Australia Funds Embrace ESG More Than U.S. Peers, Survey Shows
(Bloomberg) -- One in four institutional investors in Australia and New Zealand now consider ESG factors equal in importance to traditional financial analysis for investment decisions, according to JPMorgan Asset Management.
More than 60% of Australian investors said environmental, social and governance metrics were in their top 10 considerations, a JPMorgan Asset survey found. They were part of a global poll of more than 2,000 large asset managers, including pension funds, family offices, insurers and sovereign wealth funds conducted between November and January.
“While institutional investors are more likely to give that highest level of importance, it was noteworthy how many more financial advisers are now also giving it the highest level of importance,” Rachel Farrell, chief executive officer for Australia and New Zealand at JPMorgan Asset, said in a briefing.
Pension fund members and environmentalists have increased pressure on asset managers to embrace ESG considerations. Australian investments in clean energy, conservation and other initiatives with a positive environmental or social outcome are set to rise five-fold to A$100 billion (about $80 billion) over five years, the Responsible Investment Association Australasia predicted.
While Australia is ahead of the U.S. when it comes to ESG adoption, it lags Europe. Nearly half of European investors incorporate ESG in their top three considerations when investing, the survey showed. In contrast, just 11% of American investors incorporate ESG factors in their top three factors, and a full 39% don’t consider it at all in their investment process, the survey shows.
The impact of climate-change risk hasn’t been fully captured by markets, Farrell said Tuesday. Australia’s economy is particularly vulnerable over the long term since fossil fuels represent a chunk of the economy, which suggests domestic investors may end up boosting overseas allocations, she said.
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