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Green and gold: Australian sustainable investment assets grew 25% in 2 years

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Australians increasingly want cleaner and greener solutions when it comes to their investments, according to new research by Finder.

A Finder survey of 717 Australians revealed 43% would be willing to switch funds so that their money is invested in a way that considers environmental, social and governance (ESG) issues.

ESG funds support companies and industries that are making a positive impact on communities and the environment, such as clean energy and education, while actively excluding those that are not.

The research revealed gen Z are the most concerned about ethical investment, with 55% likely to invest in a fund that considers environmental, social and governance issues.

According to the biennial Global Sustainable Investment Review, sustainable investment assets grew 25% between 2018 and 2020 in Australasia.

Kylie Purcell, investments specialist at Finder, said this trend was only set to continue for a number of reasons, especially with exchange traded funds (ETFs).

"An increase in gen Z investors, a greater focus on sustainability from businesses and the current discourse around climate change are all contributing to the popularity of ESG ETFs.

"The finite nature of fossil fuels means that the energy industry is looking for alternatives. This is creating huge growth potential in the clean energy space."

Standout clean energy ETFs in Australia

Finder's Green Awards 2021, which recognise the businesses leading the way in sustainability, saw eInvest's Better Future Fund (IMPQ) named Green ETF of the Year.

"In addition to impressive returns, IMPQ proactively looks for companies generating more than 50% of their revenue from operations that actively contribute to creating a sustainable future.

"The BetaShares Global Sustainability Leaders ETF is another standout and is among the top 5 best performing ETFs in Australia over 3 years, averaging 25% p.a.," Purcell said.

Including clean energy in your investment portfolio mix

With new technologies evolving, the future of the energy market remains uncertain.

Purcell said Australians should do their research and not throw their eggs in the one basket when it comes to investing.

"Nobody knows for certain which energy source – battery, solar or wind – will be the most important decades from now which can make stocks and ETFs in the sector volatile.

"Aside from the positive environmental implications of these investments, we're also seeing solid financial outcomes.

"Several ethical ETFs are reporting a 1-year return of more than 20%, so it'll be interesting to watch how these newer green ETFs perform in the long term," Purcell said.

Looking to invest in exchange traded funds? Check out Finder's beginner's guide.

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