While Europe steams ahead with sustainable investment, Australian investors are still divided on two ends of the ESG spectrum.
Last week, it was reported that inflows into Australian and New Zealand sustainable funds fell 91 per cent to an “anaemic” $214 million — a decrease of more than $2.4 billion.
After ClearBridge Investments launched its global sustainable infrastructure strategy in May 2021, portfolio manager Nick Langley said he noticed two binary perspectives had emerged in the ESG space.
“What we found in the Australian market was that people are either very green or very greedy,” he observed.
While some investors strongly opposed coal and gas exposure, others were opportunistic towards the pricing of renewable energy.
Moreover, “green” investors believed the sustainable infrastructure strategy was not “green” enough, alongside other investors who thought it was too ESG-heavy.
Langley expected Australia’s sentiment towards sustainable investing to mature over the coming years, progressively moving towards an outlook as seen in Europe.
Amid discussion whether greenwashing fears discouraged investors from ESG funds, the portfolio manager was vocal about its benefits.
“It has caused a lot of investors to be very cautious on the products that they’re looking at. It’s also led to managers being cautious about what [ESG products] they are putting out,” he said.
“You need to go through these regulatory processes to shake out a common ground. From a greenwashing perspective, we’re not seeing consistent rules across the globe, which will take time to work through,” Langley said.
Data from Netwealth previously found that 56 per cent of Australians were either doubtful or sceptical about responsible investing.
The largest cohort of its 2022 survey were doubters. These individuals did not typically invest in responsible investments. They were not against it as such, but neither were they strongly for it. They were in the middle and usually either doubted or lacked a strong opinion about it either way.
Almost a quarter (23 per cent, up from 20 per cent) were sceptics. These were people who do not really understand responsible investing, nor do they wish to. Sceptics would not invest responsibly, even if it were financially beneficial, and are highly unlikely to be convinced otherwise, no matter the strategy or approach adopted by the adviser.
The ClearBridge Sustainable Global Infrastructure Income fund had $146 million in assets under management and returned 6.1 per cent over the last year to 31 March versus returns of 12.6 per cent by its OECD G7 Inflation Index + 5.5 per cent pa benchmark.
