 

If you’re new to ethical investing, the DJSI (Dow Jones Sustainability Index) is a global scoreboard for companies doing the right thing by people and the planet. Each year, the index assesses thousands of companies based on ESG factors and only the top performers make the cut. Here are three stand-outs you may spot in ethical ETFs. 

Microsoft 

You might know it for programs like Word and Excel but Microsoft is also a pioneer in sustainability. It became carbon neutral in 2012 and has committed to becoming carbon negative by 2030. The company also supports global social programs, from digital skills for disadvantaged youth to advancing accessibility in tech. 

Alphabet (Google)

The search engine giant is serious about clean energy. Google was the first major company to match its entire electricity use with renewable energy and is working toward operating entirely on carbon-free energy by 2030. Alphabet also scores highly on social responsibility thanks to education, healthcare and ethical AI initiatives. 

AbbVie

While it might fly under the radar, AbbVie is one of the world’s largest healthcare companies - and one of the most responsible. It’s recognised for strong governance, transparency in clinical trials and major investments in equitable access to treatment. It’s a popular pick for investors who want to support progress in medicine. 

Want to boost your investing knowledge? Explore more tips in our Financial Fitness hub.

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Published: 4 December 2025

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Things you should know

You should consider the Pocket ETF Terms and Conditions, Best Execution Statement, and Financial Services Guide for fees & charges and eligibility criteria, available from the CommSec website before making a decision. Please consider the PDS for each ETF prior to making an investment decision. Commonwealth Securities Limited ABN 60067 254 399 AFSL 238814 (CommSec) is a wholly owned but non-guaranteed subsidiary of the Commonwealth Bank of Australia.

This article provides general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as personal financial product advice. The views expressed by contributors are their own and don’t necessarily reflect the views of CBA. As the information has been provided without considering your objectives, financial situation or needs, you should, before acting on this information, consider what is appropriate for your circumstances, and where appropriate, consider the relevant Target Market Determination, Product Disclosure Statement and Terms and Conditions available on our website. You should also consider whether seeking independent professional legal, tax and financial advice is necessary. Every effort has been taken to ensure the information was correct as at the time of publishing but it may be subject to change. No part of the editorial contents may be reproduced or copied in any form without the prior permission and acknowledgement of CBA.