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The clean-energy transition represents a huge opportunity for investors to earn good returns from investments that have a positive environmental impact – and ethical investors in Australia have particularly good cause for optimism, according to Australian Ethical.
While greenhouse emissions and diversity remain key issues, the spate of cyber breaches seen in 2022 has made cyber security the number one ESG issue.
The ethical investment house believes consumer credit can be positive for society if it is used to buy useful items. But companies like Afterpay focus on impulse purchases that are more likely to push vulnerable Australians into financial over commitment.
In its latest sustainability report HMC details the kind of comprehensive ESG strategy typical of a fund manager that appreciates the value of corporate responsibility – both to the group’s three funds and the broader environment.
The Australian mining and energy sector drew a significant increase in investment in 2022, but a hoped-for green mining boom is currently a fantasy, with gas and coal still dominating the project pipeline, new bank research shows. A shift in focus to commodities needed for the energy transition would have to precede another super-cycle, but select opportunities exist.
Adviser James O’Reilly had a long-held personal ambition to “stick a pin in the ground” and make a difference, but it was realising how much his clients wanted leadership on sustainable investing that sparked change in the way his practice manages money.
Being independent used to be enough to attract new clients, says Wattle Partners’ Drew Meredith. Today, they are increasingly demanding alignment with their own values.
What investors often misunderstand is that despite having ‘environmental’ in its description, ESG integration screens often don’t exclude companies that damage the environment according to the 2022 Sustainability Report.
“Sometimes, the market thinks we prioritise ESG factors above investment fundamentals,” says Perennial’s Emilie O’Neill. “But the reality is that it’s just another investment lens.”
While ESG arose in the space of listed equities, private debt managers can be more effective than equity funds or other fixed income investors in getting companies to meet their ESG goals.
The Australian Securities and Investments Commission is making good on promises to combat greenwashing, issuing its second set of fines against a company for misrepresenting the ESG bona fides of an investment product.
Speaking on a fireside chat during The Inside Network’s recent ESG event in Tasmania, Langley said that while infrastructure assets will continue carrying the burden of inflation there is likely more to be concerned about with REITS, both in the dominant US market and around the world.