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ESG and impact investing statistics

35% of Australians are philanthropic investors

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By

Susannah Binsted

Edited by

David Gregory

Updated

Fact checked

Impact investing is on the rise in Australia but are consumers willing to put their money where their mouths are? Finder polled over a thousand adults in Australia as part of its Consumer Sentiment Tracker (CST) in September 2022 to find out.

Quick summary

  • 35% of Australians are willing to invest philanthropically and on average they’re prepared to earn 2.34% less p.a.
  • Men are more likely than women to say they’d be willing to earn less on their investment if it meant it would have a positive social impact.
  • Generation Y are the most philanthropic investors (43%) and baby boomers are the least (23%).
  • 43% of the Australian investment market ($1.54 trillion) is managed using a responsible investment approach.
  • Impact investing is primarily made up of green, climate or social impact bonds ($24.6 billion).

ESG or impact investing in Australia

  • 35% of Australians are willing to make less of a return on their investment in order for it to have a positive social impact. That’s the equivalent of over 7 million adults.
  • On average, those that are prepared to earn less are happy to see their annual returns decline by 2.34% per annum. However, 8% are only willing to cop a 0.5% reduction p.a. and 6% of philanthropic Aussies a 1% reduction.
  • However, nearly 1 in 10 (9%) of respondents said they’d be prepared to sacrifice 4% or more on their annual return.
  • The remaining 65% said they don’t care about investing in a company that produces a tangible social good.

Impact investing by demographic

  • Men are more likely than women to accept less of a return on their investment in order to produce a tangible social good (36% vs 33%).
  • Generation Y are the most philanthropic (43%), followed by generation Z (39%), generation X (34%) and baby boomers (23%).
  • Those in NSW are more willing to impact invest at a personal cost to them (38%) while those in South Australia are the least (23%).

Impacting investing in Australia

  • In Australia, responsible investment assets grew to $1.54 trillion, according to September 2022 data from the Responsible Investing Association of Australasia (RIAA). This is up from $1.28 trillion in 2020 and means 43% of the total market is managed using a responsible investment approach.
  • The number of investment managers reporting back to investors on environmental and social outcomes achieved has more than doubled in 2 years from 21% in 2019 to 45%.
  • Approximately $726 billion in assets under management is now being used by fund managers to agitate for change on ESG issues. This is up 54% from 2020.
  • The total impact investment assets under management increased slightly to $30 billion in 2021, up from $29 billion in 2020.
  • Impact investing is primarily made up of green, climate or social impact bonds ($24.6 billion).
  • Performance concerns are the strongest deterrent to the responsible investing market, followed by a lack of trust and concerns about greenwashing.

ESG or impact investing funds in Australia

  • The Australian impact investment market has undergone significant recent growth. In 2018 and 2019, the total value of impact investment products widely offered to Australian investors rose 249% to $19.9 billion, and the total number of impact investment products rose 118%.
  • Of the total value of Australian impact investments, 87% comprise products targeting environmental outcomes, while the remaining 13% comprise products targeting social outcomes.
  • 1 in 6 ESG funds in Australia has been retrofitted out of a pre-existing, often struggling strategy, according to Morningstar. In 2021, 25 portfolios were relaunched as sustainable funds.
  • Only a third of investment funds with a focus on ESG factors outperformed their non-ESG peers in the same asset allocation category in the 2021-22 financial year.
  • However, over 5 years, super funds ethical growth options have outperformed normal growth options by 1.1%. This increased to 1.3% over 10 years.

Global ESG investing

  • ESG investments now account for more than 25% of the world’s professionally managed assets globally.
  • The value of investments that claim to be ESG friendly has grown from US$23 trillion to US$35 trillion in 2016 and is on track to hit US$50 trillion by 2025.
  • The long-term performance of a sample of 745 Europe-based sustainable funds shows that the majority of strategies have done better than non-ESG funds over 1, 3, 5 and 10 years. However, only 3 in 10 euro corporate bond funds achieved better returns than their non-ESG funds over the same period.
  • Sustainable funds have greater survivorship rates than non-ESG vehicles. On average, 77% of ESG funds that were available 10 years ago still exist, compared with 46% for traditional funds.
  1. Finder Consumer Sentiment Tracker
  2. Morningstar
  3. AFR
  4. Responsible Investing Association Australasia

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