Record funds are flowing into responsible investments, with the sector now sitting at $633 billion under management, according to a new report by Responsible Investment Association Australasia (RIAA).
That meant that nearly half (47 per cent) of Australia's investments were invested responsibly, the association said.
The report also said consumers increasingly wanted investments that matched their morals, and that demand boosted growth.
Performance was at a record high, as responsible investments outperformed mainstream funds over one, three, five and 10 years.
RIAA chief executive, Simon O'Connor, said without a doubt this was not a passing trend, but an evolution of the entire sector, as investors were now engaged with how they invested their life savings.
"Years of demonstrated long-term investment benefits to investors, who consider environmental, social and governance (ESG) factors, have quietly shifted around half of Australia's investment industry to invest responsibly.
"Now, it is consumer demand targeted at superannuation funds, banks and financial advisers that is creating unstoppable momentum with implications for all parts of the finance sector," he said.
The report also found that core responsible investment (ethical and socially responsible investment (SRI)) reached its highest level in 15 years and increased by 60 per cent since last year (to $51 billion assets under management).
RIAA said a key driver of growth was that fund managers had implemented an environmental, social and governance (ESG) approach to investing.
"Responsible and ethical investments is now completely integrated within the financial sector. In fact, we welcome a time in the future where the differentiators of mainstream and responsible are redundant," O'Connor said.