Only half of institutional investors prioritise climate change

Just half of Australian institutional investors believe engaging on environmental issues such as climate change or fossil fuels usage are the most important stewardship topics, according to research from Schroders. 

The ‘Sustainability in Australia Institutional Investor Study 2021’, showed 54% of global investors said positively impacting society and the planet was their key driver for sustainable investing, while only 25% for Australia agreed. 

More than half (57%) believed “successful” engagement equalled real world outcomes that can demonstrate a measurable improvement for company’s stakeholders, while only a third (34%) for Australia agreed. 

Almost two-thirds (64%) believed engaging on environmental issues such as climate change or the use of fossil fuels are the most important stewardship topics, but only half of Australians (51%) agreed.  

Under half (47%) wished to invest in funds that were specifically aligned to environmental themes; while only 13% in Australia agreed. 

Most global institutional investors found sustainability challenging (80%), compared to 75% for Australia. 

Greenwashing was cited by 59% as the major challenge to sustainable investing, compared to 62% for Australia. 

However, Ella Reilly, Schroders sustainability manager Australia, said sustainable investing was a key focus for institutional investors. 

“Given recent, high profile court cases brought against superannuation funds by their members on issues such as climate change, coupled with reforms like Your Future, Your Super and other regulatory and industry pressures like super fund mergers, it’s no surprise that more than half of respondents (51%) claim their primary driver to invest sustainably is due to pressure from members, followed closely by regulatory and industry pressures (45%),” Reilly said. 

“Whilst we expect these trends to continue in the near term, there’s no question that sustainable investing will remain a key focus for Australian institutional investors in a post-COVID world.”