Finance sector urged to keep Australians safe through COVID-19

Australians increasingly expect financial institutions to demonstrate a good social purpose 

The finance sector can regain the nation’s trust if it protects Australians throughout the coronavirus pandemic and helps build a better society when the crisis ends, experts believe. 

COVID-19 has had a major impact on all aspects of Australian society, including the finance industry. 

Public trust in the sector has waned following the findings of the banking royal commission, but Responsible Investment Association Australasia (RIAA) CEO Simon O’Connor believes this damage can be repaired if the industry steps up during the pandemic.

He told Pro Bono News the crisis would cause a fundamental reappraisal of what we prioritise as a society, and what we think the role of the finance sector is.

“I think this is just going to elevate the idea that the finance sector is a critical part of any recovery and any management of big systemic disruptions like this,” O’Connor said. 

“And so it’s a really an opportunity for the financial sector to show that they can contribute constructively, by protecting society, protecting the environment and ensuring Australians are safe and secure and healthy through this period.

“So it really has a chance to flip on its head the severe lack of trust and loss of social license in the industry.”

Australians trust ethical investing to deliver better returns

O’Connor’s comments come on the back of new RIAA research that found nine in 10 Australians believed the finance sector has a role to play in generating positive social, environmental and economic outcomes for the nation.

The study revealed that 86 per cent of Australians expected their savings and super to be ethically invested, while more than two-thirds of people said they did not want their money to cause environmental harm to the planet.

While this survey took place in February – before the pandemic hit Australia – O’Connor believes that strong support for responsible investing remains.

“The current context is only going to strengthen the resolve of people to ensure they direct their money to an institution that is doing good, and is aligned with their values,” he said.

 “And I think that’s probably a large reason why the banks have been so proactive right now and are really trying to prove themselves and demonstrate a good social purpose.”

The research found the majority of Australians trusted that their ethical investments would lead to better performance outcomes, with 67 per cent of people believing ethical or responsible banks performed better in the long term and 62 per cent for super funds.

These figures rose by more than 30 per cent compared with RIAA’s 2017 research. 

O’Connor said people now understood that who they bank their money with and who they invest their super with is one of the strongest ways to have an impact on the shaping of society.

“People know where the money flows actually determines the world we’re going to live in through the coming decades,” he said.

“And so Australians want to ensure their investments are better aligned with their personal beliefs and values.” 

The study found 82 per cent of Australians believe a lack of independent information about ethical or responsible savings and superannuation is making it harder for people to make a change.

Allyson Lowbridge, chief customer officer for Australian Ethical, said the report also showed that Australians’ concern for climate action had reached a tipping point, leading many to focus on solutions such as responsible investing.

“We hope these results serve as a call to arms for the entire industry to deliver on Australia’s demands and utilise capital for a sustainable future for everyone,” she said. 

The full report can be seen here.