We’re asking Australia's top ethical financial advisers what they think these uncertain times mean for ethical investing. First up, we spoke to Trevor Thomas about Australia’s 2025 federal election. Trevor is the Managing Director at Ethinvest, Australia’s oldest ethical and impact investment advisory practice.

Whoever wins the election tomorrow will have implications for share markets, and for your shares. The two major parties both have different approaches to Trump, climate change, education, mining – and these approaches will affect ASX-listed companies differently as a result.

‍The opinions expressed in this blog are intended to be general in nature and are not intended to be personal financial advice.

SIX: Dutton has a vague plan to build nuclear reactors across Australia. What role, if any, do you think nuclear plays in the energy transition? What’s Labor’s vision and how does that affect clean energy?

Trevor: Nuclear energy is costly and would take a long time to deploy in Australia. It is a distraction from the main game, which is to deploy renewables to replace ageing and failing coal generation infrastructure. If nuclear reactors are up and running, as they are in some countries, it might make sense to keep them operating, as they provide zero emission energy. However, the business case for nuclear is very challenging to say the least. No operator could afford to cover the cost of constructing and maintaining safe storage of nuclear waste for thousands of years – so the business case relies on intergenerational government subsidies.

It seems more than a little ironic that the Liberal Party, the historic champion of free enterprise, admits that nuclear only works in Australia as a publicly owned industry.

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SIX: Trump seems to be hanging over this election like a bad smell. With Trump's tariffs, growing risk of climate change-induced catastrophes, growing inequality, geopolitical tension, companies backtracking on ESG and DEI, it feels harder to invest ethically. What advice would you give to someone investing for the first time?

Trevor: The ethical investors that we talk to are keen to put their money to work in ways that contribute directly to making the world a better place.

While the geopolitical context is more uncertain than usual, the need to mobilise capital for good is as important as ever. Anyone investing in shares should be thinking of a time horizon of at least 7 years – which means that the potential for short-term volatility is less of an issue.

It is disappointing that many companies are reacting to the anti-ESG agenda of the White House by retreating from public statements around environmental and social commitments, but that doesn’t necessarily mean they have changed their core activities and operations. We encourage investors to look beyond statements and focus on actions – particularly around emissions targets and inclusive hiring. There are still plenty of corporations who see these things as smart business decisions, as well as ethically important.

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SIX: How have ethical funds performed compared to traditional investment funds over the past few years?

Trevor: Ethical funds generally perform broadly in line with traditional or unconstrained funds, as we call them. However, there are times when that is not the case.

Ethical funds did very well in the early COVID years as they tend to be overweight healthcare and underweight oil. Government stimulus programs in the middle COVID years prompted a strong lift in demand for renewable energy, and batteries, which was good for the world, but not so good for manufacturers of these products, as production rose even faster than demand, suppressing prices (and profits).

Then fossil fuels spiked after the Russian Invasion of Ukraine, and that meant ethical funds gave up what was left of their lead. As COVID lockdowns eased, the surge in US markets driven by the Magnificent Seven AI stocks left ethical funds a little behind, as only a couple of those pass most funds’ screens. Some funds exclude them all. However, since the Tariff scare, and the meltdown in Tesla and other tech giant shares, ethical numbers are suddenly looking much more competitive.

I expect that when we look over a 10-year period from 2019–2029 we will see that ethical funds held their own against unconstrained funds and were perhaps a little less volatile along the way. We’ve been helping people run ethical portfolios since 1989 and we are confident that you don’t have to give up returns to invest ethically. In fact, by selecting industries that care for people and planet you are future proofing your portfolio in important ways.

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SIX: The ASX rode the rollercoaster of Trump’s tariffs - so we’re clearly not immune here in Australia from his agenda. How do you see his priorities, such as reviving coal and exiting the Paris Agreement affecting investments in the clean energy transition?

Trevor: Follow the money! Renewables are the cheapest way to produce energy, and the cost of storing that energy to offset the inherent variability of wind and solar is going down rapidly. When decisions are being made about base-load power, companies are looking to renewables. While some politicians are keen to promote fossil fuel and nuclear power, banks and insurance companies are moving away from financing and insuring fossil fuel generation. The shift in capital flows speaks louder than policy reversals.

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SIX: Shareholder activism is a way that SIX lets regular people join campaigns to get big corporations to go green and treat their workers better. Which issues do your clients care about and why?

Trevor: Our clients care about a wide range of environmental and social issues, and most clients are happy to support most of the different campaigns we have been involved in. These range from climate resolutions to bank AGMs, to gambling advertising during family viewing hours, paid parental leave to land clearing in areas of important koala habitat, to advertising that objectifies women and sexualises children, and protecting our friend the Maugean Skate of course.

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SIX: What is your favourite ASX listed stock?

Trevor: We have been longtime investors in Nanosonics. It is a company that has successfully commercialised Australian R&D in the area of the disinfection of medical equipment. It removes the need for hospitals (and hospital staff) to handle toxic chemicals, is fast, clean and safe, and sterilises equipment better than the alternatives. It is a company making very strong environmental and social contributions.

(This is not a recommendation to buy at current prices, of course, just a reflection of the fact that there are some companies out there doing great things).

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Prepared by Sustainable Investment Exchange Pty Ltd (ABN 61 669 461 465, AFSL no. 557092). Information provided is general only and doesn't take account of your personal needs. Read our FSG at http://www.six-invest.com.au