Global Sustainable Investment: Spotlight on Australia

By Kimberly Gladman, CFA, Ph.D., Director of Research and Risk Analytics

Sustainable investment is strong and growing in Australia, as the recently-released review of global sustainable investment demonstrates. Currently there are $178.5 billion in sustainable AUM in the country, representing about 18% of total assets invested there and 8% growth from 2010-2011. While it accounts for only about 13% of the world total of $13. 6 trillion in responsibly invested funds, Australia shares with Africa the distinction of prioritizing ESG integration–the incorporation of environmental, social and governance issues into routine investment analysis–as its preferred sustainable investment strategy. (Europe and North America, meanwhile, place more emphasis on screening of various kinds, as well as on engagement with company management.)  A massive 71% of Australian sustainable investment AUM uses integration as a strategy, while nearly one-third of the total also uses corporate engagement.  The country’s financial professionals, moreover, are demonstrating an expertise in the use of ESG factors to deliver outperformance:  the average responsible investment fund in Australia delivered higher returns than the average mainstream fund in the one, three, five, and seven-year time frames to June 2011.