How investors can tackle climate change with low effort
Switching $50,000 of investments or superannuation to a responsible fund is among the top three ways Australians could be reducing their individual carbon footprint, according to research.
It ranked only behind installing solar panels on roofs and switching to a renewable energy plan, per Australian Ethical’s A little goes a long way: the most effective ways to lower your carbon footprint white paper.
It was informed by research from the UTS Business School and Lonergan Research.
In a matrix measuring impact versus effort, switching investments sat in a sweet spot of high potential impact with a medium degree of effort.
Just 17% of Australians who had already switched said it required a high amount of effort.
A hindrance to switching to more responsible funds was a lack of awareness of its impact. A quarter of respondents (25%) said they held back because they didn’t understand how financial investments or super funds could impact climate change.
Some 19% held concerns about greenwashing while one in five respondents said they would stick with their employer’s super fund.
With superannuation investments projected to grow to $10.5 trillion by 2040, the research indicated making such a switch was a ‘sleeping giant’ in terms of potential carbon impact.
“Australians care deeply about fighting climate change, so much so that 96% of them are already taking action to reduce their carbon footprint. More and more Australians want their capital invested in line with their personal values, and many of them are looking to their advisers on how to do this,” observed Maria Loyez, chief customer officer at Australian Ethical.
“When enough people invest responsibly, this collective action can act as a powerful signalling mechanism for change in the industry whether that’s through public pressure or shrinking access to capital and insurance.”
Importantly, the paper noted that investors who made the switch were far more likely (91%) to believe they had some control in influencing climate change.
On average, Australians produced a staggering 15.4 tonnes of CO2 equivalent per person each year which was among the highest in the world.
AUTHOR
Rhea Nath
Recommended for you
Wrapping up the reporting season for the 2024–25 financial year, Money Management rounds up the results of Australia’s listed platforms.
Investment platform Praemium has announced an integration with fund services firm Clearstream’s platform into Praemium Spectrum, expanding advisers’ access to global funds and greater operational efficiency.
Financial services firm Akambo has rebranded itself as an investment management and asset consulting business after almost two decades of operation, targeting $20 billion in assets under management.
Big four bank Westpac is seeking to expand the BT Panorama investment offering through strategic alliances as well as launching a low-cost offering.
