The consideration of environmental, social and governance (ESG) factors when making investment decisions is reaching record levels according to Investment Trends, which reports that 78 per cent are either currently adopting ESG investing principles or intend to do so.

The researcher says 33 per cent of Australian investors are actively applying ESG factors now while 45 per cent want to do so in the future, with several high-profile developments increasing the trend.

“In the wake of the pandemic, social movements like BLM and ever-frequent environmental concerns like bushfires and droughts, Australians are closely examining how their actions impact the world around them,” Investment Trends head of research Irene Guiamatsia says.

“Increasingly, many are realising how they allocate money plays a vital role in supporting positive initiatives or avoiding harmful outcomes.”

The environment figures heavily in peoples’ thinking, with 70 per cent citing renewable energy as an area they wish to lend their support. Sixty per cent identified reducing carbon emissions as important while 55 per cent said they wanted to support preventing climate change.

“Australian investors say they already do their part to help the environment in their everyday lives, such as recycle non-biodegradable waste (80 per cent), reduce their energy consumption (74 per cent) and use biodegradable products (61 per cent),” Guiamatsia says.

Investors are no longer concerned about ‘trading off’ ESG investing for performance, she added, with 81 per cent saying they believed performance for ESG investments will be comparable or better than non-ESG equivalents in the long term.

Tahn Sharpe is a Sydney-based financial services journalist with a background in financial planning. He writes on advice, superannuation, investment, banking and insurance issues, is a certified SMSF Adviser and holds an Advanced Diploma of Financial Planning. Contact at [email protected]
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