Australia lagging 10 years behind Europe on ESG investment
Australia is lagging 10 years behind Europe in terms of environmental, social and governance (ESG) investment, according to Morgan Stanley.
In a webinar, Nathan Lim, head of wealth management research at Morgan Stanley, said while there had been increased interest in ESG, it still lagged behind other regions.
According to Morningstar, there was $4.9 billion invested in passive sustainable funds in Australia compared to $260 billion in Europe. There had also been more than 50 passive sustainable fund launches in 2018, 2019 and 2020 in Europe compared to less than five each year in Australia.
“Europe leads the world on responsible investment, there are a lot of offerings and sophistication, there is lot more depth than in Australia. If you want to see what Australia will look like in 10 years then look to Europe.”
He said Australia was “lagging the rest of the world” and a way to improve its offering would be to improve transparency.
This would allow investors to be rigorous in checking that what a fund held aligned with their values, a problem Australia had compared to other regions as it was not always easy to access the data. Many overseas funds offered the ability to view 100% of holdings compared to just the 10 largest ones.
“Australia needs greater transparency, it is lagging the rest of the world. They can get these analytics easily but it is not the same in Australia. But more and more funds are disclosing their holdings so investors can judge for themselves, you cannot judge what you cannot measure and the way you measure a fund is by looking at their holdings.”
AUTHOR
Laura Dew
Recommended for you
There is one specific risk that is a significantly higher concern for financial services directors compared to companies overall and is impacting their risk appetite, according to the AICD.
Global fund managers are shunning bonds, with the asset class seeing the largest drop in allocations in more than 20 years.
Australian Ethical has seen its funds under management reach $10 billion, driven by organic customer growth and superannuation contributions.
Financial advisers will have access to private equity investments run by WTW for the first time as it launches a pooled fund to provide savers with access to traditionally institutional assets.
