Research from Colonial First State has found that Australian consumers are confused by sustainability claims and cannot differentiate between ESG investment options. 

In a media release, CFS said the main problem is that the industry and the broader economy do not have clear ESG definitions that everyone agrees on. Additionally, the ESG considerations are subjective, and there are built-in trade-offs among them. 

The research found that less than a third of consumers (29 per cent) are aware of ESG or sustainable investing. Additionally, only six per cent are sure they understand it. 

Less than one in 10 (nine per cent) are confident in their understanding of the differences between a ‘sustainable fund’ and an ‘impact fund’. 

The research also identified low levels of understanding among consumers regarding common industry buzzwords. Around half of consumers do not understand the term ‘net zero’ (50 per cent) or ‘carbon offset’ (43 per cent). 

The findings highlight the need for industry, regulators, and government to collaborate to establish consistent consumer labelling standards that enable consumers to make informed choices and provide a solid foundation for labelling products through superannuation and investment funds. 

CFS commissioned market researcher Nature to survey 1496 Australians aged 16 to 89 in July 2023 about their knowledge of sustainable investing. All respondents currently have superannuation, investments, and/or a pension or annuity. The sample was nationally representative on age, gender and state.