ESG

Sustainable investing requires a balancing act when it comes to retail behemoths like Coles and Woolworths, which can have positive ESG policies while selling products with the potential to do harm. According to Australian Ethical, investors should assess these companies with nuance and a measure of compromise.

The Paris-aligned benchmarks that an increasing number of global investors now subscribe to disincentivise activities that might actually help the energy transition, according to index provider Scientific Beta.

The ethical money manager says Lendlease failed to provide information required to independently assess the impact of its planned development in Mount Gilead, an area deemed critical to the survival of a resident koala colony.

Stakeholders hope the government’s proposed nature repair market – intended to work in parallel with the Australian carbon market – will drive the significant private investment needed to create positive, rather than just net-zero, impacts on biodiversity.

Diversification is invaluable, and this is especially apparent during times of disruption and uncertainty. Exposure to infrastructure assets can help investors take advantage of the current volatility, but keeping asset correlation in mind is key.

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.

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.

An emerging global supply shortfall and booming demand due to the clean-energy transition are set to support big gains in the price of copper, leaving investors hunting exposure to the few mining projects currently online.

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.

The rush to decarbonise the economy and the ASX risks leaving workers and communities behind, and investors exposed to “significant losses” and greater social support costs.

While 2022 was a tough year for ethical and sustainable investors, the multiple compression that occurred – and a possible moderation of inflation – means they have plenty to look forward to in 2023.