Australia ‘catches up’ with global peers on ESG

Inflows into environmental, social and governance (ESG) funds reached $1.6 billion in the last quarter, almost double the combined inflows during every quarter since the start of 2019, according to Calastone.

In its quarterly report, Calastone said: “It was a big quarter for ESG funds, which garnered their largest ever share of equity inflows. $1 in every $4 of net inflows to equity funds was committed to those with an ESG focus.

“The total of $1.6 billion was almost double the combined inflow during every quarter since the beginning of 2019.”


ESG equity funds net inflow

Source: Calastone

The inflow growth also boosted the actively-managed segment which took in $8.40 of every $10 of equity inflows in the third quarter, up from the average of $7.40.

Ross Fox, Calastone head of Australia and New Zealand, said this growth indicated that perhaps Australia was catching up its global counterparts which were further ahead in ESG investing.

“Australia has lagged a long way behind its global peers in this area over the last two years, but this may be the beginning of the catch up,” Fox said.

“In the UK, almost $6 in every $10 invested in equity funds in the last two years has been committed to ESG funds, compared to just $1.30 in Australia. Q3 marked a step change.

“Experience overseas suggests the acceleration has a long way to run. ESG funds tend to be global in nature, so sustained growth in ESG funds may also rebalance flows towards international equities.”

Calastone calculated the data by analysing half a million buy and sell orders every month from January 2019 as it moved in and out of managed funds.

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