Ethical investing has been a growing topic in recent years, and Australian investors are increasingly considering how the best ethical shares can fit into their portfolio, seeking companies that can deliver financial returns while also aligning with values such as sustainability, social responsibility and strong corporate governance.
This is no longer a niche corner of the market, with Australia’s responsible investment market growing to $1.6 trillion in recent years, and with ethical funds growth having doubled in the past 5 years when compared to the prior period. Super funds are a huge part of the demand, with 88% of Australians now expecting their superannuation and investments to be responsible and ethical.
For ASX investors, ethical or ESG stocks can span a wide range of sectors, including renewable energy, healthcare, technology, waste reduction, clean transport, sustainable agriculture, education and companies with strong governance standards. While definitions vary, ethical companies are generally assessed through environmental, social and governance criteria, which may include how they manage carbon emissions, labour practices, supply chains, board independence and community impact.
With growing demand for responsible investment, and rising concern about greenwashing, finding the best ethical shares in Australia means looking beyond the label and focusing on companies with credible practices, transparent reporting and long-term growth potential. In addition to this, you will still want any shares you add to your portfolio to have a solid investment case, so there needs to be a blended approach when considering which names fit the bill. If you don’t want to pick individual names yourself, and have a more balanced approach to the topic, you might find something like an ethical ETF more to your liking.
We have put together a list of seven ASX listed shares that each put forward an ethical investment case, and are worthy of consideration. The highest ethical purity sits in some of the healthcare name, but outside of this, there are other companies who have solid ESG frameworks, or come from sectors that make you rethink what ethical investing is in it’s entirety, and provide a more diversified look at the topic. Whilst you may agree or disagree, taking a second thought about some of what may fit can be an interesting exercise in and of itself.
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Best Ethical Shares To Consider
| Ticker | Latest price | Market cap | P/E | Dividend yield | Revenue TTM | Profit margin | ROE | Quarterly revenue growth YoY | Average price target |
|---|---|---|---|---|---|---|---|---|---|
| CSL | A$124.41 | A$60.4b | 14.5 | 3.4% | A$15.4b | 9.1% | 6.7% | -1.8% | A$196.69 |
| PME | A$136.28 | A$14.5b | 61.6 | 0.5% | A$240.6m | 97.6% | 76.8% | 28.4% | A$179.38 |
| XRO | A$86.17 | A$14.4b | 55.7 | 0.0% | A$2.3b | 11.6% | 8.3% | 19.9% | A$135.02 |
| COH | A$99.47 | A$6.6b | 19.2 | 4.4% | A$2.3b | 14.8% | 18.2% | -0.4% | A$126.08 |
| TCL | A$14.29 | A$44.2b | 94.4 | 4.8% | A$3.9b | 12.2% | 5.4% | 8.2% | A$13.94 |
| GMG | A$29.77 | A$61.3b | 35.6 | 1.0% | A$3.1b | 54.6% | 7.9% | -15.9% | A$34.46 |
| WOW | A$34.17 | A$41.7b | 69.7 | 2.6% | A$70.3b | 0.9% | 11.9% | 3.4% | A$35.24 |
CSL
CSL is a global biotechnology and plasma medicines company, with operations across CSL Behring, CSL Seqirus and CSL Vifor.
This is the best blend of ethical relevance, and business scale. and is one that has seen valuation come down significantly over the past 12 months, with CSL shares down 52% on the period before dividends. That is not exactly the typical setup for a top ethical stock, yet that discount could well prove value in the years ahead for those with longer term horizons. With CSL, you are not buying a small speculative impact company, you are getting a global healthcare franchise that has been de-rated heavily, now trading on a much lower multiple than its historic reputation would suggest.
The ethical case is also straightforward, as CSL’s products sit in serious disease areas, immunology, haematology, vaccines, iron deficiency and nephrology. The company’s own strategy is framed around patient impact in areas of high unmet medical need.
The investment case is now valuation-led. A P/E of ~14.5 and dividend yield of 3.4% make CSL look much more like a recovery-quality stock than a priced-for-perfection growth stock. The average price target from the analyst community also sits materially above the latest price, indicating that the street has yet to give up on the turnaround, despite what markets say.
CSL is certainly not firing on all cylinders at this stage, with the latest numbers showing negative quarterly revenue growth and very weak quarterly earnings growth. The market is clearly questioning the pace of recovery, the integration and performance of Vifor, and the durability of margins. Those reasons that have driven shares to ~9 year lows could be reasons not to buy, yet for those that believe in the turnaround story, those negatives could be providing a great entry for the future.
Cochlear (COH)
This is another beaten down healthcare share, that has plenty of potential valuation upside if management can turn things around. Cochlear makes implantable hearing solutions, including cochlear implants and related sound processors, providing one of the clearest real-world impact stories on the ASX.
From an ethical-investing perspective, Cochlear has arguably the cleanest social-good story in the group. Its products directly improve hearing, communication and quality of life. That makes the ethical case simple and tangible: if you want a business where the product itself is clearly linked to better human outcomes, Cochlear stands out.
Cochlear is a high-quality medical-device company with strong brand equity, global reach and a long innovation cycle. The company said its FY26 aim was to help more than 60,000 people hear with a cochlear or acoustic implant, and the current numbers are also interesting.
The share-price story has changed dramatically in recent times. with Cochlear shares having fallen 63% before dividends over the past year. That is a brutal de-rating for a company that has historically been treated as one of the ASX’s premium healthcare franchises, but it also means investors are no longer being asked to pay the old premium price for the same quality of brand and market position.
The company has recently reduced FY26 earnings guidance, which explains why the market has reset expectations so aggressively. At the same time, Cochlear has reaffirmed confidence in its long-term growth strategy and innovation pipeline, despite current uncertainty.
At current levels, Cochlear looks less like a momentum stock and more like a recovery-quality healthcare stock. A P/E of about 19.2, dividend yield of about 4.4%, and ROE around 18% make the valuation far more digestible than it has been in the past. The main risk is that earnings disappointment lasts longer than expected. But for patient investors, the ethical and business-quality case remains strong.
That means that COH currently offers a better valuation, but not a clean near-term earnings upgrade cycle. This is another that could be a great turnaround story, but there is inherent risk in buying beaten down stocks, with sentiment tough to shift.
Pro Medicus (PME)
Pro Medicus is a healthcare imaging software company that provides radiology and enterprise imaging technology to hospitals, imaging centres and healthcare groups.
This is probably the highest-quality business on the list, and it also has a strong ethical angle. Its software helps medical professionals access, view and interpret complex imaging studies more efficiently. That gives Pro Medicus a clear social-utility case: better healthcare workflows, better clinical productivity and potentially better patient outcomes.
Pro Medicus shares have fallen 42% over the past year before dividends. That is a major reset, but it does not automatically make the stock cheap. Even after the fall, the shares still trade on a P/E of about 61.6, so the market is still pricing Pro Medicus as an elite growth company.
The business performance remains excellent. Its latest interim result showed revenue from ordinary activities of A$124.8 million, up 28.4%, underlying profit before tax of A$90.7 million, up 29.7%, underlying EBIT margins of 73%, and a debt-free balance sheet.
That combination of healthcare relevance, high margins, global growth and no debt is rare. The investment case against Pro Medicus is not business quality; it is valuation. You need to believe the company can keep winning large contracts and scaling internationally for many years. For ethical growth investors, it is one of the best businesses on the ASX. For value-focused investors, it may still require discipline.
Xero (XRO)
Xero is a cloud accounting and small-business software platform used by small businesses, accountants and bookkeepers.
The ethical case here is different from CSL, Cochlear or Pro Medicus. Xero is not a healthcare impact stock. Instead, it is a productivity stock. It helps small businesses run their finances, payroll, payments and reporting more efficiently. For investors who view small-business enablement as a positive social and economic contribution, Xero has a credible ethical-growth angle.
Xero shares have fallen ~49% over the past year before dividends, as markets sold software names aggressively following AI fears, and generally became more cautious about valuation, growth expectations and the path from revenue expansion to durable profits.
The operating story still has appeal. Xero has a global platform, recurring revenue characteristics and a long runway in cloud accounting and adjacent small-business services. Its next major update is the FY26 full-year result, which should give investors a clearer read on subscriber growth, margins and strategic execution.
The current numbers show a business still growing revenue strongly, with quarterly revenue growth close to 20% and a P/E of about 55.7. That is not cheap, but it is a very different valuation setup after the share-price fall. Xero is best suited to investors who want an ethical-leaning software growth stock and are comfortable waiting for scale benefits to show more clearly in earnings.
Transurban (TCL)
Transurban owns and operates toll road networks in Australia and North America.
Transurban is an ethical share only in a more nuanced sense. It is not a clean impact stock like Cochlear or a healthcare productivity stock like Pro Medicus, but it does provide essential transport infrastructure, and that gives it real economic utility. Roads support commuting, logistics and urban mobility, and Transurban also emphasises road safety across its networks.
The TCL share price has been relatively steady compared with the healthcare and technology names on this list. Transurban shares have added just under half 1% before dividends. That makes it the least dramatic setup here. You are not buying a major de-rating; you are buying a defensive infrastructure income stock.
The latest operating performance has been solid. Transurban reported A$2.019 billion in proportional total revenue for 1H26, up 6.0%, proportional EBITDA of A$1.592 billion, and statutory profit after tax of A$343 million.
The attraction is income and stability. A dividend yield of about 4.8%, low beta and positive revenue growth make Transurban useful for investors who want defensive cash flow. The ethical drawback is that toll roads can raise affordability concerns, and the business remains tied to road usage. That means Transurban may suit you if you are comfortable with infrastructure as a practical ethical category, but it is not the purest ethical pick in the group.
Goodman Group (GMG)
Goodman Group owns, develops and manages logistics properties, warehouses and data centres across major global markets.
Goodman is a high-quality infrastructure and property platform, but the ethical case requires balance. On one hand, logistics assets support supply chains, food distribution, e-commerce and the digital economy. On the other hand, its growing exposure to data centres brings energy-use and sustainability questions into the investment case.
Goodman shares have fallen 0.45% over the past year before dividends, yet remain ~60% higher over the past five years. Investors are still giving Goodman credit for business quality, scarcity value and its data-centre growth pipeline.
The company’s latest result supports that view. Goodman reported A$1.2035 billion of operating profit for 1H26 and continued to strengthen its data-centre pipeline.
The valuation is not obviously cheap, with a P/E of about 35.6 and a low dividend yield of about 1.0%. The investment case is more about long-term infrastructure growth than income. Goodman also argues that its data centres are designed with sustainability in mind, including energy efficiency, renewable energy, circular design and low-carbon materials.
For ethical investors, Goodman is best viewed as a “quality infrastructure” stock that gives exposure to the physical backbone of logistics and the digital economy, but it requires comfort with the environmental complexity of data-centre expansion.
Woolworths (WOW)
Woolworths is Australia’s largest supermarket and food retail group, with operations across Australian Food, New Zealand Food, B2B distribution and related retail businesses.
The ethical case for Woolworths shares is mixed. On the positive side, food retail is essential. Woolworths plays a central role in household consumption, supply chains and food access. It also has community initiatives, including its long-running partnership with OzHarvest, which Woolworths says has helped provide the equivalent of 100 million meals to Australians in need.
The share-price performance has been much stronger than most of the list. Woolworths shares have risen 4.22% over the past year before dividends, with the YTD gain of 15% showing a build in momentum. That makes Woolworths more of a defensive holding than a turnaround opportunity. You are not buying a distressed valuation with this one, but a resilient supermarket business that has held up well.
The challenge is that Woolworths carries the most obvious social licence risk in this group. The ACCC’s supermarkets inquiry made 20 recommendations and found that major supermarkets’ average product margins had increased over the previous five financial years. That does not make Woolworths uninvestable, but it does make the ethical case less clean than healthcare or productivity software.
Woolworths has huge revenue, recurring household demand and a dividend yield of about 2.6%, yet profit margins are thin, earnings growth has been weak, and the average price target sits only modestly above the latest price. For ethical investors, Woolworths may be acceptable as an essential-services holding with strong community initiatives, yet that is a personal preference.
Bottom line
Ethical investing is not just about avoiding “bad” companies, it is about deciding what kind of economic activity you are comfortable profiting from, and then checking whether the business quality, valuation and long-term risks still make sense.
That matters because a company can look ethical on the surface but still be a poor investment. It can also look boring or imperfect and still contribute something useful to society. Healthcare, renewable energy, education, infrastructure, food supply, financial inclusion, small-business software and medical technology can all fit into an ethical framework, but each comes with trade-offs.
The key question then is not just “Is this company good?” but does it create useful value in the world, treat stakeholders reasonably, manage its risks properly, and offer you a fair investment case at today’s price?
That is where ethical investing becomes more practical, as you are not trying to build a perfect portfolio, as much as we would like to. You are trying to build a portfolio where your money is aligned with your values, while still being disciplined about valuation, profitability, balance sheets, growth and risk.
Ethical Investing FAQs
Can an ethical company still be a bad investment?
Yes, and this is one of the most important lessons in ethical investing. A company can have an excellent mission, produce socially useful products, and still be a poor investment if the valuation is too high, the balance sheet is weak, or the business model cannot generate durable profits. This is especially relevant in areas such as clean energy, healthcare innovation and social-impact technology. The theme may be attractive, but investors can still overpay. Ethical appeal does not remove valuation risk.
Is avoiding “bad” sectors enough to make a portfolio ethical?
Not exactly. Many investors start with exclusions such as no tobacco, gambling, weapons, thermal coal, fossil fuels or controversial industries. That can be a useful first step, but it is not the whole process. A portfolio can avoid obvious problem sectors and still own companies with poor labour practices, weak governance, excessive pricing power, questionable supply chains or serious environmental risks. The more mature approach is to combine negative screening with positive selection. That means asking not only what you want to avoid, but also what you actively want to support
Can a company with environmental impact still belong in an ethical portfolio?
Sometimes yes, as ethical investing can be complex. A logistics company, data-centre owner, toll road operator or mining services business may have a real environmental footprint, but it may also provide essential infrastructure or enable broader economic activity, or be part of highly beneficial community projects. The question becomes whether the company is reducing harm, improving efficiency, investing in cleaner operations, and providing a service that society genuinely needs.
Are healthcare stocks always ethical?
No, although healthcare is one of the strongest ethical investing categories because it is directly linked to better human outcomes. Companies involved in vaccines, diagnostics, hearing implants, imaging software, medical devices and life-saving therapies can have very strong social-utility cases, but healthcare is not automatically ethical. Pricing, access, clinical safety, regulatory behaviour, product quality, trial transparency and marketing practices all matter. A healthcare company may produce valuable treatments while still facing ethical questions around affordability or access. That means the investor still needs to ask: who benefits, who pays, how fairly the value is shared, and whether the company’s profit model depends on responsible outcomes.
Should ethical investors care about dividends and valuation?
Yes this is still important. Dividends, margins, return on equity, debt levels, revenue growth, cash flow and valuation all help you understand whether a company can keep doing useful work over time. A financially weak ethical company may struggle to invest, innovate, pay staff properly, or survive downturns. A financially strong ethical company has more room to improve its operations, expand its impact and reward shareholders. That is often why the best ethical investments are always not the most exciting stories but those where social usefulness, business quality and financial discipline overlap.
