Sustainable investing has been through plenty of challenges of late. After a string of political and social backlashes, the return of a US president who appears to be opposed to creating a more sustainable future, a rise in greenwashing cases and a challenging period of relative performance, sustainable investing has become more demanding and, arguably, more useful.
Most investors tend to think of systemic risk as something that arrives with a bang, like a banking crisis, a pandemic, or a war. Increasingly, the more realistic systemic dangers are slower to gauge and harder to price. They are an ominous set of interconnected and interacting stresses that have the potential to degrade the very conditions required for markets to compound at all.
For a growing number of investors, what they own in their portfolios is as important as the returns they generate. Or, at least it’s a much more important consideration for them than it used to be. As a result, the various forms of responsible and value-driven investment have been transitioning from niche to mainstream for some time now. The Responsible Investment Association Australasia (RIAA) estimates that Australian responsible investment assets reached $1.6 trillion in 2023, and accounted for 41% of total managed funds assets.
Sustainable investing has been through plenty of challenges of late. After a string of political and social backlashes, the return of a US president who appears to be opposed to creating a more sustainable future, a rise in greenwashing cases and a challenging period of relative performance, sustainable investing has become more demanding and, arguably, more useful.
Most investors tend to think of systemic risk as something that arrives with a bang, like a banking crisis, a pandemic, or a war. Increasingly, the more realistic systemic dangers are slower to gauge and harder to price. They are an ominous set of interconnected and interacting stresses that have the potential to degrade the very conditions required for markets to compound at all.
For a growing number of investors, what they own in their portfolios is as important as the returns they generate. Or, at least it’s a much more important consideration for them than it used to be. As a result, the various forms of responsible and value-driven investment have been transitioning from niche to mainstream for some time now. The Responsible Investment Association Australasia (RIAA) estimates that Australian responsible investment assets reached $1.6 trillion in 2023, and accounted for 41% of total managed funds assets.
We wrote recently about how the DEI backlash has affected the ESG investment landscape. Long story short: it’s had a detrimental impact on US flows into ESG assets, although the long term arguments in favour of ESG investing arguably remain unscathed.
Does going woke mean going broke in 2025?
ESG investors have certainly had their challenges to contend with in recent years, not least of which has been the global pushback against diversity, equality & inclusion (DEI) as a core ESG strategy.
We investigate why the DEI backlash has happened and what it means for ESG investors looking forward.
As the transition towards a low carbon, more sustainable world accelerates, many investors have assumed that ESG is connected with the impact needed to address the world’s environmental and social challenges for the simple reason they hear the term so often.
But there’s more to it than that. So what is ESG? And what isn’t it?
Sustainable investment strategies such as ESG and impact investing have been through a challenging couple of years with recent performance headwinds translating into a slowdown in funds under management growth momentum.
Most successful investors will testify to the fact that selecting outperforming stocks is as much about identifying high quality management teams as it is about analysing the numbers, arguably more so. With outperformance in mind, one of the leading indicators of a high quality management team is their ethics. It’s an area worthy of investor attention.
As more investors understand the performance-enhancing and risk-reducing benefits of investing in ESG oriented strategies, demand for ESG data is on the rise.
That’s all good and well, but how can individual investors benefit from integrating ESG scores into their decision-making process without being ESG experts?
The Intergovernmental Panel on Climate Change (IPCC), which is leading the global scientific assessment of climate change, estimates that human activities have already caused around 1°C of global warming above pre-industrial levels.
If global warming continues at the current rate, the IPCC estimates it will reach 1.5°C above pre-industrial levels between 2030 and 2052.
Ethical investment funds aren’t new.
Some people have always shunned investments associated with harmful activities such as uranium mining, deforestation and arms manufacture. Instead, they’ve looked for opportunities in renewable energy, education and healthcare.